Shifting Online Sales Policies
They're not nearly as customer-friendly as they used to be.
The Atlantic’s Amanda Mull has discovered the same thing many of us have: “The Free-Returns Party Is Over.”
If you’ve recently tried to return something you bought online, getting your money back might have gone a little bit differently than in the past. Maybe you received a store credit when you thought you were due a full refund. Maybe the retailer encouraged you to return your ill-fitting dress to one of their stores or, for reasons that are not at all clear, to your local Staples. Maybe encouraged isn’t a strong enough word, because dropping your return in the mail instead would have cost you $7.50, even though it used to be free.
I do most of my online shopping through Amazon and have noticed a gradual change. It used to be that, if I wanted to return something, UPS would pick it up for free. Gradually, the policy shifted and that became the case only for certain reasons supplied for the return. (I found that “Inaccurate website description” usually worked.) A few months ago, it became almost impossible to get free pickup, even if they sent the wrong item or the item arrived damaged. I either needed to drive the package to the nearest Kohl’s or pay a $7.50 pickup fee.
Apparently, it’s not just Amazon.
For regular people who return things here and there, these marginal policy changes can pose some perceptual challenges—is something changing, or did you just misremember your favorite stores’ rules? In all likelihood, it’s the former: Quietly, and largely unnoticed by many buyers, the returns landscape is shifting. All kinds of retailers have begun to tweak their policies: Kohl’s, the suburban mecca of affordably priced clothes and housewares, now charges for return shipping, as does REI, the yuppie mecca of camping and hiking gear. Neiman Marcus won’t charge you for shipping as long as the product is back in their hands within 15 days of when you received it, but after that, you’re out $10. Even Amazon has made some tiny adjustments in its famously returns-friendly policies, charging customers $1 for dropping off packages at a UPS store if they forgo drop-off at a Whole Foods or Amazon Fresh location closer to them.
In a 2022 analysis of 200 retailers’ return policies, the post-purchase-logistics company Narvar found that 41 percent charge some kind of return-shipping fee—up from 33 percent in 2021. Amit Sharma, Narvar’s CEO, told me that that number is still rising; now it’s more like 44 percent. And charging for returns is just one example of what he said are many trendy policy changes. The last time you tried to return something, maybe you didn’t succeed at all, because the fine print revealed that your deeply discounted, deeply uncomfortable shoes had been banished to the realm of the final sale.
It’s no mystery why stores want to make this change:
Returns are the intractable problem of online shopping. For nearly two decades, the expectation has been that customers can return anything that doesn’t spark joy, sometimes months after they bought it, no real reason required. This approach has been wildly successful for retailers, at least insofar as it has persuaded millions of people to buy clothing, shoes, furniture, and other fit- and taste-sensitive goods online. But it has also been a giant boondoggle, logistically and financially. Most kinds of brick-and-mortar stores have a return rate in the single digits, but for online purchases, the average is from 15 to 30 percent; for goods where the physical, tactile experience really matters, as much as half of sales might come back.
But it’s always been an expensive prospect that was chalked up as a cost of doing business. So, why now?
Internet retailers have been saber-rattling about the need to tighten up anything-goes return policies for years. Now they’ve found their chance. When everyone’s already hooked on online shopping, why let us return things for free?
The balance of power simply shifted. Amazon no longer gives a damn about my business because they’re pretty sure I’m coming back. And, ultimately, my wife or I will drop stuff off at the Kohl’s a couple times a month because it’s still remarkably more convenient to order from Amazon than it is to go to the store or postpone purchases.
Laissez-faire return policies became the norm because internet retailers wanted to shift the balance of power in the industry in their favor. Since the advent of online shopping, those retailers have bent over backwards to please consumers, sometimes at extraordinary cost to their own budget. At least initially, what they were selling was broadly unpopular. Americans once had a real aversion to buying most things online. Internet retailers had to convince millions of Americans that shopping in person, which by the 1990s many considered a social activity or a favorite pastime, was actually a hassle. They also had to overcome the distrust that many people felt toward what was then a novel technology. Buying something online sounded like a great way to get your credit card stolen.
To turn the tide of public opinion, online stores went about the work of highlighting their putative advantages—huge selections, low prices, no fight for parking on a busy Saturday—and eliminating as many perceived risks as possible. A major part of that effort was getting rid of fees: You wouldn’t be dinged a couple of bucks for the convenience of avoiding the mall, and you wouldn’t be dinged a few more if you decided you didn’t like your new stuff. For consumers, this was a gift of corporate-subsidized ease. According to one estimate, a single return can cost a retailer $10 to $20 before the price of transporting it back to the warehouse is even factored in. Nevertheless, absorbing this cost allowed for online financial transactions to mirror those available in physical stores, and companies that pioneered these policies, such as Amazon and Zappos, gobbled up sales from brick-and-mortar competitors, even if they lost money doing so.
This entrepreneurial bargain is at the foundation of many tech businesses launched in the past three decades: Losing money up front is fine if you’re using it to buy market share. For upstart retailers that could make the math work long enough, the gambit paid off—they scaled up, and their brick-and-mortar competitors have now mostly adopted their tactics online, sunk into irrelevance, or closed entirely. (RIP Bed Bath & Beyond.) Even the industry’s winners, however, eventually have had to control the bleed. They’ve tended to try to account for returns losses by cutting costs elsewhere: increasing automation, using cheaper materials, cutting wages and benefits.
Abandoning generous return policies themselves was long seen as untenable, according to Neil Saunders, the managing director of retail at the consulting firm GlobalData. “There was a reluctance, because it was like, Well, if we do this, and no one else does, it puts us at a disadvantage,” he told me. Smaller retailers were scared of losing sales to bigger retailers that were better able to absorb the cost of lax policies, especially Amazon. But then came the coronavirus pandemic. Return rates skyrocketed as supply shortages rippled through the consumer market and people began buying more kinds of things online and trying out unfamiliar retailers. Those return rates still haven’t gone back to their pre-pandemic levels, Saunders told me. He believes the scales have already tipped in favor of reeling them in with blunt action.
Convenience is always expensive for someone. For much of the internet era, the individual buyer hasn’t been footing the bill, but slowly, that has begun to change. Now if you don’t want to bear the brunt of convenience fees, you might be paying in legwork. For all the promise of online shopping, you could very well end up in a crowded parking lot on a Saturday with your return in hand anyway.
Part of this is a natural sorting. The online shopping era is now more than a quarter-century old. I do most of my shopping online at this point and have for years. Part of it is that consolidation has done what it always has: given firms monopsony power.
Of course, if you’re the producer/wholesaler of the products getting returned, you’re getting screwed by the policy. For years they got it in the neck for this and have been pushing hard against it. Ditto Fedex and other carriers whose carriers had to pick things up for “free”. Personally, the only things I ever bought from Amazon was books and dvds – the only time I ever asked for and got a refund was when something wasn’t delivered at all. I would never buy clothing or office furniture online because I want to see that stuff first before I hand over my card. So for me it’s never been a completely online shopping world.
Americans always take it hard when they have to adjust to something they’v gotten used to. I expect this to be no different but really, all anyone has to do is ask an old-timer how they used to buy things 30-40n years ago.
@Not the IT Dept.: I too prefer to touch, and when appropriate try on, something before buying. That seems to me largely sensible, but it’s also curmudgeonly habit. Langston week I bought a couple pair of bicycle shorts online. I tried Dick’s, Walmart, and Trek and could find only odds and ends not in my size. As online sales dominate local stores are reducing inventories in many items, leaving no choice but online.
@gVOR08: AI ain’t gonna take over the world. In @gVOR08: I fat fingered “Last”, watched spell check change it to “Langston”, (Langston?) retyped it, saw it as “Last week” and moved on. Now it’s “Langston” again.
The only Langston I know of is Langston Hughes.
And that’s why they burn large mountains of cash chasing market share off a cliff.
I do very little shopping online. Mostly ebooks and audiobooks. I’ve bought clothes online, usually cheap fast fashions. Most things fit and are ok, but if one or two don’t then it’s no big deal. Even with free returns, it was less bother to just write them off.
Somehow today’s discussion brings this to mind.
Normally, it’s a very bad idea to take things away from customers. I guess this is a “nobody’s going to notice” thing?
@Jay L Gischer:
“I guess this is a “nobody’s going to notice” thing?”
More of a “what can you do about it”, given Amazon’s market share.
There’s this bookstore called Powell’s that sells second-hand books. Before ebooks, and long before I had a smartphone or tablet, I found a lot of out of print titles I’d been looking in vain for years. Best of all, they offered free (ground) shipping to Mexico. I also bought some titles still in print, but which were cheaper second-hand.
Then the free shipping ended. I think by then I’d gotten all the hard to find books I wanted, and the shipping rates weren’t too dissimilar from what Amazon charged. I think I plain stopped ordering from Powell’s around then.
I suspect that some version of the 80/20 rule is in effect and that a large portion of the returns are generated by a much smaller subset of customers. That would greatly reduced the risk of losing a customer due to a change in policy and maybe that is a customer that the merchant wants to lose. Except for the smallest online businesses, they all are running customer value equations in the CRM.
Because Jeff Bezos is no longer CEO of Amazon.
He’s a weird motherfucker, with very firm obsessions, that permeated the entire business, whether they made good business sense or not (short or long term). This was both good and bad.
One of those obsessions was that a customer who has a positive interaction with customer service was going to stick. People are expecting misery and hassle, so if you make it easy you will lock them in as a customer. And they will tell their friends, so that will get you more customers.
These new policies wouldn’t have gotten anywhere with him still at the helm. I’m not trying to praise him, this just goes exactly opposite one of his overriding obsessions.
On the other hand, he found nifty technology more interesting than people in warehouses, leading to workers being reduced to meat robots. I remember several all-hands meetings where he would excitedly describe something that was basically a dystopian nightmare.
Well, that’s a very solid explanation right there. I think he was right about customer service, by the way.
@Jay L Gischer:
Customer service can go a long way. But, IMO, it comes after price and convenience.
I honestly don’t think much about the ability and cost of returning something when I consider an online purchase. I focus more on how much it costs, and when it will get here.
@Kathy: Of course you don’t think about those things. You won’t until something goes wrong. And if they do a bad job at fixing the problem, it will stick with you for a long time. For instance, I am never, never, ever going to get another appliance from Lowes, because they did such a terrible job of taking care of me after they tried to deliver a dented washing machine to me. Multiple store trips, and much more, and finally I had to cancel, get my money back, and buy it from someone else.
That will stick with me for a lifetime. I had another friend go through much the same thing. With the same company. I’m sure their CEO has his patter down about why his way is better. Maybe it doesn’t happen enough to justify paying for better customer service. Of course, I don’t give a crap about that. I just know I’ll never go back.
@Gustopher: I didn’t know Bezos was no longer CEO. Per WIKI
Late ’21 would seem to line up with when WAPO started to go perceptibly more rightward. These days they seem obsessed with pushing that Biden should compromise with the House GOPs on the debt ceiling. I wonder if Bezos’ taxes are behind that.
@Jay L Gischer: Sorry to hear you had trouble with Lowes. I returned a dented microwave last year with no problems. Hope there hasn’t been a change in policy. Also a year old water heater (woke up one morning and my garage was a sauna), but I had an RGA from the manufacturer.
I tend to avoid Home Depot because their CEO contributes to the Kochtopus. Unfortunately, they occasionally have something Lowes doesn’t. Some of that is hangover from the past CEO several years ago who cut costs by not lighting and cleaning the stores. They’re better now, but still, I like to keep my money away from Chuckles Koch.
Hmm… Ya think? (Tho, I’m not sure I see the connection. 🙁 )
@Jay L Gischer:
The one thing I can recall that went wrong was delivery of my TV late in 2021. a chat with Walmart’s service, or maybe a bot(?), ended with the TV being delivered a few days later.
I may have related before a good experience I had with the late Interjet’s customer service once, many years ago. This did not prevent me from booking Volaris once for a vacation, when it offered a much better price.
There are some restaurants I’ve never been back to due to one terrible service experience. But with restaurants price can be a reasonable secondary consideration.
If I can buy it local from an independent store, I buy it there. I actually enjoy making a pleasant, mutually beneficial exchange. I’ll chat with the clerk. I very much enjoy and prefer a vibrant local economy where the profit goes to locals.
If I can’t buy it there, I will go to a chain specialty store. If I can’t get it there I will go to a big box store. I’ll buy from Target, but not Walmart. That’s just bias, unsupported. Target was the knockoff version of Dayton’s which was the predominant department store where I grew up. I believe I have been in a Walmart 3 times and every time I was the tag along guy not there under my own desire. I just go to Target, always have; no ding on Walmart – I lack the experience to compare. I have a BestBuy bias too.
When I can go to a physical store and get what I need / want, I go there.
On-line is my last choice and limited almost exclusively for things I cannot buy locally.
That might be an age thing and is definitely also an inherent preference towards local shopping. I lack the insight to untie that knot.
Going to Target is a spending spree disaster in the making. You go in with a plan or a list for three things and inevitably end up with eighteen. “That’s pretty cool! I want that.”
One time I was dumb enough to walk there thinking I could stick by my list. I could not: had to call a taxi to get home with my haul. Lesson learned.
The biggest downside for on-line shopping is returns. I’ve only had to do that a handful of times, but my lord, is that a pain the butt. It is such a [bleeping] hassle!
@Sleeping Dog: My FIL will order 6-7 different versions of the same thing in sizes and cuts, esp shoes. He will then free return all but 1. He’s def. a power shopper, so they make a return on him. But he could also 100% afford to ship things himself and not notice it.
I have a few locations nearby (like Whole Foods) where I can easily return Amazon deliveries -but I don’t, not worth the hassle.
An Amazon return “bin store” recently opened near me, saw the ads on Facebook. What a weird collection of stuff. I go on $5 and $3 days, not the $12 day (usually resellers). I recently picked up some $20 moth traps for the closet, and a LED picture light (goes over a painting, retail $200). This is where many of those those returns go. Treasure hunt. I also realize this too shall change in a moving market. The store near me is run by a Middle Eastern immigrant with a Scottish accent.
FYI… Walmart still has generous return policies.
As we have an AmEx Platinum card, that gives you free Walmart+ membership, and with that free grocery deliveries.
This has saved us so much time and money, as we no longer have to walk the isles for the basic consumables, nor drive to the location. A $5.00 tip for the delivery person covers the hassle.
If something is selected that is subpar, a refund is started online and in most cases the return is not even required.
Target is still a good retail store.
But Kohl’s days are numbered. I went there looking for a dress shirt. The shirts and suit jackets were of such extremely poor quality that I left, appalled, and went to Brooks Brothers (at the local outlet mall).
Sure, if you have a great Kohl’s coupon, plus catch a sale, then that Cusinart mixer becomes affordable… but that is a once-and-done thing and not a sustainable business model.
They are the next big one to go down.
In international trade, there’s the analog of “dumping” as their version of loss leader. (Dumping is a term used in the context of international trade. It’s when a country or company exports a product at a price that is lower in the foreign importing market than the price in the exporter’s domestic market. Because dumping typically involves substantial export volumes of a product, it often endangers the financial viability of the product’s manufacturer or producer in the importing nation.)
So far it seems, loss leaders to destroy market competition with long term competitive environment sustainability has been completely acceptable. Consumers get short term benefit and get screwed longer term with a LOT of collateral damage (loss of jobs, poorer working conditions, etc.).