With the cost of online returns soaring, some retail giants might allow gift recipients to keep unwanted items and issue refunds anyway, according to Axios.
Amazon and Walmart, specifically, have started to refund the purchase price of select products while allowing customers to keep items due to supply chain issues and labor shortages.
According to the returns processor Optoro, returning a $50 item costs an average of $33, up 144% from 2020, when it was $13.53 to do so.
About 3 in 10 online purchases get returned, according to CBRE Supply Chain.
“If you buy it from an e-commerce retailer or the e-commerce division of a retailer it never winds up back on a shelf to be resold,” Columbia Business School retail studies professor Mark Cohen told NBC’s ”Today” show last week.
Online refunds are typically sent to a different warehouse, otherwise known as a reverse logistics hub, and those are hobbled by the supply chain crisis, according to Today. Online items that are returned are often thrown out, donated, or repurposed for sale through another route, according to Axios.
But the customer is still paying the price of a “free return.”
“The consumer pays the price for free shipping. So, when a consumer takes advantage of free shipping, that cost, which is not free, has to be borne somewhere, and the only somewhere in a retail setting is in the price of the goods,” Cohen said.
Optoro CEO Tobin Moore told Axios that retailers are on the lookout for anyone who attempts to game the system.
“There’s tracking involved that will determine whether or not consumers are taking advantage of the system,” he said.
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