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Will Amazon Customers Revolt Over Return Fees?
Amazon.com has begun charging return fees on products brought to the UPS Store.
The retail and technology giant has begun charging a $1.50 fee when customers drop off product returns at a UPS location instead of a nearby Amazon Fresh, Kohl’s or Whole Foods, reports The Information.
Amazon has added fees to returns in cases where customers indicate that they changed their minds about a purchase or accidentally placed an order. The $1.50 is deducted from the amount refunded to customers.
The fees are being added, eSeller 365 reports, as Amazon looks for ways to reduce supply chain costs and bolster profits. The company does plan to continue offering free returns on products brought back to its preferred destination points. Amazon has long sought to reduce its reliance on outside logistics suppliers for order deliveries and returns as it has built one of the most extensive parcel services in the world.
The News of Amazon tacking on return fees has followed closely behind another report by The Information that found the online seller has begun labeling products on its site that are frequently returned. Amazon advises browsers to check item details and customer reviews before putting these items in their shopping carts.
“We’re always innovating on behalf of customers to improve the shopping experience,” Amazon spokesperson Betsy Harden told USA Today. “We’re currently showing return rate information on some product detail pages to help our customers make more informed purchase decisions.”
Amazon is believed to be using the “frequently returned” designation to pressure manufacturers and third-party sellers to fix the issues that lead to items being returned.
Some of those selling on Amazon throw the blame back on the platform claiming that its fast checkout and deliveries combined with easy returns promote customers sending back items they might otherwise keep. These sellers claim that the returns on products sold on Amazon exceed those ordered from other platforms.
The good news is that a combination of factors, including consumers shopping in stores, new return policies and advancements in artificial intelligence technologies, are reducing retailers’ return rates.
Insider Intelligence has forecasted that online return rates will fall to 18.2 percent this year, down from 21.7 percent in 2021. It expects the rate of returns to drop to 14.7 percent by 2026.
Discussion Questions
DISCUSSION QUESTIONS: Will Amazon’s customers push back against return fees for products brought to UPS Store locations or will they willingly bring items to stores where they will not be charged? Do you think Amazon will further expand instances where it charges return fees?
Poll
Loading …BrainTrust
Katie Thomas
Lead, Kearney Consumer Institute
Brian Numainville
Principal, The Feedback Group
This move by Amazon will inspire other retailers to do the same. And while this recent change by Amazon will cause some customers consternation, it will likely not impact overall buying behavior. Many retailers are struggling with profitability, and reducing costs related to returns is one of them. I expect to see Amazon and other retailers continue to push costs to customers on returns.
My pushback would have been significant after reading the headline. But the article tells another story. Our (mainly my wife’s) stable of retailers only includes those with no return fee. However the Amazon plan makes sense and is not unreasonable.
It is simply a charge for my convenience. Indeed, my situation is unique. The UPS store is 20 yards away from where I live. The Whole Foods is about 100 yards away. For $1.50, I will choose UPS all the time.
For those who drive to drop off their returns, it is a matter of “once in the car.” How much further would I go to save $1.50?
I do not anticipate further changes in Amazon policies. Zappos knows that the more straightforward returns they allow, the more product they sell. Amazon’s “try before you buy” option also suggests the customer bracket their buys and return those that don’t fit.
I heartily applaud these moves by Amazon. The charges are modest, but they encourage and incentivize new behaviors. “Free” has become one of the most expensive words in retail. It encouraged some really sloppy behavior. It’s past time for expenses to be recognized and charged for accordingly.
The UPS store has been difficult at best for returning Amazon products. My local UPS store has been charging for Amazon returns for about a year. As a result, I’ve stopped going there and now make a trip several miles longer to go to Kohl’s when I need to return products. Fees affect behaviors, and customers who have been used to free returns, I suspect, will at least think twice before they use UPS. I honestly think UPS has more to lose here than Amazon; when other outlets still provide the service they expect, they’re likely to blame the outlet, not Amazon.
Either way I don’t think this will move the needle much, but it will add to customer frustration, which is already high.
This is the beginning of a trend towards a realistic business model. The liberal returns policies of yesteryear are colliding with the reality of profitability and reasonability. More businesses will follow this lead. Watch!
Amazon customers are happy to pay for “free” shipping–I’ll guess that they’ll be happy to pay for returns as well.
I don’t foresee a $1.50 charge for UPS dropoffs triggering a revolt. If anything, the nominal fee will gently urge consumers to use the multiple alternatives already on offer. The move could also prove perilous for competitors that would like to follow suit but need to charge more to make the math work.
Consumers might grumble about erosion of services, decreased product size, or increased prices, but mostly they adapt and carry on. Most will agree that the cost of returns is part of the online shopping experience.
It’s funny, I was standing in line in a UPS store just this weekend to return something from Amazon and I was thinking to myself, as I noted that about half of the line of eight also appeared to be returning products to Amazon, that this had to be costing someone somewhere a boatload of money.
There is one clarification I would like to make. I read the policy as, they will charge you to return an item to UPS only if there is an alternate location that is closer. In my case, there is not — both Whole Foods and Kohl’s are farther away. So I don’t anticipate that this will change my behavior at all.
I can understand that returning to Whole Foods ultimately costs Amazon less than returning to the UPS store. I can also understand that there are a lot more cross-sell opportunities — chances to get me to buy something in the store — if I’m returning to Whole Foods or Kohl’s vs. the UPS Store. But I also believe this is yet another sign that the free money ride of interest rates is completely at an end. We’re entering the era of “oh, that’s what this actually costs?” – and it’s going to be a bit of a shock to consumers.
Consumers hate added fees. This will go the way of free shipping, and how consumers often walk away when online stores don’t offer it. Brands such as Amazon could think of better ways to absorb the cost of returns into the price of the products, rather than an added fee charged to the consumer. Why not make every item $1 more? That would cover this cost and then some.
Katie, what you suggest is what any reasonable business person would do. I suspect Amazon already does that. If they don’t, they are foolish.
Hmm, if that’s the case, then why the added fee?
Actually, there is no added fee unless there is an Amazon location closer and you pass it up. I suspect it is to encourage the drop-off at someplace one can buy more from Amazon (Whole Foods or Fresh).
To me that would mean careful, efficient shoppers paying for, or subsidizing, the sloppy, inefficient shopping habits of serial returners. Amazon’s approach here I find to be surgical and customer specific. And customers have a choice. One alternative is free, and the other alternative has a very reasonable, and fair, fee.
Consumers may be more likely to shift their habits rather than revolt against return fees. By keeping its own dropoff sites free and encouraging consumers to check product specs with care, Amazon shapes our habits.
It’s possible Amazon could hike fees among targeted consumers with a history of frequent returns, bracketing and attempts at returns fraud.
Amazon has a lot of leeway to add fees because their value proposition is so enticing. As others have said, expect others to pass along the costs and remember the business motto: There’s no such thing as a free lunch.
Absolutely, Bob. “There’s no such thing as a free lunch.” I am sure everything we buy from Amazon has a little bit in the price to cover “free returns.” It is part of the value proposition. We are all buying a “call” to return for free, even if we don’t take advantage of it.
Amazon has its own system for distribution, shipping, and returns. If a customer wants to go outside of its system for a return, then a small fee seems reasonable. Let’s see how this works out before we start predicting the end of free returns.
Whenever we have the “free returns” discussion, it sounds like Amazon is taking a big hit on the bottom line. Amazon is not stupid. The cost of returns is part of the pricing. It only appears free to the shopper. Who runs a business and, knowing that X percent will be spoiled, broken, or returned, has not included that cost in the pricing?
That doesn’t mean that the cost is an issue that should be ignored any more than any other cost. But “free returns” is part of the value proposition. It is as much of the product value as the price or quality.
Though consumers may not like return fees, it’s a part of the process and $1.50 is very nominal. This shouldn’t deter the masses from traveling further to find another location. However once this fee climbs over the $5 threshold, it becomes a whole different ball game.
While the “frequently returned” enhancement will be valued, this new charge will be less so. Understandably, it appears as these new charges will be for customer error, “where customers indicate that they changed their minds about a purchase or accidentally placed an order.” One of the advantages to still using UPS is the ability to return without any hassle (package, label, etc.). Plus, customers will still have other “free” return options. Therefore, it should not be a big deal.
Customers tend to bristle when retailers take away perks. That being said, I don’t expect many people to rebel over a $1.50 charge. It may, however, train shoppers to choose one of Amazon’s preferred destination return points instead.
It’s surprising that Amazon isn’t using the petabytes of data they collect to try and fix this issue on the front end. They should be able to identify the characteristics of serial returners and provide remedial action for them. They should also be able to identify the characteristics of shoppers who never return products and reward them for it.
I completely agree Navjit, but I’ve seen even the largest companies sometimes struggle with pulling together many different sources of data to uncover meaningful insights.
And likewise, they should know who the most valuable customers are and provide free returns versus those who spend little and return much more. While I don’t think this $1.50 will trigger a revolt, not treating better customers differently is an irritant.