Should Amazon Encourage Shoppers to Start Returning Things?

We’ve shown how Amazon streamlines the return process to minimize customer inconvenience and cost. Still the retail analysts lament how returns diminish operating margins. So, customer returns become a necessary evil. We think for Amazon, the “necessary” may be more true than the “evil”. 

40% of recent US Amazon shoppers report never having returned an item to Amazon. One might think Amazon should love these customers. Yet, the data suggests shoppers who return their Amazon purchases from time to time are better customers. Those with the most recent returns spend more than twice as much non-returners (Chart 1).