Keep Calm and Stay Smart
Amazon has begun displaying a warning about frequently returned items as the company tightens its belt in response to shaky finances and an uncertain economy. Industry-wide e-commerce returns skyrocketed during pandemic lockdowns. Although they’ve declined, they’re still well above pre-pandemic numbers.
The retailer’s new badge reads, “Frequently returned item: Check the product details and customer reviews to learn more about this item.” However, it doesn’t appear visible to everyone (my Amazon account doesn’t show it when viewing the record player and dresses that The Information reported on). That may suggest Amazon is deploying a gradual rollout or a limited test. In addition, the tagged products all appear to be from third-party vendors fulfilled by Amazon.
Product returns and exchanges are a convenience businesses use to help customers shop confidently, but they can also be expensive. Return-related costs include shipping, processing the returned inventory and other miscellaneous expenses. The company likely hopes the label will nudge sellers to modify their listings or products, as a prominent alert could seriously damage an item’s sales. Of course, retailers factor returns into their pricing, but with rates higher than usual as companies cut spending (Amazon has announced layoffs for 27,000 employees this year), it makes sense it would crack down.
Some sellers have said their customers return items at a higher clip on Amazon than when bought from other outlets, a discrepancy they chalk up to Amazon’s easy checkout process and fast Prime shipping. The retailer has already passed on some of the extra expenses to vendors, as it raised fees for “Fulfilled by Amazon” sellers earlier this year.
“We’re currently showing return rate information on some product detail pages to help our customers make more informed purchase decisions,” Amazon spokesperson Betsy Harden confirmed to The Information this week. It isn’t the first time Amazon has highlighted sales data publicly: The company recently began displaying a badge showing how many sales a product made (for example, “100K+ bought in past month”).
In December, the National Retail Foundation (NRF) reported that online return rates rose to 18 percent in 2020 — when customers tallied $428 billion in returned merchandise — from a mere 8.1 percent in 2019. They only dropped slightly to 16.5 percent last year. Unfortunately, bogus returns are another concern: The NRF says retailers lose $10.40 to return fraud for every $100 in returned merchandise.
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