business news in context, analysis with attitude

The Information reports that "Amazon has started charging fees to make some returns at UPS Stores, marking the latest effort by the e-commerce giant to cut down on costs associated with customers sending back items."

According to the story, "While Amazon shoppers used to be able to return any product by dropping it off at a UPS Store without charge, the company began charging a $1 fee for some returns earlier this year. Amazon adds the fee if customers have another free return option, such as a Whole Foods or Kohl’s or an Amazon Fresh store, that is within equal distance to or closer than a UPS Store"

Returns to Whole Foods, Amazon Fresh and Kohl's stores remain free, the story says.

The Information writes that "the new UPS fee appears to be aimed at deterring customers from using UPS when they have lots of other choices, presumably as a way of reducing the cost of returns for Amazon. Amazon relied on outside delivery companies during its early days, but the company has increasingly spurned partners like UPS and FedEx as it has built up its own sprawling logistics network that’s increasingly capable of handling both deliveries and returns in major U.S. markets."

Amazon recently decided to start labeling certain products on its site, when appropriate, as "frequently returned," hoping that this will dissuade some customers from making purchases that will end up being returned.

KC's View:

Ease of shipping, and free shipping, have generally been a core part of Amazon's value proposition.  While I understand that the company would like to shift returns into lanes where it can exert greater control, it is hard to take something away from customers who have grown used to it.

Amazon is smart only to apply these fees in markets where customers have the option of returning items to a Whole Foods, Amazon Fresh and Kohl's store.  If it were to start applying fees to those returns, the company would take an enormous hit in terms of shopper relationships.  I have to admit, though, that I'm reasonably sure that somewhere at Amazon, they're making calculations about how severe such a hit would be, and if the company can afford to impose such fees.  That just seems to be the culture at the moment.