Amazon Starts $1 Fee For Returns In US; Rising Costs, Slowing Economy To Blame

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Amazon Starts $1 Fee For Returns In US; Rising Costs, Slowing Economy To Blame

| Updated: April 17, 2023 13:06

In a world wrought with shrinkflation and cutting down on costs wherever possible, Amazon’s slow but steady move is a studied business plan. The retail giant is rolling back its free return policy one tiny bit at a time (at least in the US currently), in a bid to spare itself the bigger backlash a more sweeping change would have caused. 

Amazon is now charging fees for some free returns dropped off at a UPS location. Market experts believe this small move is the beginning of the end for the free returns most online customers have come to take for granted. In recent times, Amazon laid off 18,000 employees (and announced that it would cut a further 9,000) and hence, the rollback is in sync with a cost cutting mode. 

However, many have taken to social media to voice their displeasure. Some end users in the US also stated that they would be cancelling Prime memberships as a result. 

Free returns are a challenge that the online retail industry has struggled to solve. According to research by the financial and mobile payments website PYMNTS, 96 percent of U.S. shoppers check return policies before making an online purchase. On the other hand, free returns are a monstrous expense for Amazon. According to the National Retail Federation, 21 percent of online purchases are returned. “Amazon’s sales reached $514 billion in 2022, meaning it likely had around $108 billion in returns,” according to the New York Daily News

As of now, the fees is $1 if you drop off the item you’re returning at a UPS Store. Drop-offs are still free at Kohl’s (with which Amazon has a partnership), Whole Foods, and Amazon Fresh stores. 

Amazon has deployed other strategies aimed at reducing the number of returns it must process and pay for. More recently, the company began marking products that are frequently returned with a warning: “Frequently returned item. Check the product details and customer reviews to learn more about this item.”

The retailer is also mulling options of adjusting which items are eligible for free returns in the first place. All in all, the new drop-off charge is a very small change, and that might be Amazon’s intention here. However, sceptics warn that with rising costs making shipping returns more expensive, it is just a matter of time that freebies are a matter of bygone days.

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