I do a lot of my holiday shopping online, and I have often defaulted to Amazon because of the availability of goods, the pricing and the quick delivery. I have always been satisfied with the service and the quality of product, even when it has come from one of their resellers.
And today, Amazon surprised me, as a customer, and demonstrated that they truly understood the cost of returns to the supply chain.
I had ordered a number of CD's for my son for Christmas, and obviously as I was going back and forth in the ordering process, I had inadvertently double-ordered one of them (my total order had 6 CDs). So when the package arrived today (just 3 days post order), I realized my error when there were two duplicate CD's in the package.
I virtually smacked myself up side my head, and then went to the Amazon site to determine how to return this item. It wasn't a lot of money -- it came to just over $10 with taxes. I began their online process, which first required me to identify the item, and then the reason for the return. It was when I hit the Continue button, that I received a message that said As a valued customer we will issue a refund for the item but you can keep it. I was speechless, which for those of you who know me is an extreme rarity!
I had to press another Continue button to accept this, which of course I did immediately, just in case this was a limited time offer! Another screen came up that said my refund would be processed in 3 to 5 business days and a thank you. I thought I'd hit the jackpot and maybe I should go out and buy a lottery ticket.
But then my supply chain persona kicked in, and I realized that Amazon is brilliant. For those who are not in supply chain, Amazon has just given their client a WOW moment, making them feel special, privileged and definitely creating customer loyalty. For those of us in supply chain, we just wish that our companies would understand the economics of what Amazon did.
The cost of returning the $10 item, is exponentially greater than the item itself. And let's not forget that the $10 is the retail price. The actual cost is significantly lower -- maybe a couple of dollars if that. To process a return, a company such as Amazon must first issue an authorized return number which in this case would be done electronically, so not a lot of cost here. The return shipping cost is borne by the buyer, so again, no cost to Amazon. But the costs start escalating when the item ends up at the warehouse door. The item needs to be matched to the return number, the item then must be inspected to ensure that it is the same item as indicated, and that it has not been damaged. Once the product is acceptable then an electronic flag can go to customer service or accounts or the like, which will trigger the refund. The product then must be tagged to be restocked in the specific area of the warehouse. And with the credit card companies, Amazon will have paid a transaction fee, and then a further fee to issue the refund. It is these last few steps that at minimum and I mean absolute minimum are at a cost of $100+.
So you see Amazon saved themselves money by letting me keep the CD. I am sure that they don't do this every time, even for cheaper products, because someone would figure this out and then just order items and try to return them, and well, always get a refund and keep the stuff. I am sure there is some sort of algorithm built in that protects against this.
The little smile in the Amazon logo is well-deserved. Today they made me happy as a customer but also as a supply chain professional.
Now if they could only help me figure out who among my friends might like the grunge band Alice in Chains. So far I haven't been able to come up with anyone!
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