Retailers give customers refunds and tell them to keep items
Offering refunds without requiring the return is being adopted more broadly by retailers during the pandemic, according to a Wall Street Journal report.
In most cases, the cost of shipping the inexpensive or bulky item is seen as not worth the returned item.
The practice gained attention in 2017 when Amazon.com introduced “Returnless Refunds” as an option for sellers. At the time, Amazon said the feature was “highly requested” by sellers wanting to avoid time and cost of managing returns shipping and processing or for items that would be hard to resell. Processing returns can often range between 20 percent and 65 percent of the cost of goods sold, according to UPS.
A friendly return policy could boost the third-party merchant’s seller rating to earn more favorable search positioning on Amazon’s site. For Amazon, benefits included more uniform return policies across its platform and goodwill to drive Prime membership growth.
Walmart around the same time introduced a “Keep It” program for its marketplace sellers. Sellers gained the option to set price limits for items they want customers to keep. Walmart marketplace seller site states, “It may be more cost-effective to let customers both keep the item and get a refund.”
The Journal article noted that Target and Chewy also provide refunds for some items and tell customers to keep or donate the items.
Part of the reason for the increase in such refunds is that returns overall spiked over the holiday due to the acceleration in online spending during the pandemic and e-commerce’s higher return rate versus items bought in physical stores. Shoppers are also wary of returning items to physical stores.
But advances in artificial intelligence are making it possible to quickly ascertain the economic feasibility based on customers’ purchase history, the value of the unwanted items and the return processing cost. Amit Sharma, CEO of Narvar Inc., a reverse-logistics specialist, told the Journal, “We are getting so many inquiries about this that you will see it take off in coming months.”
- Amazon, Walmart Tell Consumers to Skip Returns of Unwanted Items – The Wall Street Journal
- Amazon’s new refunds policy will ‘crush’ small businesses, outraged sellers say – CNBC
- Don’t want to return that stuff? Keep it, Amazon says – DV Velocity
- Amazon’s New Returns Policy: What You Need to Know – Xsellco
- QuickStart Returns Configuration – Walmart Marketplace
- What if unwanted online purchases didn’t have to be returned? – RetailWire
- Which 2020 returns options will stick? – RetailWire
- Has COVID-19 exacerbated online return challenges? – RetailWire
DISCUSSION QUESTIONS: Does it make sense to offer refunds without requiring a return for certain items? How would you structure such a program to limit abuse?