Why Amazon, Walmart, Chewy Are Letting Customers Keep Certain Items While Issuing Refunds

Retail giant Walmart Inc WMT and e-commerce stores like Amazon Inc AMZN and Chewy Inc CHWY are using artificial intelligence to determine the financial feasibility of processing product returns, according to the Wall Street Journal.

What Happened: The tech-driven methodology shows that refunding the order amount for inexpensive products and allowing the customers to retain the product is cheaper than fulfilling a returns request by shipping a new product all over again. It is equally beneficial during the pandemic when the risk of infection is high.

“We are getting so many inquiries about this that you will see it take off in coming months,” Narvar Inc CEO Amit Sharma told the Journal.

Narvar is an intelligent customer experience platform that handles product returns for retailers. Sharma noted that order returns in 2020 were 70% higher year-over-year.

Locus Robotics CEO Rick Faulk claims that online order returns comprise 75% of the total returns and the balance belongs to purchases from physical stores. Faulk, whose company uses robots for automated returns, also noted that returning an online order could carry an additional cost in the range of $10 to $20 without considering the freight charges.

Why Does It Matter: A spokesperson for Walmart clarified that there are certain caveats that decide the feasibility of product returns like the cost of packing and shipping a new product, the order value, and the customer's past history of purchases. Additionally, the “keep it” option will only be available for products not meant for resale.

WSJ says that United Parcel Services Inc UPS was expecting a 23% hike in returns in the week through Jan. 4 compared to the same period one year ago, whereas FedEx Corporation FDX claims that returns volumes in the past six months were at record highs. FedEx also says that percentage-wise the returns are less YoY due to a surge of online orders in 2020.

Price Action: AMZN closed at $3,182.70, 0.65% higher, and Walmart closed 0.03% lower at $146.63 on Friday. Whereas CHWY was down 1.13% — quoting $96.87.

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