Spending

Amazon, Target, and other big box retailers might pay you to keep your returns, experts say: here's why

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Key Points
  • Stores may soon start offering refunds while also letting shoppers keep any item they want to return.
  • The practice is meant to alleviate some of the costs retailers absorb when shoppers return items.
  • "Retailers across the board are to trying to limit returns because they have been surging, especially with online sales becoming a higher and higher," one expert says.

Retailers' ongoing struggle with supply chain issues is showing up in an unexpected place: returns. Shoppers who try to return an item bought online may find the retailer offers them a refund and tells them to keep the product.

As Americans continue to feel the pinch of inflation, they are spending less freely than they were during the peak of the pandemic. This is causing many big box retailers to have a surplus of inventory and be less keen to take back unwanted items, Karthik Easwar, an associate teaching professor at Georgetown University who specializes in consumer psychology and decision-making, recently told Grow.

"With supply chain issues, the Targets and Walmarts and Best Buys overstocked those things expecting that demand to keep going," Easwar said. "With inflation, as they are now filling their shelves, we are pulling back. They are overstocking and we are less interested in those products."

This practice of offering return-less refunds is meant to alleviate some of the costs retailers absorb when shoppers make returns, says David Swartz, an equity analyst at Morningstar who focuses on retail. "It's logistical headache to take products back," he added. "Their systems are designed to take products out not take products back. Shipping costs are higher, but also it is labor."

Returns have been 'surging'

From March 2020 to February 2022, U.S. consumers spent $609 billion more online than they did in 2018 or 2019. The increase in online sales has led to even more returns, Swartz says.

"Retailers across the board are to trying to limit returns because they have been surging, especially with online sales becoming a higher and higher," he says. "Online sales tend to be returned at a higher rate."

This is especially true for clothing. For example, many shoppers have gotten used to ordering multiple sizes of one item and then returning the ones that don't fit, he says.

It's logistical headache to take products back.
David Swartz
Morningstar Analyst

What shoppers should know

This practice isn't new, says Julia Ramhold, a consumer analyst with DealNews.com. Amazon, for example, is known to sometimes let shoppers keep some items, even after offering a refund. Target, Walmart, and Chewy are among the other companies that do return-less refunds on a case-by-case basis, according to The Wall Street Journal.

"It could certainly become a trend to some degree, with different retailers offering this perk for select items and for a certain amount of time," she says. "However, it's likely to have very specific parameters to meet, and there's a chance that there will be blackout periods, such as Black Friday."

If you frequently purchase items online here's what to know about the trend of more generous refund policies:

  • Return-less refund policies might be temporary. "Overall this may be just a temporary move in order to kind of clear out stock and make room for other items, rather than a long-standing policy we can look forward to," Ramhold says. "Because of that, it's best to pay attention to items you purchase that you think you may end up wanting to return and make sure that you adhere to the policy."
  • The policy might not apply to all items. "Don't assume that just because a retailer has a policy like this in place that it will apply to anything and everything they sell," she says. Retailers are likely to assess returns on a case-by-case basis.
  • Don't abuse a generous return policy. "Generous return policies have resulted in retailers being forced to either end the policy or seriously revamp it to be less generous in an effort to prevent loss from customers trying to game the system," she says. "Even if the policy sticks around, though, it's clear if you're trying to cheat the store."

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