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Will Amazon’s Warning About ‘Frequently Returned’ Items Make It More Popular Than Ever?

Amazon.com may have devised a partial solution to curb the amount of product returns it receives. The online giant has begun labeling products as “frequently returned” and advising shoppers to check item details and customer reviews before purchasing.

The news, first reported on earlier this week by The Information, comes at a time when retailers are looking for ways to reduce returns and boost their profit margins. Returns were a key topic of discussion at Shoptalk 2023, held this week in Las Vegas.

USA Today reports that Amazon uses the same methodology for its products and those sold by marketplace sellers in evaluating the return rates of products before they are flagged.

“We’re always innovating on behalf of customers to improve the shopping experience,” Amazon spokesperson Betsy Harden said in an email to media outlets. “We’re currently showing return rate information on some product detail pages to help our customers make more informed purchase decisions.”

Engadget speculates that Amazon is using the badges to pressure manufacturers and third-party sellers to address product shortcomings that lead to returns. Some marketplace sellers, however, say that the rates of return for goods sold on Amazon are higher than on other sites. They point to Amazon’s easy checkout, fast delivery and customer-friendly return process as promoting higher return levels.

Return rates across the retail industry soared with the start of the novel coronavirus pandemic with Americans ordering a greater percentage of the products they purchase from Amazon and other online sites.

Those rates have begun trending downward as concerns about COVID-19 have flagged and shoppers have done more of their shopping in stores.

Insider Intelligence forecasts a significant drop in online return rates in the future. Its research shows online return rates fell from 21.7 percent in 2021 to 18.2 percent this year. Return rates are expected to continue declining year after year to reach 14.7 percent in 2026.

Wendy Louie-Lam, forecasting analyst at Insider Intelligence, says that the return to stores is only part of the reason that return rates are coming down.

“The other reason is retailers are implementing new policies or AI tech to minimize returns,” Ms. Louie-Lam said. “Many online apparel retailers have implemented or are planning to implement new AI technology that should help with sizing to eliminate bracketing (people buying more than one size). Also, some online retailers are charging for returns.”

BrainTrust

"These badges will shift shopper habits by inspiring consumers to pay closer attention to product specs."

Lisa Goller

B2B Content Strategist


"This is a terrific enhancement of the Amazon/shopper interface. Until now, customers had to negotiate pages of customer reviews to ascertain the quality of a product."

Richard J. George, Ph.D.

Professor of Food Marketing, Haub School of Business, Saint Joseph's University


"Hopefully Amazon gives suppliers notice and a window for remedying any issues. Otherwise, why wouldn’t Amazon simply delist these problem items?"

Carol Spieckerman

President, Spieckerman Retail


Discussion Questions

DISCUSSION QUESTIONS: Will Amazon’s “frequently returned” badges reduce its return rates? How will this system affect Amazon’s relationships with its own suppliers and third-party merchants selling on its marketplace?

Poll

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Neil Saunders
Famed Member
11 months ago

This is a good idea as it will hopefully prompt customers to explore item details more closely. It also acts as a massive disincentive to sellers as I am sure a “frequently returned” badge will dissuade some people from buying. That should nudge them into remedying any issues. All that said, the one thing that concerns me slightly is the array of information Amazon is now providing on the site: it is becoming more and more cluttered and complex to navigate.

Mark Ryski
Noble Member
11 months ago

This makes good sense that will benefit customers, Amazon and the environment. The message “frequently returned” is a proper yellow flag warning for consumers that there is an issue with the product. And while some suppliers may be put off by this, they should instead be grateful to get the feedback. If the suppliers’ products are frequently returned, then there is a problem. Frankly, Amazon should simply blacklist products that are too frequently returned. While this initiative doesn’t represent a significant change in the world of returns, every little bit helps.

Georganne Bender
Noble Member
11 months ago

Let’s look at this from a consumer’s point of view. A frequently returned badge on apparel will warn shoppers that the item is either of poor quality or runs too small or too large.

The frequently returned badge on those items would cause me to either skip them altogether or order multiple sizes. And if everyone orders multiple sizes then Amazon will be in the same place it started. Maybe even worse.

Jasmine Glasheen
Reply to  Georganne Bender
11 months ago

I’m with Bender on this one. Looking at it from a seller’s point of view, why would I choose to list products on an online marketplace that’s actively discouraging customers from buying them? If Amazon adds a “frequently returned” label, they’ll need to explain why those returns happened.

What’s funny here is, had sellers not figured out how to hack the product reviews on Amazon — offering free product for reviews, hiring bot teams, and working with micro-influencer platforms like Stack to incentivize positive write ups — this wouldn’t be necessary. Actual customer comments alone would be enough to let us know what to expect from a product. In the immortal words of The Who, “Meet the new boss, same as the old boss.”

Georganne Bender
Noble Member
Reply to  Jasmine Glasheen
11 months ago

“Meet the new boss, same as the old boss.” Happens a lot, doesn’t it?

Bob Amster
Trusted Member
11 months ago

Amazon’s focus on this decision is clearly the consumer. The indirect consequence (intended, I am sure) is to reduce having to process as many returns as in the past. The impact on the retailers and manufacturers that sell through the Amazon Marketplace is not so predictable. It will be an interesting case to follow over the next year or so, and I am sure that Amazon will keep actionable statistics on how sales of the “flagged” products will be affected and on the behavior by the sellers. The choices are: do nothing, improve those products, remove those products, leave Amazon.

David Naumann
Active Member
Reply to  Bob Amster
11 months ago

Good points Bob. While the “frequently returned” badges will help customers make better informed decisions, the real reason is to reduce the cost of returns. It will cause some shoppers to switch to another seller (probably on Amazon Marketplace) so it shouldn’t negatively impact Amazon’s revenues.

Ken Morris
Trusted Member
11 months ago

You know the returns rate is hurting business when Amazon is willing to give “don’t buy this” signals to shoppers. Returns are a big problem for everyone, and any technique to slow them is a smart move. During the pandemic, even if you did shop in-store, changing rooms were closed and bracketing at store level was a thing. It’s still a problem, especially online. User Generated Content (UGC) leveraging doppelgänger-like influencers is another way to combat this growing problem, as return rates continue to plague the marketplace. 

Amazon’s “frequently returned item” label is also a good example of using big data to affect the bottom line, even if it hurts the top line a bit. It’s yet another way for retailers to fight returns–in addition to RFID, serialized inventory, limits and minimums, etc. Now they have caution signs to hang on repeat-offender SKUs.

John Lietsch
Active Member
11 months ago

If we assume that a high percentage of returns are caused by improper or insufficient information then Amazon’s “frequently returned” badges should reduce return rates in those cases. However returns based on consumer behavior directly or indirectly encouraged by Amazon’s easy-to-use orientation will not be affected by the badges without a consequence such as a return fee. I don’t expect the Amazon badges will affect Amazon’s relationship long term because of Amazon’s size and market dominance and because many people already read reviews to gather information which in many cases helps reduce returns. In other words, retailers have a return problem and blaming Amazon’s easy of use, while a likely contributor, is not the only contributor.

Lisa Goller
Trusted Member
11 months ago

These badges will shift shopper habits by inspiring consumers to pay closer attention to product specs.

Companies affected by badges will feel both pressured and motivated to re-examine their processes to minimize returns.

Cathy Hotka
Trusted Member
11 months ago

The best way to reduce returns is to prevent them. This is a great idea!

David Spear
Active Member
11 months ago

I like this idea. Any tip or insight that a retailer can give to a consumer about a particular item is extremely helpful and should boost the overall experience. I always look at product specs and reviews but not everyone does, so these spotlights should help drive down returns and, due to Amazon’s scale, even a half point drop in returns equates to millions in savings.

Carol Spieckerman
Active Member
11 months ago

Woe to the supplier that receives the scarlet R! Hopefully Amazon gives suppliers notice and a window for remedying any issues. Otherwise, why wouldn’t Amazon simply delist these problem items?

Katie Thomas
11 months ago

This initiative is a business decision trying to be couched as a consumer benefit. While helpful to the consumer in theory, the primary motivation is to reduce Amazon’s cost of returns. I’ll be curious to see if “frequently returned” is even useful — how will it tie to what is already seen in the comments, questions, and reviews? Will there really be 4+ star products labeled frequently returned?

Doug Garnett
Active Member
11 months ago

“Amazon’s easy checkout, fast delivery and customer-friendly return process as promoting higher return levels.”

The sellers making these observations are absolutely correct. Some days (most?) Amazon appears truly clueless about people and why they buy.

Scott Norris
Active Member
Reply to  Doug Garnett
11 months ago

I see far, far higher rates of returns and refused delivery with Amazon listings vs. our own direct-to-consumer business for the same products. And we don’t have an issue with ratings — it really does look like Amazon makes it so easy for the shopper to get credit, that factors like over-ordering and not reading the product descriptions before hitting the buy button are dare I say encouraged?

Brandon Rael
Active Member
11 months ago

Trust and transparency are core tenets of any relationship between a retailer or, in this case, Amazon and the customer. The discovery process on Amazon and competing e-commerce platforms entail customers typically heading toward product reviews. While there are some extreme biases in the review process, providing visibility to frequently returned items will be a crucial differentiator for Amazon.

This level of transparency will incentivize consumers to be more conscious about their decision-making process, to review the product specs, and potentially look into competitors’ products. From a retailer or brand perspective, if you somehow get a “frequently returned badge,” this is a recognition you would want to mitigate quickly as it implies your products are inferior and low quality. Similar to negative Uber ratings, consumers will gravitate toward those products without the badge and with solid reviews.

Patricia Vekich Waldron
Active Member
11 months ago

It would be interesting, for customers and suppliers, to know why items are frequently returned.

Craig Sundstrom
Craig Sundstrom
Noble Member
Reply to  Patricia Vekich Waldron
11 months ago

Absolutely! and tho the article doesn’t seem to go into detail about how the “badges” are awarded, I would think there’d be wildly different determinations if it’s absolute number of returns vs. percentage of sales; and what about peer rankings? (some categories of items are just going to be returned more than others.).

Richard J. George, Ph.D.
Active Member
11 months ago

This is a terrific enhancement of the Amazon/shopper interface. Until now, customers had to negotiate pages of customer reviews to ascertain the qualtiy of a product. However, Amazon lists a variety of non-product performance reasons for returning a product, e.g., bought by mistake, arrived too late, no longer needed, etc. For this warning to work efficiently, Amazon will need to convey the reason for the returned item. If done properly this represents another link in the Amazon/customer relationship.

Craig Sundstrom
Craig Sundstrom
Noble Member
11 months ago

As Amazon loves to experiment – and of course also loves telling us about it – a lot of its ideas go nowhere. I think this may be an example.

Shep Hyken
Active Member
11 months ago

This is as powerful as a review. That simple. If people see that it is frequently returned, game over. This will up the quality of products and descriptions. It puts suppliers and third-party merchants on notice. Bottom line: It is great for the consumer.

Mohamed Amer, PhD
Mohamed Amer, PhD
Active Member
11 months ago

Any additional tools that consumers can use to refine sizing, color, material, and so on will be welcomed. Consumers, in general, don’t get enjoyment out of buying and returning items. It’s a hassle for all and ties up valuable resources (time and money). A “Frequently Returned” tag will make for better consumer purchase decisions and will help the sellers and manufacturers to improve the products and descriptions.