SoylentNews

takyon [soylentnews.org] writes:

Kohl's [wikipedia.org], an American department store retail chain, will accept Amazon returns [npr.org] at all of its 1,150 locations starting in July. But what will each company get out of the relationship [marketwatch.com]?

Shoppers don't like returning items in the mail, so services provided by companies like Narvar and Happy Returns have become more popular. For Kohl's, the benefits to joining with Amazon are clear. This deal drives foot traffic through Kohl's doors. And if those shoppers, now with a little more cash in their wallets, see something they like after they drop off their package, Kohl's gets to ring up the sale.

But Amazon gets something out of this also. "Amazon looks to be enticing customers to bring returns to a limited number of known Kohl's addresses, instead of picking up returns at an endless number of home or office addresses," said Pete Madden, a director in the AlixPartners LLP retail practice. "This likely saves Amazon money because customers are absorbing Amazon's transportation cost by doing the driving and Kohl's would be acting as Amazon's consolidator." For example, Kohl's is screening the items and putting them into a single shipment. Kohl's is likely being compensated, Madden said, but at a rate that makes it a win-win for both companies.

Amazon is already spending billions to get items to customers. Amazon's shipping costs in 2018 were $27.7 billion, according to the company's 10-K, up from $21.7 billion the year before. "We seek to mitigate costs of shipping over time in part through achieving higher sales volumes, optimizing our fulfillment network, negotiating better terms with our suppliers, and achieving better efficiencies," the 10-K reads. "We believe that offering low prices to our customers is fundamental to our future success, and one way we offer lower prices is through shipping offers."

Madden also thinks the partnership provides a way for Kohl's and Amazon to keep customers from spending their money with the competition. "Amazon is likely hoping to figure out new ways to keep their common customers with Kohl's away from mutual rivals such as Walmart," he said. "Keeping a customer locked in with you is priceless."

Kohl's press release [kohls.com].

Original Submission