Merchants usually suffer a post-holiday shopping hangover from handling returned items. Online retailers have it worse. Around 30% of online purchases are typically returned after Christmas.
This season’s e-commerce sales set new volume records, so merchants face an avalanche of returns. Some online retailers, such as Amazon, Target, and Walmart, are telling certain customers to keep or donate their unwanted merchandise, in addition to giving them a refund. That’s because shipping and handling costs can outweigh the product price. Looks like some consumers will be receiving a New Year’s bonus.
The following excerpt from a Wall St. Journal article reports more on the topic:
Retailers have a new message for consumers looking to return an item: Keep it. Amazon.com Inc., Walmart, and other companies are using artificial intelligence to decide whether it makes economic sense to process a return. For inexpensive items or large ones that would incur hefty shipping fees, it is often cheaper to refund the purchase price and let customers keep the products.
The relatively new approach, popularized by Amazon and a few other chains, is being adopted more broadly during the Covid-19 pandemic, as a surge in online shopping forces companies to rethink how they handle returns. “We are getting so many inquiries about this that you will see it take off in coming months,” said Amit Sharma, chief executive of Narvar Inc., which processes returns for retailers.
A Target Corp. spokeswoman said the retailer gives customers refunds and encourages them to donate or keep the item in a small number of cases in which the company deems that option is easier than returning the purchase.
Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group