In its second-largest acquisition, Amazon buys the company for $970 million.
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Indeed, some retailers apologize for their strict returns policies, explaining that the nature of the business simply doesn’t allow them to process many returns, much less pay shipping costs. “We wish we could accept all returns without any questions or limitations, but that is just not possible,” Overstock.com Inc. says. Overstock, which sells excess products from other retailers, notes that other sellers of deep-discount products often follow an “all sales final” approach, but that it will accept returns up to 30 days of its original ship date. Customers pay their own return shipping and Overstock charges a $4.95 handling fee for each returned item except computers and electronics, for which it charges a restocking fee of 15% of the purchase price.
Like Zappos, other retailers that offer free return shipping say it helps sales. At consumer electronics retailer Crutchfield.com, free shipping on returns helps to contain costs as well as increase sales, Dave Dierolf, vice president of information technology, says. By working with United Parcel Services’ pre-printed label program for processing returns, Crutchfield pays a flat fee for shipping. As a result, Crutchfield now can pay shipping on all returned items and still incur fewer expenses than when it paid for only some returns.
In addition to the lower fee per package, Crutchfield benefits from less time spent by customer service reps in handling calls related to returns, and in less time processing returns, Dierolf adds. Because a return label is now generated with each order, workers can scan a returned item’s barcode to identify the order number. “This greatly diminishes the need to search for the order information associated with the return,” Dierolf says. This enables the returns processing employee to confirm more quickly that Crutchfield received back what was originally ordered, expediting the processing of refunds or exchanges, he adds.
Dierolf says the long-standing free-returns policy has helped to increase sales, although the company hasn’t measured the effect recently. “The cost-savings is an added benefit, since in the past we sometimes refunded to customers the return shipping charges anyway,” he says. Crutchfield ships each order with a pre-paid UPS shipping label for returns. It requires customers seeking to return an item to contact Crutchfield for a return authorization number, which they write on the pre-paid shipping label.
Four of the 35 surveyed retailers offer a free pick-up service for online sales - HPShopping, Home Depot, Office Depot Inc. and Staples Inc. HPShopping requires a customer to repack equipment in its original packaging and call a customer service representative to receive a return authorization number and arrange for a carrier service. The customer then writes the authorization number on the package along with the words, “NetReturn Express Tag Pickup.” HP requires customers to first speak with a customer service rep to see if there is a way to work out technical problems with the purchased equipment to avoid a return.
Home Depot’s online return policy tells customers to complete the UPS return form that appears on the bottom of their receipt, attach it to their package and drop it off at any UPS facility-at no charge. But the retailer adds that a customer not near a UPS facility can call Home Depot on a toll-free telephone number and have the retailer arrange for UPS to pick up the package, again at no charge to the customer.
Although it doesn’t offer a pick-up service, WalMart.com includes a pre-paid U.S. Postal Service return label with every shipment.
Five of the 35 surveyed retailers include a restocking fee in their returns policy. Apple, Best Buy Co. Inc. and Target Corp. apply it to open computer and electronics boxes, Overstock applies it to everything. Several retailers make a point of noting that they don’t charge a restocking fee. Best Buy says the restocking fee discourages customers from ordering an expensive gadget for a one-time use-like a video recorder for a wedding-and then returning it.
More common among the surveyed retailers is the ability they grant customers to return products to a physical store-offered by 16 of the 35.
For the most part, retailers in the survey provide clear instructions on how to return products. Fourteen explain where to find a return shipping label, which is usually contained in the original package and which some retailers also make available online. Most of the surveyed retailers, 21, allow 30 days to return a product. Four allow 90 days; Zappos alone allows 60, and young adult apparel retailer Hot Topic Inc. allows 45. LandsEnd.com and LLBean.com set no limit as part of their lifetime product guarantees.
Retailers’ return periods begin, however, at different times, with some beginning at the time of purchase and others at the original ship date or the date the customer receives the product.
Fewer than half of the 35 surveyed retailers, or 14, instruct customers to get a return authorization before sending a return. Separate surveys conducted by The e-Tailing Group show a decline in the number of e-retailers requiring return authorizations-to 16% last year from 24% in 2001. Primarily computers and consumer electronics retailers require return authorization numbers, although some non-electronics sellers, such as AllPosters.com and Home Shopping Network, require such numbers. Retailers say return authorization numbers help restock returned items more accurately. Circuit City, for one, says it has received no negative feedback from customers concerning the additional step.
Searching for returns
Most retailers surveyed by Internet Retailer also make it easy to find information on their return policies. Although no others highlight this as much as does Zappos, all but one presented return policy details within three clicks of the home page.
While many retailers place a link on their home page specifically for return policy information, several require shoppers to click on a customer service or help link. The site with the most difficult-to-find return policy is AT&T Wireless Services’ ATTWS.com. From its home page, a shopper must click a link in a top horizontal bar for Online Customer Service, then choose Frequently Asked Questions, then from a long list of links, Online Ordering; the shopper can then scroll down to an FAQ about making changes to or canceling an order, which suggests she e-mail Customer Care (no e-mail address is provided) but also provides a toll-free telephone number for Online Orders. Nowhere are there instructions for returning a phone.