Amazon is now accepting returns in some of its Go stores — and it’s a brilliant strategy to slash logistics costs

  • Amazon is now accepting returns for purchases made online in some of its cashierless Amazon Go stores.
  • Not all 15 stores are presently processing returns. For those that do, customers can scan a QR code on the Amazon app to receive a refund and return their items.
  • Processing returns is costly for retailers. But they can slash “reverse logistics” costs by processing returns in-store rather than having customers mail their packages in.
  • Visit Business Insider’s homepage for more stories.

Amazon is now accepting returns on purchases made online in its some of its Amazon Go stores, the company confirmed to Business Insider.

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Customers can return products purchased on at an Amazon Go store. Amazon app

To make a return, Amazon customers select the product they’d like to return in the Amazon app and select an Amazon Go store. It’s free and doesn’t require any packaging or boxes.

Then, the customer receives a QR code in the app or via email. An Amazon Go employee scans the code and the return is processed.

“We are currently trialing pickup and return options at select Amazon Go stores in San Francisco and New York City, and are excited to get customer feedback on these offerings,” an Amazon spokesperson told Business Insider.

Amazon accepts returns in its 19 Amazon Books locations and three Amazon 4-star stores. Amazon Hub Lockers and Kohl’s 1,150-plus locations also accept returns. But as recently as June 2019, Amazon Go stores, which opened publicly in early 2018, couldn’t process returns.

Not all of the 15 cashierless stores – which are in Seattle, Chicago, San Francisco, and New York City – are accepting returns. An Amazon Go employee told Business Insider that only two of the three New York locations can process returns.

Here’s why processing returns in-store could slash Amazon’s transportation costs

Customers who made returns at Amazon Go locations said on Twitter that the convenience of showing a QR code to make a return was a win.

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Customers have to scan a QR code to process a return. Amazon app

Nearly 60% of Americans prefer returning purchases to a physical store rather than mailing in their product, according to a UPS study.

Read more:
UPS said 1.5 million packages were returned in one day – and it reveals a troubling reality for retailers about the future of holiday shopping

Amazon’s push for more in-store deliveries isn’t just a boon for customer satisfaction – it has the potential to slash the massive retailer’s “ballooning” transportation costs. Amazon’s worldwide shipping costs have grown fifteenfold from 2009 to 2018, while net sales have only increased by sevenfold in the same time.

Amazon shipping cost vs sales growth

Returns are cheaper for retailers when made in stores. According to AlixPartners, the returns process costs retailers $US3 per package when customers return them to a store.

But when a customer mails the package back, retailers spend up to $US6 per return.

Some retailers outsource the cumbersome process of “reverse logistics.” And that’s even pricier – it costs $US8 per return when returned to a third-party processor.

Read more:
Amazon took over the $US176 billion market for cloud computing. Now it’s using the same playbook in logistics.

While they’re not at all free for the retailers themselves, free returns are becoming the norm for most customers. Between 10% to 30% of goods purchased online are returned, depending on the sector, according to an XPO study.

Because of the quickly rising cost of managing those returns, retail analysts say companies are starting to invest more and more into seeing where returns can be made in-store rather than through the mail. That explains Amazon’s recent push to allow returns in its Go locales.

“Retailers need to put some guardrails around free returns,” Antony Karabus, CEO at HRC Retail Advisory, previously told Business Insider. “They’re beginning to realise that free returns and free shipping is killing them.”