Amazon.com Inc.(NASDAQ: AMZN) has tweaked its return policy in response to a spike in the number of items that customers are returning to its e-commerce platform. In the revised policy, consumers will now be able to keep defective items up for return and still get a total refund on the amount used to purchase it.
Return policy
The new policy is in response to Amazon using artificial intelligence to determine whether returning an item makes any economic sense. The new policy will apply to inexpensive items that, if returned, would not make any economic sense taking into consideration the logistics and costs incurred. Likewise, the policy will affect large items that incur hefty shipping fees.
However, the new return policy will only affect items that Amazon does not plan to resell. The option will apply to select items. For instance, Amazon will take into consideration a customer’s purchase history and the cost of processing the item.
According to Amazon’s new policy, it makes a lot of economic sense to refund the purchase price and let the customers keep some of the items instead of having them returned to stores. Amazon is not the first retailer to deploy the new return policy. Other retailers, including Walmart Inc. (NYSE: WMT), have popularized the approach.
Returns Surge
The new policy has been influenced by the COVID-19 pandemic, which has triggered high online shopping levels, forcing companies to rethink how they handle items. The idea to let customers keep items and still give refunds is supposed to cut down on the companies' work and costs. Target Corporation (NYSE: TGT) has already started giving customers refunds while letting them keep defective items.
The new way of handling returns comes hot on the heels of an increase in returns. The number of packages returned to the e-commerce platform, surged 70% in 2020 compared to 2019. Delivery services led by U.S Postal Service FedEx and UPS reported higher return rates last year, a move that has prompted them to work with retailers to cut the costs.
