Weird story going around in market news today that Kohl’s, the American, brick-and-mortar, clothing / household goods chain has experienced a sizable stock bump over news that it will begin accepting Amazon returns at all of it’s 1,000+ locations.
Traffic Equals Sales
Whether you are online, or out here in the real world, when it comes to retail, traffic equals sales. For my online web properties, I earn more income, referral fees, ad sales, or commissions from sites that have more traffic. At Kohl’s, more traffic also equals more sales, and so…
As you might guess, there are plenty of people who walk into a Kohl’s store with an Amazon-ordered survival knife to return, get the return setup, and walk right back out without even turning their head to look at what Kohl’s has in stock.
But, you can also imagine the guy who walks in with his zombie-killing survival knife return, and notices a well-priced pair of binoculars, a pair of cargo shorts, or even a fun new top for his daughter on the way out. These sort of “drive by” buying impulses are the goal of sales, discounts, and advertising. A customer comes in to get that really low-priced, water-proof Big Hero 6 watch, and walks out with not only a zero-margin watch, but a profitable hot-air fryer, leather wallet, and a Rockies hat. Get enough people in this category, and high-volume Amazon returns are a gold mine.
Free Amazon Returns at Kohl’s
None of the above is any surprise to anyone who analyzes retail, so Kohl’s stock did a nice 10% bounce on news that it would accept “eligible” Amazon returns at all of its locations, rather than just some stores as part of a pilot program.
It’s a bit of a ding against Kohl’s that returning another retailer’s merchandise can be seen as such an improvement in its business model, but if it can capture more sales, then pride be damned.
The costs to Kohl’s aren’t very steep either. Sure it takes another worker (mostly low-paid, without benefits), some shipping supplies, and some shipping expense to get the items boxed up and sent back off to Amazon. But, a few hundred dollars in extra sales each month ought to absorb most of that expense.
And the rest?
Higher revenue per share, baby.
“Say… is that an bluetooth alarm clock, with a remote and iPhone charging slot that projects the time on the ceiling?….
I didn’t even know I needed that.”