Kohl’s to accept product returns for Amazon

Discussion
Photo: Kohl's
Sep 20, 2017
Matthew Stern

Only a few weeks ago, retail experts were discussing whether Kohl’s was letting a Trojan Horse in through the front door by opening Amazon.com smart home experience shops within 10 of its stores in Chicago and Los Angeles. Now, Kohl’s is making another move that appears to indicate an even tighter bond with Amazon.

Beginning next month, Kohl’s will accept returns for items purchased from the e-tailer in 82 of its stores in the Chicagoland and LA markets. The chain believes that the Amazon partnership could bring back foot traffic by giving Amazon e-commerce customers a reason to visit Kohl’s.

Amazon customers will be able to return items to Kohl’s regardless of the reason and whether or not they are packed for shipping. Participating locations, which will offer designated parking spots for customers making returns to Amazon, will pack and transport items to the e-tailer’s return centers.

“This is a great example of how Kohl’s and Amazon are leveraging each other’s strengths — the power of Kohl’s store portfolio and omnichannel capabilities combined with the power of Amazon’s reach and loyal customer base,” said Richard Schepp, Kohl’s chief administrative officer, in a statement.

The move comes after Amazon’s highly-publicized entry into the brick-and-mortar grocery space through the recent acquisition of Whole Foods. Since the acquisition, Whole Foods has implemented a policy of accepting Amazon.com returns in its 400 stores. This has led to some speculation that Amazon has its sights set on acquiring Kohl’s, as well.

It is not clear from statements made by the companies if Amazon will install its own employees at Kohl’s locations to pack the returns or if Kohl’s employees will be used.

Amazon has partnered with other retailers in the past in ways that create a brick-and-mortar front end for its online operations. Beginning in 2011, for instance, Amazon has made Amazon Lockers available at some 7-Eleven stores, so that e-commerce customers who can’t easily receive home deliveries can still shop on Amazon.

DISCUSSION QUESTIONS: What does Kohl’s hope to gain in the long-term from its bond with Amazon? How far should Kohl’s go in aligning itself with Amazon, and what would be too far?

Braintrust
"It’s too early to say for sure of course, but it sure looks like Kohl’s is doing the dry goods version of the Whole Foods Waltz. "
"Without payroll support from Amazon, this could be a heavy lift."
"Ultra-smart move by Kohl’s. Returns consolidation makes a lot of sense and bringing people to stores has always been a good idea."

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28 Comments on "Kohl’s to accept product returns for Amazon"


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Charles Dimov
BrainTrust

Any doubts about the power of omnichannel retail just evaporated completely!
Very powerful move for Amazon — leverage the fact that consumers prefer to return items in-store. It will also work out to be less costly for Amazon, rather than having items returned via mail/courier. For Kohl’s this is a big win because 66 percent of shoppers returning items will purchase other items while they are in-store (UPS 2017). New sales — cha-ching!
This paradigm shift of letting the big gorilla into the store might work out for Kohl’s. As speculated above, it is hard NOT to think that this is a setup maneuver for Kohl’s to sell itself to Amazon. Interesting times.

Paula Rosenblum
BrainTrust

The article said it … “foot traffic.” Do I think it’s a good idea? Nope. Not unless Kohl’s is hoping to become part of Amazon, which I don’t see happening.

Sterling Hawkins
BrainTrust

Good idea for Amazon. I’m with Paula here, not so much for Kohl’s unless there’s an acquisition in the works. And that’s a long-shot at best. Effectively letting your largest competitor in the front door isn’t worth the long-term detriment for any short-term gain.

Adrian Weidmann
BrainTrust

Another disruptive wrinkle in retail strategy. Every strategy and its tactile implementation has validity until it is proven otherwise. Accepting and facilitating returns (presumably for a fee?!) in an attempt to increase traffic to, and through, the store may be a very effective strategy. Kohl’s will need to understand the shopper’s journey through their store and make certain that they create a planogram and experiences that politely interrupt the shopper journey — in this case, returning goods purchased on Amazon.

Cathy Hotka
BrainTrust

And so it begins.

The key line in this story is “whether or not they are packed for shipping.” Imagine customers bringing in snow skis, full-length mirrors, lamps and other size-intensive merchandise without packaging for return to Amazon. They will, of course, and this interesting partnership enters its next stage. The implications for store operations people are daunting. This is going to be interesting to watch.

Doug Garnett
BrainTrust
Doug Garnett
President, Protonik
7 months 5 days ago

I thoroughly agree. My son works in retail – a store that takes returns from several websites. It’s an incredible mess.

Ben Ball
BrainTrust

It’s too early to say for sure of course, but it sure looks like Kohl’s is doing the dry goods version of the Whole Foods Waltz.

Kohl’s has always been a very solid retailer. They have enough locations to make a tie-in viable for Amazon as a leap into brick-and-mortar dry goods.

Tony Orlando
BrainTrust

There is a small chance of this working in Kohl’s favor but, hey, retailers are desperate and Amazon knows this. I see more desperate moves coming as stores follow to the abyss of retail failure. I like Kohl’s but this, for me anyways, is like giving up.

Ken Lonyai
BrainTrust

I have to agree with Tony and agree with Cathy’s point about return packaging. If — big IF — they believe or know that they are in line for an Amazon acquisition, this acquiescing is a reasonable move. If not, it feels like cowering to the alpha dog.

From Amazon’s perspective, if they are not considering buying Kohl’s this is the stuff of ego building around the water cooler. I’ve written about the danger of stores selling Alexa and have critiqued Kohl’s for it, so I agree with you about them being “desperate” and “giving up” unless they are to be the next Whole Foods.

Chris Petersen, PhD.
BrainTrust

In the very near future a “store” will not just be a destination to stack products to sell at cash registers. Customers are demanding a seamless experience before, during and after the sale. Whether the Kohl’s/Amazon partnership is exactly the right model is yet to be determined. But it is a great experiment in making the “store” a focal point and hub of integrated customer experience and service. Given Amazon’s current track record and trajectory, Kohl’s certainly chose one of the most innovative partners driving retail transformation.

Max Goldberg
BrainTrust

Kohl’s wants to gain foot traffic and sales from consumers making Amazon returns. The hope is that once people are in the store they will see and purchase items they like. I wonder how many people will want to take the time to drive to Kohl’s to make an Amazon return when they can simply print out a mailing label and easily drop the item at any UPS location.

Art Suriano
BrainTrust

I think Kohl’s is looking at this as, as it said, an opportunity to bring in traffic. It’s a good idea on the surface, but we’re not privy to the backroom conversations and it is possible that in the future Amazon may attempt to acquire Kohl’s. Amazon is extremely unpredictable, so anything is possible. However, for now, this program should bring in more customers to Kohl’s — both existing and new customers. While in the stores the customers will have an opportunity to shop and make additional purchases. Of course that will depend on how well Kohl’s can “wow” these customers once in their stores. Lately, many of Kohl’s stores have been lacking a good customer experience due to poor customer service. This is something Kohl’s needs to look at hard and fast. But if the program with Amazon is successful, I would expect to see additional Kohl’s and Amazon partnering. How far that goes, only time will tell.

Steve Montgomery
BrainTrust

Kohl’s is trying to gain foot traffic. They are gaining, but it is Amazon’s feet. This is a further example of Amazon’s “foot in the door” strategy. The next step would be, “hey, this worked, let’s let Amazon customers pick up their orders here.” Kohl’s should remember the Native American legend about the little boy and the snake.

Dick Seesel
BrainTrust

Omnichannel initiatives like BOPIS already put strain on existing store operations, as panelists just discussed in the context of holiday hiring. So Kohl’s ability to process Amazon returns (even unpackaged ones) without affecting their other operating standards will be something to watch. Without payroll support from Amazon, this could be a heavy lift.

As to who comes out ahead in this collaboration, I understand that this will drive even more traffic to Kohl’s stores. (And here is my usual disclosure that I worked there from 1982 to 2006.) But Amazon picks up as many as 1,100 more brick-and-mortar locations (if it rolls this out chain-wide), with the eventual ability to add pickup lockers and even an ordering kiosk if they play their cards right. So it looks like Amazon is the biggest potential winner in this deal.

Meaghan Brophy
BrainTrust

I’m having a hard time finding the upside of this for Kohl’s. Logistics of these returns will be a nightmare. I’m betting on a Kohl’s acquisition by Amazon in the works.

Shep Hyken
BrainTrust

This shows that the traditional store is not becoming obsolete. Amazon is continuing to connect and align with traditional retailers — Whole Foods and now Kohl’s — proving that the in-store experience is important. For Kohl’s, more foot traffic in stores translates to sales. And anytime someone is in a store there is always the opportunity to win them over as a repeat/loyal customer. I’m not sure of the financial arrangements that Amazon and Kohl’s have agreed to, but it looks like it’s good for both parties — and the consumer. That’s a “triple win.”

Peter Charness
BrainTrust

Imagine the loyal Kohl’s customer waiting in a long line at the customer service desk behind all the Amazon shoppers … Amazon shoppers who for the most part don’t want to wait in line at all, and are used to that online experience.

Doug Garnett
BrainTrust
Doug Garnett
President, Protonik
7 months 5 days ago

In my blog post following up the Amazon purchase of Whole Foods I observed that the insurgent leader (Amazon) had just taken its army across the field to join what’s left of the enemy (physical retail).

It’s inevitable — the economics are against a pure play e-commerce strategy for Amazon and their only way to win from here (not like they’ve done bad up to this point :-)) is brick-and-mortar.

But Kohl’s? The Kohl’s brand image is far different from what Amazon portrays in the cleanliness of their online store. It’s possible that this is one of the weakest brand matches (short of doing this deal with Ross or a dollar store) I could have suggested.

It will be interesting to see what happens now that Amazon’s embracing of brick-and-mortar is increasing in speed.

Neil Saunders
BrainTrust

If it drives customer traffic into Kohl’s stores it is a good thing. This is assuming Kohl’s is not left out-of-pocket for the service it is providing.

This agnostic approach to retail — i.e. looking for sensible opportunities and partnerships, rather than seeing everything in über-competitive terms — is gaining ground.

Brian Kelly
Guest
7 months 5 days ago
Traffic. Prime members who typically do not shop at Kohl’s. It is customer acquisition to build Kohl’s base. I suspect that Kohl’s recent customer loyalty program has provided insights that it now is attempting to capitalize upon. My sense is that Prime members (higher HHIs) are under-represented among Kohl’s shoppers. If this is the case, and IF Kohl’s can flawlessly execute the strategy without any negative impact upon its selling model/store experience (people plus place), then Kohl’s should be able to build its database. It then will have to convert those consumers into Kohl’s shoppers. This is way early days. We really don’t know Amazon’s apparel play as it seems to be a work in progress. Kohl’s shoppers (lower HHIs) are attractive to Amazon for building its database and then altering its selling model. Therein lies the rub. “If you can’t beat them join them” seems to be catching on. Shrewd retailers need to test their way in with eyes wide open and a firm hand on the KPIs. Too far? Well I guess that… Read more »
Mohamed Amer
BrainTrust

Short-term this will generate gains in increased foot-traffic (incremental or increased repeat visits) by Amazon Prime members whose profile are similar to Kohl’s typical customer. Longer-term, I believe Kohl’s is addressing future uncertainty by building various partnerships with Amazon as the company pursues options in a digital future.

As long as Kohl’s derives tangible value from its alignment with Amazon, it will continue on its current path of limited testing and learning with some deliberate and selective roll-outs across a region or entire chain. What would be too far? If the arrangement with Amazon becomes so one-sided that incremental value only accrues to Amazon. Another would be if Kohl’s finds that its decision horizon has become more restricted due to the Amazon relationship.

Ricardo Belmar
BrainTrust
Just to prove that Amazon is still thinking outside the box (as if we doubted that) yet another partnership with Kohl’s appears! While this may lead to foot traffic gains for Kohl’s, this really looks like a big win for Amazon. Ask yourself what the customer pain point is that is being alleviated here — it’s merchandise returns. No one likes to deal with this friction-laden activity. But wait! Now there’s an easy answer to this — just take your Amazon return to Kohl’s and they’ll process it for you! Friction removed! Where is the friction point Kohl’s shoppers experience that is being removed? I don’t see one. It would be interesting to understand the following points to better evaluate this announcement: Just how much of the returns processing will Kohl’s do? Does the Amazon customer give a Kohl’s customer service associate their Amazon account info (or login through a POS screen) and then Kohl’s handles ALL of the processing, not just physical packaging? Or does the customer need to bring their printed return label… Read more »
Dan Raftery
BrainTrust

Ultra-smart move by Kohl’s. Returns consolidation makes a lot of sense and bringing people to stores has always been a good idea. However, this is not the first time that a shipping desk has been installed in stores.

Learnings from the past include, and are not limited to: how quickly competitors jump on the train; service level in the store and operational economics.

Amazon has the ability to influence all three. So it comes down to how much Amazon will do to make this work.

William Hogben
BrainTrust

Kohl’s is guaranteeing themselves a baseline of traffic. It’s unclear how Amazon could use this against them, as most Amazon returns customers are likely new to Kohl’s.

Craig Sundstrom
Guest

I half agree with Mr. Schepp. It’s a great example of Amazon leveraging its strength.

I “get” what Kohl’s is trying to do, I just don’t agree with it. In the spectrum between “innovative” and “desperate,” this has the latter written all over it.

Frank Poole
Guest
7 months 4 days ago

Kohl’s no doubt sees this as thinking outside the box: a bold, innovative move. The problem, I suspect, is that Amazon sees this as nothing more than 1100 parking lots within which to place their return stations.

I wonder if this will turn into (another) race to the bottom for retailers, each scrambling to get a slice of Amazon’s pie.

Kiri Masters
BrainTrust

By aligning further with Amazon, it seems Kohl’s is attempting to attract Amazon’s upper-income demographic into its stores. The logic is that this new traffic could translate into new customers for Kohl’s. It’s a big bet, but big bets need to be taken at this stage so Kohl’s can stay relevant.

Julie Bernard
BrainTrust

At the heart of the Amazon and Kohl’s returns plan is an opportunity to convert Amazon-returns customers into Kohl’s purchasers. We know, thanks to years of industrywide retailer research, that the value of returns-customers’ store visits amounts to as much as three times the value of a non-returns visit. Returns customers spend more on a per-customer-dollar basis, they buy more units, and they go to physical retail locations more often.

Here’s where the opportunity lies: data tells us that returns customers make a purchase during the return-related store visit some 50% of the time. If a brand can push that purchase rate up to, say, 60%, then that increase is driving a legitimate lift in comparable store sales.

So, in this case, even though the return is from Amazon, Kohl’s has an opportunity to grow their own sales when and if they are able to convert that returns customers to a Kohl’s purchaser.

wpDiscuz
Braintrust
"It’s too early to say for sure of course, but it sure looks like Kohl’s is doing the dry goods version of the Whole Foods Waltz. "
"Without payroll support from Amazon, this could be a heavy lift."
"Ultra-smart move by Kohl’s. Returns consolidation makes a lot of sense and bringing people to stores has always been a good idea."

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