Some retailers to offer holidays refunds without requiring returns

With the continued growth of online sales, and retailers trying to make sure there's enough product to sell, some have a new message for consumers looking to return an item: Keep it. An industry report found online purchase-returns jumped by 70% during the pandemic, and supply chain challenges have more retailers deciding there's got to be a better way.

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While some shoppers are certainly venturing out to stores, COVID and convenience has a lot of people relying on making their purchases from the comfort of their keyboard. Package that totaled more than $70 billion last holiday season, are running higher than ever and the added strain on a struggling supply chain might be too much. The Wall Street Journal reports a growing number of large retailers, like Amazon, Walmart, and Target, are relying more on making refunds while telling consumers not to bother with the return.

Houston marketing expert Paul Galvani says it's all about cash flow. "It's a lot cheaper for them to do that, on certain items," he says. First, there's the cost of sending and processing returns that can total 20% of the item's value. Then, there's a limited workforce to handle the packages in warehouses that are often automated. For smaller items, particularly those that won't be resold, it may not be worth the effort. "That's a huge expense for them and if they're handling returns, that means they're not handling items and putting them in boxes and 'selling' them," says Galvani.

There's also the issue of competing for consumer dollars. For some businesses, eating the cost of an unwanted item, while saving the expense of taking it back may be a valuable investment in customer goodwill. "The customer feels very satisfied and, more importantly, feels loyal to that particular retailer," argues Galvani. 

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Retailers and observers caution that the new return policies are, typically, applied to items that can't or won't Be resold. Larger items, like TV's, computers are unlikely to get the same consideration. 

Retailers tracking consumer patterns to root out any fraud. If they find someone attempting too many returns, there's a good chance that consumers could be banned from making any more purchases.