Product returns have always been Amazon’s Achilles’ heel, especially for purchases such as home electronics that are difficult to package and ship. But lately Amazon has been trying to make the process of returning products easier. In 2017, Amazon announced an expansion of its self-service lockers across Whole Foods locations, making it easier for customers to pick up and return orders. One development that intrigues us at Moonshot involves Amazon collaborating with a frenemy: Amazon Returns at Kohl’s.

In September 2017, retailer Kohl’s, which operates 1,100 stores, announced the launch of Amazon Returns centers at 82 Kohl’s stores in Chicago and Los Angeles. Starting in October, select Kohl’s stores would pack and ship eligible Amazon return items for free. As Kohl’s explained:

Amazon Returns at Kohl’s creates a convenient location for Amazon customers to return eligible merchandise to select local Kohl’s stores. Items can be returned free of charge regardless of return reason and regardless of whether the items are packaged for shipping. Kohl’s will package and transport all returned items to Amazon return centers. As an additional convenience, customers visiting Kohl’s for Amazon Returns at Kohl’s services can use designated parking spots near the store entrance. Starting in October 2017, Amazon Returns at Kohl’s will be available at 82 Kohl’s stores in Los Angeles and Chicago.

Why would Kohl’s partner with Amazon? The answer is simple: to generate foot traffic. As I blogged on March 1, Kohl’s has been putting more focus on maximizing the value of its brick-and-mortar locations, which is one reason why Kohl’s recently reported fourth-quarter earnings and revenue that exceeded analysts’ expectations. Generating foot traffic is essential to achieving growth in same-store sales.

We recently visited one of Amazon Returns at Kohl’s locations (in Woodridge, Illinois) to better understand the Kohl’s approach.

First off, Kohl’s means business with Amazon Returns. The Woodridge store features prominent signage outside and inside the store to ensure that customers know about the service:

In addition, the return station at the Woodridge location is located in a prominent, visible spot at the front of the store.

When we visited the store, the store associate in charge of the returns center that particular day was busy fulfilling what appeared to be a sizable assortment of boxes. She explained to us a few interesting details about the center:

  • The return center is located at the front of the store even though placing it at the back would have encouraged customers to walk through the entire store to use it. Reason: Kohl’s already operates its own returns counter at the back of the store. Co-locating an Amazon returns booth was confusing customers who wanted to return their purchases from Kohl’s.
  • To encourage foot traffic, Kohl’s gives Amazon Returns customers coupons with discounts for in-store purchases.

When Kohl’s announced its fourth-quarter earnings March 1, CEO Kevin Mansell said it is too early to measure the impact of the return centers, but Kohl’s will provide a report at some point in 2018. Indeed, a casual visit to one store provided but one on-the-ground perspective, but it’s clear to us that Kohl’s intends to make the effort succeed.

Throughout 2018, Kohl’s will continue to invest in its stores as part of an omnichannel strategy. To be sure, Amazon is a threat, but Kohl’s understands that without Amazon, shoppers would go online, anyway – so the chain is being creative about giving people a reason to visit its stores by partnering with the biggest online retailer of them all. Amazon Returns is a smart strategy if Kohl’s can manage the uptick in labor and shipping costs. Let’s see how the service plays out.

Saul Delage

Saul Delage

VP Growth