Amazon has started marking products as "frequently returned."
Industry-wide rates of return have soared during the pandemic and have remained about double their pre-pandemic levels.
Amazon has begun displaying a warning about frequently returned items as the company tightens its belt in response to the shaky financial situation and uncertain economy. Industry-wide e-commerce revenues have skyrocketed during the pandemic lockdowns. Although it has declined, it is still well above pre-pandemic numbers.
The new retailer's badge reads, "Frequently Returned Item: Check product details and customer reviews to learn more about this item." However, it appears visible to some (my Amazon account doesn't show up when viewing the record player and dresses I reported to The Information). This may indicate that Amazon is rolling out gradually or testing is limited. Additionally, all of the products tagged appear to be from third-party suppliers that Amazon fulfills.
Product returns and exchanges are convenient for companies to help customers shop confidently, but they can also be expensive. Return-related costs include shipping, handling of returned inventory, and other miscellaneous expenses. The company may be hoping the tag will prompt sellers to modify their listings or products, as a prominent alert can seriously harm sales of an item. Of course, retailers factor returns in their pricing, but with rates higher than normal and companies cutting spending (Amazon announced 27,000 layoffs this year), it makes sense to crack down.
Some sellers said their customers return items at a higher clip on Amazon than when purchasing from other outlets, a discrepancy they attribute to Amazon's easy checkout process and Amazon's fast shipping. The retailer has already passed some extra expenses onto its sellers, as it raised fees for "Fulfillment 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 purchasing decisions," Amazon spokeswoman Betsy Harden confirmed to The Information this week. This isn't the first time Amazon has made sales data public: the company recently started displaying a badge showing a product's sales (for example, "100,000+ purchased in the last month").
In December, the National Retail Foundation (NRF) reported that online return rates rose to 18 percent in 2020 — when customers recorded $428 billion in returned merchandise — from just 8.1 percent in 2019. They fell only slightly, to 16.5 percent last year. Unfortunately, counterfeit returns are another concern: NRF says retailers lose $10.40 to return fraud for every $100 of merchandise returned.
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