First, retailers have long return times, allowing shoppers to send back things, 60, 90, or even 180 days after purchase.
Secondly, retailers have temporarily suspended returns entirely until the pandemic passes.
Both these changes will probably impact retailer profits within another month or two.
The pandemic has shifted operations, including product yields, for many ecommerce merchants. Here a worker at an Amazon fulfillment center wears a mask.
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Merchants have extended their return windows because the pandemic compelled shut-downs and hindered shipping. Including some of the retail industry’s biggest omnichannel and pure-play ecommerce shops.
By way of instance, prior to the pandemic, Amazon provided a 30-day return window on many orders. But that’s changed.
“The health and well-being of our clients, employees, and the communities we serve are of extreme importance to us,” read the return policy page on Amazon’s site on April 28, 2020. “Therefore, we’re temporarily extending the return to give you more time to send things back. The majority of the items purchased from Amazon or our Seller spouses between March 1, 2020, and April 30, 2020, can be returned until May 31, 2020.”
The upgraded return policy from Amazon states, in part,”…we’re temporarily extending the return to give you more time to send things back.”
Likewise Macy’s announced that it would provide in-store shoppers an extra 30 days to return items and ecommerce shoppers another 60 days.
The need to change return policies also impacts mid-sized retailers. A communications manager with an ecommerce platform manufacturer, offered as an illustration La Perla, an apparel retailer.
“As we are all adapting to the present conditions, we’ve extended our present return coverage to 60 days for internet orders (final sale excluded) purchased after March 1st, 2020,” the La Perla site stated.
“We apologize for any inconvenience, and we thank you for your patience and understanding at this tough time.”
Paul Magel, president of the company applications division at CGS, a learning and outsourcing company, summed up, in an email to Practical Ecommerce, the demand for extended returns.
“If retailers didn’t change their policy to coincide with the times and the limitations of this pandemic, consumers would only shop elsewhere with retailers that provide more accommodating policies. In ecommerce, returns continue to be a cost of business. Consumers expect liberal return policies, so retailers have eliminated any purchase risk for customers that are purchasing something they have never been able to feel or touch. This is particularly true in fashion and apparel,” Magel said.
“Returns have been a focus of ecommerce business, as many point to this area as a significant leakage of both revenue and profit. This lengthened return policy is just one more factor in the new standard that manufacturers and retailers will need to factor in their ongoing business model. This change in policy wasn’t for improvement to customer support or goodwill; instead, it’s regarded as a requirement to continue to conduct business in this time of stay-at-home orders and social distancing.”
In other cases, yields are suspended or canceled altogether — largely as a result of public health. Retailers were doing their best to “flatten the curve” and limit the coronavirus’s spread. Thus, not recirculating returns made sense.
By way of instance, Walmart has ceased accepting in-store returns or exchanges for many product categories, such as food, paper products, home cleaning supplies, laundry detergent, pharmacy, health and beauty goods, and apparel, according to the provider’s site on April 28, 2020.
Walmart’s new return and exchange policy says,”We’re temporarily not processing returns/exchanges in our shops of: food, paper products, home cleaning supplies, laundry detergent, pharmacy, beauty & healthy and apparel.”
Likewise, Target suspended yields from March 26 to April 26, 2020, in the majority of stores nationwide. At the time of writing, it was still not accepting self-improvement yields in New Jersey.
Other retailers are just making all sales final.
However unavoidable they are, these pandemic-induced changes to exchange and return policies will probably reduce profit in the near term for a number of retailers.
The issues could arise in two kinds.
First, there might be a glut of yields after shops reopen and following ecommerce operations return in full force. Consider, by way of instance, Target’s announcement from a March 25, 2020, blog post.
To be extra careful, Target will stop accepting in-store product returns and exchanges for another few weeks–but do not worry if you’ve got a return that expires during this period, because we will still honor them three weeks beyond the holding period [emphasis added].
Many retailers who have suspended returns (or said that sales are final) might feel pressured to accept quite late exchanges.
Likewise retailers who extended the windows could receive returns in May, June, and outside.
Secondly, the returns which do arrive may be worth less.
“Retailers will now have to factor in the higher cost of returns, leading to goods having been bought at a much higher price point than that which that yield will be worth when it’s shipped or return to the shop,” said CGS’s Magel.
The problem Magel clarifies is particularly real for seasonal goods like fashion apparel.
These things generally start at a peak price before the season starts. By mid-season, retailers will start to offer discounts. As the season ends, the items are often placed on closeout.
Imagine, as an instance, a spring style raincoat bought in March for $199. From mid-April, its retail price may have dropped 25 percent. In July, it is on closeout for $59.
CGS’s Magel said,”For apparel and other seasonal or non-essential goods, there’s a large quantity of inventory already in shops or in transit which is going to be out of season when shops are prepared to reopen. Additionally, the number of orders and volumes which were cut from retail purchasing has caused enormous inventories further back in the supply chain that will have to be moved; therefore, heavily discounted.”