Kohl’s is a department store offering clothing basics, homewares, shoes. CNN described its shoppers in April as “a loyal shopping base of middle-aged moms,” in a story about how the retailer is pursuing the coveted Millennial market.
Millennials may have a new reason to go to Kohl’s, however — one unrelated to “style bars” and other retail experiences.
In July, Kohl’s will begin accepting all Amazon returns at stores nationwide.
In October 2017, Kohl’s announced a pilot version of this partnership at 82 stores in Chicago and Los Angeles. Customers could bring any products they’d purchased on Amazon to Kohl’s, and the retail chain would handle the return process.
When Amazon said “any item,” they meant it. It didn’t have to be a Kohl’s product. It didn’t even have to have a box or a label. Kohl’s would pack the items and ship them back to Amazon’s vast network of warehouses – for free.
“We are thrilled to launch this unprecedented and innovative concept, allowing customers to bring in their unpackaged Amazon returns to Kohl’s and we will pack them, ship them, and return them to Amazon for free,” said Richard Schepp, Chief Administrative Officer for Kohl’s, in a statement at the time.
“This is a great example of how Kohl’s and Amazon are leveraging each other’s strengths – the power of Kohl’s store portfolio and omnichannel capabilities combined with the power of Amazon’s reach and loyal customer base.”
In April, Kohl’s announced that it was expanding its Amazon returns service to all of the 1,150 locations in the department store chain.
The expanded partnership, which launches in July, is a big deal for both companies. For Kohl’s, it means more foot traffic and a foothold in the quickly shrinking big-box retail world. And for Amazon, it means customers will have a much easier time returning items — and Amazon will have a much easier time working them back into its logistical network.
Breaking down the partnership between Kohl’s and Amazon
The expansion suggests that this pilot partnership was very good for both Kohl’s and Amazon.
In March, Inc. Magazine writer Justin Bariso said its relationship with Amazon, along with a few other clever partnerships, had helped Kohl’s “return to relevance” as a retailer.
Amazon customers return items all the time. But filing a return request online, re-packing an item, and waiting weeks for Amazon to receive and process it isn’t exactly a procedure that screams convenience to customers. Kohl’s offered a convenient alternative to those customers — who began to stop at a store they otherwise may have driven right past.
Every retailer knows that getting a customer in the door is the first step to making a sale. If even a small fraction of the people Amazon brought into Kohl’s made purchases, even small ones, they generated buckets of revenue Kohl’s wouldn’t have had otherwise.
“I think that the most important thing that we’re seeing is how excited our customers and the Amazon customers are about this service,” Kohl’s CEO Michelle Gass recently told investors, per that Inc. piece. “It’s really unique. It takes a lot of the hassle out of returning items.”
And that was only at about 100 Kohl’s stores nationwide. In July, the effect will increase exponentially.
Amazon, which is by far the world’s largest retailer, has long struggled to make returns convenient not just for customers, but for itself. Returns are essential for customer loyalty, so it has no choice but to offer a process. But currently, most customers put returns in the mail themselves. That inventory travels to warehouses, where Amazon likely liquidates it.
But Kohl’s is giving Amazon the opportunity to put human faces on its return process — a physical customer service counter, where customers can ask questions and be helped. It’s never been possible for Amazon to replicate that feeling at scale. At least, not until now.
What does this mean for parcel shipping?
Amazon Marketplace — where third parties sell products, enhancing Amazon’s omnichannel capabilities — and Amazon.com comprise a total of 47 percent of online retail sales. It’s possible that almost half of goods shipped from e-commerce retailers touch Amazon’s logistics network.
For that reason, Amazon spends a lot of money on shipping — an estimated $27.7 billion in 2018, up from $21.7 billion in 2017, Marketwatch reported. The e-commerce giant is making a number of moves into the shipping industry, from its own air fleet to package pickup robots that customers can own themselves.
Its partnership with Kohl’s is another one of those moves.
“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, told Marketwatch. “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.”
Instead of Amazon accepting thousands of shipments from thousands of individual customers, it can accept a fraction of the shipments from a limited number of Kohl’s stores. In effect, Amazon is buying in bulk — paying to pack and ship whole loads at once rather than one parcel at a time.
We’re not privy to details of the partnership between Kohl’s and Amazon, but its benefits are clear: More foot traffic for Kohl’s, and more consolidated shipments for Amazon — shipments that may soon fit snugly into an Amazon-owned and Amazon-operated network.
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