DC Velocity - August 2017

newsworthy

AMAZON.COM INC. HAS INSTITUTED A PROgram allowing customers buying from the company’s stable of third-party merchants to obtain refunds on orders they don’t want, while still keeping the product they ordered.

The program, known as “returnless refunds,” will be optional for merchants, Amazon said in an e-mail sent Aug. 1. If the merchant agrees, a refund will be automatically issued without the consumer’s being required to return the item. The program goes into effect Oct. 2.

In the memo, Seattle-based Amazon said the program was instituted at the request of sellers because it would spare them the time and cost of managing returns shipping and processing. It could also spur consumers to do future business with a merchant if they can avoid the expense and inconvenience of returning an unwanted product.

Merchants that sell and fulfill on Amazon are rated on a variety of metrics, including customer satisfaction with the returns process. A merchant with a high rating generally gets more favorable search positioning on Amazon’s site.

The program may get a mixed response from the merchants that use the company’s “Fulfillment by Amazon” service to market, fulfill, and deliver their products. (Amazon charges merchants 15 percent of the selling price as its fee.) Merchants generally set their own return shipping policies, and some require their customers to pay for shipping unless the returned product is defective.

Small to mid-sized merchants that must offer free
forward shipping as a condition of working with
Amazon often find it economically untenable to give
away shipping services for returns. At the same time,
it may be a hardship for merchants to refund the price
of an item and never get the product back.

One merchant that occasionally uses Amazon assesses shipping charges on all returns except for defective items. The merchant, which asked not to be identified, said it cannot afford to offer free return shipping and would object to losing a returned item that could not be remarketed and redistributed.

BIG BUSINESS

Product returns, and the reverse logistics engineering required to support an efficient flow of returns, have become big business in the e-commerce era. According to the Reverse Logistics Association, the e-commerce returns rate is between 18 and 25 percent, roughly three times that of brick-and-mortar stores. Returns tend to run particularly high for online clothing and shoe purchases because a customer might order several different sizes to assure a fit and then return all but one.

Not surprisingly, return volumes spike during the holiday season. According to Atlanta-based UPS Inc., holiday shoppers returned more than 5. 8 million packages via UPS during the first week of January 2017, including 1. 3 million packages on Jan. 5 alone.