Should You Charge for Returns Like Amazon?


Logistics innovations

Did you buy a blouse that does’t quite fit right? Perhaps the color of your new household accessory you bought online was just one shade off. No problem, just send them back. But wait… you may be asked to pay a return fee.

According to a recent article by CNN Business, Amazon is attempting new measures to get customers to return fewer of their online orders, including charging a fee to return items to UPS stores. This move by Amazon is likely to have a significant impact on the retail industry as a whole.

Charging customers for returns may make them feel like they are being punished for returning items they don’t want or need. However, it may also encourage them to think twice before making a purchase and ultimately reduce the number of returns retailers receive.

The $1 fee the company wants to impose will only apply if there is a Whole Foods, Amazon Fresh, or Kohl’s location nearby. While at first blush it may appear to be a move to drive traffic to their grocery stores, Kohl’s theoretically could be seen as a competitor. In this case, it appears Amazon is simply looking to lower their reverse logistics costs.

How Retailers Can Reduce Return Costs

According to a recent report by Optoro, retail product returns are expected to reach $1.3 trillion by 2023 in North America. This statistic highlights the importance of retailers taking steps to reduce the number of returns they receive.

Retailers can take several steps to reduce their product returns. One way is to provide detailed product descriptions and images that accurately represent the product. Another way is to offer customer service that is responsive and helpful in answering questions about products before they are purchased. Additionally, retailers can also consider offering incentives for customers who keep their purchases instead of returning them.

Customer service representative at her computer.

Great initial customer service is key to preventing returns.

But there will always be returns. And when the cost of shipping and processing a returned item is considered, often times the loss incurred far exceeds the product’s value itself. Therefore, retailers still need a way to reduce the logistics involved in accepting a returned item.

Part of the solution can be found in leveraging new technologies that manage the reverse logistics process. But more effective options include solutions that bring return options closer to the consumer while also lowering associated costs should be considered.

Smart Lockers as the Solution for Returns?

Smart lockers just might be the future of how products are returned. With their small footprint, smart lockers can be placed in public locations, commercial areas and residential buildings making them available for use within a very short distance of the consumer. And by moving returned items using optimized routes during off-peak hours, goods can be brought back for processing and aggregation cost-effectively.

Photo of a parcel being retrieved from a ParcelPort smart locker

Smart lockers offer low-cost, speedy convenience to retail customers

Smart lockers offer retailers a variety of opportunities to boost customer loyalty while simultaneously reducing logistics costs. Returns can be offered for free without needing to repackage or add a label, loyalty points can be awarded for utilizing a nearby smart locker, and product discounts can encourage smart locker use. All combine to form a formidable alternative to traditional courier logistics.

Instead of mailing products individually through the mail, smart lockers with their back-end logistics, can make returns not only less costly but a welcome alternative for customers. Couple smart lockers with the latest in pre-purchase technologies such as augmented reality and returns, and it just might be – dare I say – a pleasurable experience for everyone.