Pandemic Alters Retail Return Policy

The Coronavirus pandemic has forced retailers big and small to make significant, temporary changes in their return. Since March, dealers have generally handled returns in two ways.

First, retailers have extended return times, which allows shoppers to return goods, 60, 90 or even 180 days after purchase.

Second, dealers have temporarily suspended returns until the pandemic passes.

Both of these changes are likely to affect the retailer's profits over the next month or two.

The pandemic has changed the business, including the return on the product, for many e-commerce merchants. Here, a worker at an Amazon fulfillment center wears a mask.

The pandemic has changed the business, including the return on the product, for many e-commerce merchants. Here, a worker at an Amazon fulfillment center wears a mask.

Extended returns

Merchants have expanded their return windows since the pandemic forced shutdowns and prevented shipping. This includes some of the retail industry's largest omnichannel and pure-play e-stores.

For example, before the pandemic, Amazon offered a 30-day return window on most orders. But that has changed.

"The health and well-being of our customers, employees and the communities we serve is of the utmost importance to us," read return policy page on the Amazon website on April 28, 2020. ”Therefore, we temporarily extend the return window to allow you more time to return items. Most of the items ordered from Amazon or our sales partners between March 1, 2020 and April 30, 2020 can be returned to May 31, 2020. "

The updated Amazon return policy states in part

The updated Amazon Return Policy partially states "… we are temporarily expanding the return window to give you more time to return items."

Similarly, Macy announced that it would give stores in the store another 30 days to return goods and e-merchants another 60 days.

The need to change the return policy also affects medium-sized retailers. A communications manager at BigCommerce, the e-commerce platform, offered as an example to one of the company's customers, La Perla, a clothing retailer.

"As we all adapt to the current circumstances, we have extended our current return policy to 60 days for online orders (final sale excluded) purchased after March 1, 2020," the website La Perla stated.

"We apologize for any inconvenience and we thank you for your understanding and patience at this difficult time."

Paul Magel, CEO of the Business Applications Division at CGS, a learning and outsourcing company, summarized, in an email to Practical E-commerce, the need for increased returns.

“If retailers did not change their policy to match the timing and constraints of the pandemic, consumers would simply shop elsewhere with retailers offering more accommodating policies. In e-commerce, the return is still a cost to the company. Consumers expect a liberal return policy, so retailers have removed all purchasing risks for consumers who buy something they haven't been able to touch or feel. This is especially true when it comes to fashion and clothing, Magel said.

“Returns have long been a focal point for e-commerce, as many point to this area as a major leak of both revenue and profit. This extended return policy is just another variable in the new norm that brands and retailers will need to include in their ongoing business model. This policy change was not to improve customer service or goodwill; rather, it is seen as a necessity to continue doing business during this time of home-home order and social distance. "

Suspended return

In other cases, returns have been canceled or canceled altogether – mainly due to public health. Dealers did their best to "flatten the curve" and limit the spread of coronavirus. Thus, it did not make sense to recycle returns.

For example, Walmart has stopped accepting returns or exchanges in stores for several product categories, including food, stationery, household cleaning, laundry soap, pharmacies, health and beauty products and clothing, according to the company's website on April 28, 2020.

Walmart's new return and exchange policy states,

Walmart's new return and exchange policy states: "We do not temporarily process returns / exchanges in our stores of: food, stationery, household cleaning items, laundry soap, pharmacy, healthy & beauty and clothing."

Similarly, Target returns will be suspended from March 26 to April 26, 2020, in most stores across the country. At the time of writing, it still did not accept returns at the New Jersey store.

Other retailers simply make all sales final.

earnings Estimates

However unavoidable, these pandemic changes in return and exchange policy are likely to reduce short-term profits for some retailers.

The problems can arise in two forms.

First, a large number of returns can come after the stores have reopened and after e-commerce has returned in full force. For example, consider the Target statement from a March 25, 2020, blogs.

To be extra careful, Target will stop accepting product returns and exchanges over the next three weeks—but don't worry if you have a return that expires during that period, because we will still honor them three weeks over the holding period (emphasis added).

Many dealers who have canceled returns (or said the sale is final) may feel compelled to accept very late exchanges.

Similarly, dealers who extended the windows could get a return in May, June and beyond.

Second, the return that arrives may be less worthwhile.

"Resellers will now have to take advantage of the increased return costs, as a result of having purchased goods at a much higher price point than that return will be worth when it is shipped or returned to the store," says CGS's Magel.

The problem Magel describes is especially real for seasonal items such as fashion clothing.

These items usually start at a high price just before the season begins. In the middle of the season, dealers will start offering discounts. When the season ends, the articles are often placed in close proximity.

For example, imagine a spring fashion raincoat purchased in March for $ 199. By mid-April, the retail price may have dropped 25 percent. In July, it's close for $ 59.

CGS's Magel said: “For clothing and other seasonal or non-essential goods, there is a large amount of inventory already in stores or in transit that will be out of season when the stores are ready to open again. In addition, the amount of orders and volumes that have been reduced from the retail purchase has caused huge stocks further back in the supply chain that must be moved; therefore very discounted. "

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