Why do retailers think being a returns parter for Amazon is a good idea?

What do UPS, Kohl’s, and now Staples have in common? They are all Amazon return nodes.

In simple terms:

  1. More than 4,768 UPS Store locations.

  2. More than 1,170 Kohls locations

  3. nearly 1000Staples locations

  1. 350 Whole Foods Markets stores will see returns kiosks that enable easy, frictionless returns for Amazon customers.

Over 6938 locations that are not owned by Amazon but offer free returns to Amazon, which has to start on Amazon’s website. - retailers supposedly gain foot traffic as customers need to look for a return counter to hand over items to be returned to Amazon. Amazon has spent no capital to partner with retailers with larger footprints closer to consumers than Amazon’s retail locations.

Amazon has already started to charge customers $1 fees to return items via Whole Foods markets rather than going to UPS stores. Who is not part of these discussions - consumers? Having to go to a store location that is not convenient to their location is something that is getting little or no press. Yes - this happens on various Amazon web pages, but why do retailers think this is beneficial?

  1. The opportunity to provide customers with a coupon for the value of the returned items - which could generate sales? The analog here is unspent gift cards - what guarantee exists that these coupons are used?
  2. Footraffic has started show diminishing returns - Kohls’ had positive foot traffic data in 2019 when it started with Amazon returns however in 2022 this is no longer the case. Kohl’s could have made regarding selection and inventory but the data is not pretty.

Returns is a huge pain point for every part of retail - it’s not just Amazon. In summary, returns were $818 billion in lost sales in 2022, which cost $171 billion. The days of free returns increasingly look numbered. Being a node for Amazon seemingly benefits only one party and its not retail partners

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In a related UK context: Amazon doesn’t have a similar coverage of returns drop off points with other chain retailers (although some do have Amazon lockers on site). Many independent convenience retailers (think bodegas in a US context) do accept returns, as do all post offices (many of which are also located inside other retailers–convenience and chains)

But, I wonder what Argos gets from the long running relationship of being a pickup location for eBay sellers (commercial and personal). Notionally footfall, but Argos product categories hugely overlap popular categories on eBay and Argos also has good omnichannel ecommerce (partially picked from pickup store or nearby store). More recently, many Argos locations downsized and relocated inside the stores of their now parent, Sainsbury’s, so that’s potentially a better message on footfall (generating food and non-food sales for Sainsbury’s)

I think these partners get marketing opportunities to customer segments not owned by them. Let’s advertise Sainsbury’s return solution and a potential coupon or discount to eBay customers.

I still don’t see an upside for a retailers being the returns partner for a online marketplace.

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I commonly see it costing me $6 to return to a UPS store not $1. Free returns isn’t what it used to be.
Prime messaging doesn’t really even mention returns anymore.

So free returns is no longer free - as the customer is paying for them.