The Wall Street Journal (WSJ), in a recent reported that major retailers are letting customers keep their unwanted returns, even after processing their refunds.

This sound very counterintuitive - doesn't it.

What led to this?

Rick Faulk, the CEO of Locus Robotics, shared with WSJ that the biggest expense associated with processing returns is the cost of shipping. "Returning to a store is significantly cheaper because the retailer can save the freight, which can run 15% to 20% of the cost," he said.

Over the course of the pandemic, supply chain and logistics issues have been amplified across the globe. According to the return-processing firm Narvar, online returns leaped by 70% in 2020, WSJ has reported.

How are retailers managing this?

The major retailers eluded to earlier include giants like Walmart, Amazon and Target. Beyond the cost of shipping, there are other variables taken into consideration. Retailers also evaluate the reselling probability of the product and if it's unlikely to be resold, along with cost of processing being equal to or greater than the cost of the product itself, then retailers simply don't see value in getting the product back.

Whilst this may be assumed as a loophole by consumers, this in most cases is not applicable to high-end items such as electronics, premium goods...etc.

A happy customer is a returning customer...

As we've previously shared, there are new types of businesses forming around circular retail economy - such as Trove. On the other hand, consumers enjoy keeping an item they don't have to pay for, regardless if they utilize it or not. Actions like these also bring brand equity and will more than likely endue network effects.