Amazon's non-grocery physical retailing efforts are increasingly running through department store Kohl's.
Kohl's said that it will offer free returns for Amazon customers starting in October across 82 stores in Chicago and Los Angeles. Under the effort, Kohl's will pack Amazon returns, ship them and return to the e-commerce giant. Amazon customers will even get designated parking spots.
Richard Schepp, chief administrative officer of Kohl's, said the partnership is an example of both companies "leveraging each other's strengths." Schepp added that the Amazon partnership highlights Kohl's store portfolio and omnichannel capabilities.
This deal between retailers comes after Kohl's said it will create Amazon smart home experiences in select stores.
If you zoom out a bit, this Kohl's-Amazon emerging partnership sounds like the two retailers are dating. Amazon acquired Whole Foods for a physical grocery presence as well as a fulfillment and omnichannel footprint. Could Kohl's give Amazon a larger physical store network beyond groceries?
The question isn't all that crazy given Amazon is obviously showing a penchant for real estate. Kohl's has a large store network and is using those assets to broaden its digital ambitions and fulfill orders. Kohl's also has a strong loyalty program that could provide more shopping data for Amazon.
In addition, Kohl's market capitalization is $7.57 billion. Amazon could digest that sum given that it spent $13 billion for Whole Foods. Amazon could also buy a retailer like JC Penney, which has a market cap of $1.29 billion, but isn't run nearly as well as Kohl's.
Add it up and the Amazon-Kohl's partnership may just be a way to find win-wins between rivals, but it's worth watching over time.
Online returns are a pain point for consumers, according to a recent JDA Software survey. The Kohl's partnership could solve a consumer issue for Amazon while bringing foot traffic to Kohl's.
JDA, a supply chain software provider, found:
- 70 percent of respondents said they'd prefer to return an online purchase to a store. One key reason among 33 percent of respondents was not wanting to deal with the hassle of return deliveries.
- 49 percent said paying for return postage and packaging was frustrating.
- 26 percent said a frustration was returning items by mail or carrier.
Amazon is focused on customers rather than competitors and that's bad news for every other company, which has to worry about real or imagined competition from the e-commerce and cloud juggernaut.
Amazon said it will keep Whole Foods running under current leadership as it expands its physical and grocery footprint in one swoop.
Omnichannel goes well beyond retail and the storyline about how Amazon is hurting brick-and-mortar retailing is more about innovation and customer experience.