Amazon Cuts Back on Free Returns While Walmart Gives Away Free Memberships

For Amazon and Walmart customers, convenience is key for each step — everything from ordering to paying to receiving a delivery order or picking up goods — and few things are more convenient than free services. Amazon Prime and Walmart+ offer members free deliveries, free video streaming, free returns and other perks.

The problem with “free” services is that somebody has to pay for them: the retailers, merchants or consumers. Although free services can spark customer satisfaction, financial pressures may lead some merchants to transfer some of these costs back. One service in particular that may not return is, in fact, free returns, as retailers such as Foot Locker, Urban Outfitters and JCPenney are now charging a fee when consumers return items.

The latest company to cut back on free returns is the very one that arguably pushed competing merchants to offer free returns in the first place: Amazon. Two weeks ago, the eCommerce giant announced that customers returning items at UPS stores might have to pay a $1 fee if they have another free-return option the same distance away or closer.

The explicit reasoning for this strategy is unclear. It undoubtedly reduces costs but could also serve as a way to pull back from their collaboration with UPS while rerouting customers to other locations where returns will remain free, such as Whole Foods, Kohl’s, and Amazon stores. After all, consumers may make purchases at these locations after returning their items.

Time will tell how consumers react to this new fee and whether this move will impact Amazon’s customer base, both Prime members and non-subscribers. Consumer reaction to this move is important because although Amazon still dominates the subscription market, customers wishing to cut ties may end up on Walmart’s doorstep. Having to pay to return items, in itself an action consumers only take when unhappy with their purchases, may compound frustrations and make shoppers look for other options. The amount of consumers without a subscription is significant, too: 35%, or 91 million U.S. consumers, fall into this category, per PYMNTS data.

It seems that Walmart has already taken note of Amazon’s policy change and is doubling down on the free services that its Walmart+ membership includes. Walmart made two splashy announcements on Monday, April 24, reiterating that Walmart+ members will still receive free deliveries, shipping and returns and that it is giving away 20,000 memberships to new moms in May to celebrate Mother’s Day. These moves suggest that Walmart is willing to foot the bill in the short term if these moves can expand its subscriber base.

Promoting free returns for members isn’t new for Walmart. Last Christmas, the company launched curbside returns and return pickups from home for Walmart+ members to ease the holiday season shopping experience.

Notably, this battle is taking place over free returns in particular,  as many U.S. consumers consider this a key shopping feature. PYMNTS’ data finds that 35% of consumers consider the ability to return their purchases for free an essential element of online shopping that merchants should offer.

Ultimately, Amazon is still offering free returns to consumers in many instances, but this slight policy shift has left an opening for Walmart, which is ready to welcome those consumers unwilling to pay a $1 fee.