Business Finance - Management Week Three Discussion 2 Assignment Instructions

Retailers Say Skip Returnsof Unwanted Items Kapner, Suzanne; Ziobro, Paul . Kapner, Suzanne; Ziobro, Paul. 

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FULL TEXT Retailers have a new message for consumers looking to return an item: Keep it.

Amazon.com Inc., Walmart Inc. and other companies are using artificial intelligence to decide whether it makes economic

sense to process a return. For inexpensive items or large ones that would incur hefty shipping fees, it is often cheaper to

refund the purchase price and let customers keep the products.

The relatively new approach, popularized by Amazon and a few other chains, is being adopted more broadly during the

Covid-19 pandemic, as a surge in online shopping forces companies to rethink how they handle returns. "We are getting so

many inquiries about this that you will see it take off in coming months," said Amit Sharma, chief executive of Narvar Inc.,

which processes returns for retailers.

Lorie Anderson of Vancouver, Wash., was pleasantly surprised when she tried to return online purchases of makeup at

Target and batteries from Walmart. The chains issued her a refund but told her to keep the items.

"They were inexpensive, and it wouldn't make much financial sense to return them by mail," Ms. Anderson, 38 years old,

said. "It's a hassle to pack up the box and drop it at the post office or UPS. This was one less thing I had to worry about."

A Target Corp. spokeswoman said the retailer gives customers refunds and encourages them to donate or keep the item in a

small number of cases in which the company deems that option is easier than returning the purchase.

A Walmart spokeswoman said the "keep it" option is designed for merchandise it doesn't plan to resell and is determined

by customers' purchase history, the value of the products and the cost of processing the returns.

Amazon didn't provide a comment.

The number of e-commerce packages that were returned in 2020 jumped 70% from 2019, according to Narvar. More than

half of the increase was due to higher e-commerce sales, Narvar estimated, while more than a quarter was the result of

shoppers not wanting to return web orders to physical stores.

A smaller percentage was because people didn't get the right size -- either because their weight had changed during the

pandemic or they were unfamiliar with the brand's sizing.

E-commerce returns could total as much as $70.5 billion for this past holiday season alone, a 73% jump from the previous

five-year average, according to CBRE Group Inc., a commercial real-estate services and investment firm.

After handling a record three billion packages during the holiday season, the U.S. Postal Service and delivery companies are

now receiving boxes that need to go back, including some of the two million whose arrival was delayed past Christmas,

according to ShipMatrix Inc., a consulting firm.

United Parcel Service Inc. expected a 23% rise in returns the week of Jan. 4 from a year earlier.

FedEx Corp. said returns volume has set record highs for the past six months. But the percentage of items ordered being

returned is a bit lower than normal because a big part of the increase in online shopping during the pandemic has been

from purchases of essential goods, according to Ryan Kelly, a marketing vice president at the delivery company. "A lot of

the e-commerce surge was not shoes, but diapers," Mr. Kelly said.

Delivery firms are working with retailers to help them reduce costs by providing scannable codes that consumers can bring

to retailers such as Walgreens or UPS stores that accept the returns, according to industry executives.

Walmart is allowing shoppers who purchase items online to schedule a time for FedEx to pick them up.

Processing online returns can cost $10 to $20, excluding freight, depending on the item, said Rick Faulk, chief executive of

Locus Robotics, which uses robots to help automate returns.

"Returning to a store is significantly cheaper because the retailer can save the freight, which can run 15% to 20% of the

cost," Mr. Faulk said. Online return rates run about triple those of purchases made in physical stores, he said.

In past years, retailers urged shoppers to return online orders to stores not only to reduce costs but also to boost sales

because customers tend to make additional purchases while there, Mr. Faulk said.

Doing so this year is problematic given capacity constraints on retailers and the reluctance of some consumers to frequent

enclosed public spaces.

"Gone are the days of popping into stores without feeling anxious, so I'm doing almost all my returns by mail," said Brittany

Connor, who lives in Philadelphia.

She recently tried to return a $16.91 cat harness she bought from the online pet retailer Chewy Inc. because it was too

small. Chewy told her to donate the harness to an animal shelter. It refunded her the money and sent her a new harness in a

bigger size. "I love that," said Ms. Connor, 32, who works in public relations.

A Chewy spokeswoman said the company is committed to providing customer-friendly return policies.

Jan Edmiston, a Presbyterian pastor from Charlotte, N.C., ordered the wrong version of a book titled "What Lies Between

Us." Instead of an antiracism book, she bought a thriller by the same name. Rather than asking her to send it back, Amazon

issued a refund and told her to keep it.

"How much money is Amazon making to be able to absorb these mistakes?" Ms. Edmiston asked. She has been using the

errantly ordered book to prop up her laptop for Zoom calls. She plans to give away the book.

Cybercriminals are getting wise to these new return techniques.

"People do this for the sport of it, not just for monetary gain," said Yuval Ben-David, an analyst at Sixgill, a cybersecurity

company.

The most common method is to claim an item didn't arrive or was defective, Mr. Ben-David said. Then the criminals use

social-engineering techniques to try to persuade the retailer to issue a refund. One common technique among scammers is

to claim to be afraid to sign for packages during the pandemic for fear of catching Covid-19, he said.

About a quarter of all dark-web chatter about return fraud in the past year focused on Amazon, according to Sixgill. The

criminals say Amazon's algorithms are more likely to detect fraud if the account is newly opened, which has led to a

secondary market for older accounts, according to Mr. Ben-David.

Credit: By Suzanne Kapner and Paul Ziobro DETAILS

Business indexing term: Subject: Retail stores Electronic commerce Customers Discount department stores; Corporation: FedEx Corp Walmart Inc; Industry: 45411 : Electronic Shopping and Mail- Order Houses 49111 : Postal Service 49211 : Couriers and Express Delivery Services 45511 : Department Stores

Subject: Retail stores; Electronic commerce; Purchasing; Customers; Postal & delivery services; Coronaviruses; Pandemics; Discount department stores; COVID-19

Company / organization: Name: FedEx Corp; NAICS: 484110, 492110, 551114; Name: Walmart Inc; NAICS: 454110, 455110, 455211

Publication title: Wall Street Journal, Eastern edition; New York , N.Y.

First page: A.1

Publication year: 2021

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Publication date: Jan 11, 2021

Publisher: Dow Jones & Company Inc.

Place of publication: New York, N.Y.

Country of publication: United States

Publication subject: Business And Economics--Banking And Finance

ISSN: 00999660

Source type: Newspaper

Language of publication: English

Document type: News

ProQuest document ID: 2476504877

Document URL: https://go.openathens.net/redirector/nu.edu?url=https://www.proquest.com/newspapers/ retailers-say-skip-returnsof-unwanted-items/docview/2476504877/se-2?accountid=25320

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Last updated: 2025-01-30

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