May 14, 2021
Online shopping is booming but so are returns. An old-school solution is gaining steam

Online shopping is booming but so are returns. An old-school solution is gaining steam

A UPS worker loads packages on a truck on a New York City street in May 2020. | Noam Galai/Getty Images

Amazon and smaller e-commerce brands are offering more in-person return options, no box or shipping label necessary.

Returning online orders can be annoying, and they’re about to get trickier this holiday season during a pandemic. So more online retailers are following Amazon’s lead in making it easier to drop off items at brick-and-mortar locations near your home, no box or shipping label necessary. At the same time, more physical stores are planning to accept returns from other online retailers at their locations, giving existing customers another reason to visit and providing a reason for new shoppers to come in and take a look around.

The trend may seem counterintuitive to the rise of e-commerce, but it can make sense for consumers and businesses alike. Shoppers get more free options for returns and don’t need a printer at home. Often, they can get quicker refunds, too. Retailers that regularly pay return shipping fees can cut down on costs as well. And in-person returns for online orders can be better for the environment, turning smaller, more frequent return shipments into fewer, consolidated returns.

This year especially, returns of online orders are going to face challenges. Shipping companies like UPS and FedEx are straining under the weight of the unexpected e-commerce boom coupled with the holiday shopping season. And the nationwide logistics operation needed to ship Covid-19 vaccines in the coming weeks and months could impact shipping times, too. That means items you want to return via mail may take longer to reach warehouses, increasing the time it takes to get a refund at a time when money for many is tight. For others, having no access to the office where they work means no easy way to print out return labels, making shipping back a return nearly impossible unless a retailer provides return shipping labels with your original orders.

So retailers from Amazon to smaller brands are increasingly adding more in-person drop-off options. And these are going to become more and more common in the coming months and years.

“From a business standpoint, returns by mail are getting much more expensive and that’s because of things like Covid surcharges and holiday surcharges [from shipping companies],” said David Sobie, co-founder and CEO of the startup Happy Returns. “But the consumer expectations are that returns are going to be free. The reality is that no one said it had to be by mail. Consumers just want a free return option.”

Like many things related to online shopping, Amazon has been one of the leaders of the trend. Last year, Kohl’s began allowing Amazon returns at all of its 1,000-plus US stores, allowing Amazon customers to drop off returns for free with no box or label needed. In exchange, Kohl’s attracts much-needed foot traffic into its stores. Amazon also struck a deal with UPS to allow for similar no-packaging drop-offs on some Amazon orders at UPS Stores. In total, Amazon customers can do free, no-box drop-offs of returns at 5,800 locations in the US, including some Whole Foods locations as well as Amazon Books stores.

Smaller e-commerce retailers, like the fashion brands Everlane and Revolve as well as the women’s shoe brand Rothy’s, have also jumped on the trend in recent years with the help of Happy Returns. The five-year-old company has been building a network of brick-and-mortar locations for customers to drop off returns from e-commerce brands that have few or no stores of their own. Rothy’s customers, for example, can bring the shoes they are returning to a Happy Returns location, show a QR code on their phone, and refunds are processed immediately.

Happy Returns originally bet big on drop-offs at shopping malls, but in the wake of mall closures and struggles during the pandemic, the startup signed a deal this fall with FedEx to add 2,000 FedEx Office locations to the return network. Between malls, FedEx, and a few mid-sized retail chains like Paper Source, Happy Returns offers 2,600 return locations across the country. Sobie, the co-founder, said the goal is to eventually have around 10,000 nationwide.

Shoppers bringing back items to these locations will immediately get a notification that the merchant has processed their refund. But credit card companies may still take a couple of days to post the refund to your account. For e-commerce brands, immediate refunds do come with the risk that a shopper will return an item that is damaged or heavily used. Staff at Happy Returns locations check that the shopper is returning the right item, but a quality check is not done until the merchandise is shipped back to the startup’s warehouse. Sobie argues that consumers trying to return damaged or heavily used items are less likely to do so when they have to interact with someone in person than they are when returning by mail.

Other big retail chains are buying into the trend, too. Staples announced recently that it would start accepting returns in January at its 1,000-plus US stores for online orders from other retailers that don’t have physical stores or don’t have a national presence. Staples is working on the service with a return logistics company called Optoro, but neither side would say yet which retailers will be part of the Staples drop-off program or which other big retail chains that work with Optoro might add their stores as drop-off locations.

Staples executive Craig Grayson said Staples would likely start by accepting returns from retailers that sell products in categories like apparel that are easy to handle and aren’t competitive with Staples merchandise. While Grayson said Staples would be pleased to attract new customers because of the drop-off service, he mainly hopes it will be another good reason for existing Staples shoppers to frequent the chain.

In the future, you can expect some retailers to add curbside returns too, especially if they already have a lot of customers that pick up online orders out front. Optoro CEO Tobin Moore said he has discussions about curbside return options with some of his retail clients and expects some to eventually offer the option. It’s also likely that large retailers with their own networks of delivery people — think Amazon and Target, which owns Shipt — will someday offer convenient at-home pickups. But your average e-commerce site most likely won’t.

There’s an environmental advantage to some in-person returns, too. Happy Returns locations will typically wait either three days or until they have 15 returns to send one large reusable shipping container back to a Happy Returns warehouse. Happy Returns organizes returns by individual e-commerce brand before sending out consolidated containers of returns to each online retailer, often in the same reusable containers. The process cuts down on the number of individual return shipments sent through shipping partners, and on the cost.

In the future, Happy Returns hopes to cut down on some of its shipments in another way. Instead of sending a returned product back to a retailer from one of its return warehouses, it will repackage it if in great condition and ship it to a new customer who has just placed an order on the retailer partner’s website, to help with delivery speeds on new orders.

“The giants are setting the consumer expectation about how quickly we get things,” Sobie said.

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