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DoorDash launches Package Pickup for returns

In 2021, U.S. consumers spent $4.58 trillion — yes, trillion — on retail. But at the same time, retailers took back more than $761 billion worth of merchandise, or an average of 16.6% of all American sales.

The return rate tends to tick even higher following the winter holiday season. Customers returned about $158 billion worth of goods purchased between Nov. 1 and Dec. 24, 2021 — an average of nearly 18% of all sales during that period.

It’s that time of year again. And in anticipation of the floodgates opening, DoorDash on Wednesday put itself in the reverse logistics mix with the reveal of its Package Pickup feature, which allows users to return packages to their local carrier directly through the app.

The new service won’t encompass the entire reverse supply chain. DoorDash (NYSE: DASH) is working with the big three U.S. carriers — UPS, FedEx and the U.S. Postal Service — to build a sort of connective tissue. The customer gives the package to DoorDash, which passes it on to one of the carriers, and the carrier finally returns it to the merchant.

Customers pay a $5 fee — or $3 if you’re a member of DashPass, the platform’s premium subscription offering — and can select up to five packages per pickup, with the option to attach a prepaid shipping label or share a shipping QR code directly with their courier.

A gif demonstrates DoorDash’s new Package Pickup feature (Image: DoorDash)

After requesting a pickup, the customer hands off the merchandise to the courier, who sends them a confirmation photo once it reaches the carrier. The service is now available nationwide for 95% of Americans, DoorDash said.

“We are excited to introduce Package Pickup as a seamless and efficient offering for those looking to make returns during the busy post-holiday season and throughout the year,” said Gagan Gupta, product manager at DoorDash. “The extensibility of our platform allows us to power all local commerce and local delivery needs, with this newest offering enabling us to meet time-starved shoppers wherever they are.”

There are a few different ways customers typically return merchandise. One is home pickup like DoorDash now offers, which about a quarter of customers prefer according to research by PayPal’s Happy Returns. About 63% of respondents said they would be much more likely to shop with a retailer if those returns are free.

Consumers said the more popular method was to return goods in person for a quick refund, either directly to the merchant or to a return bar or post office.

Watch: Returns – the economics of the logistics and how to deal with Buyer’s Remorse

But while DoorDash will charge a fee for Package Pickup, it likely won’t face the repercussions a retailer would have in terms of customer experience. That’s because it isn’t actually selling any of the merchandise it’s returning for customers — instead, it drives loyalty through its food and grocery delivery and subscription services.

To boot, a $5 or $3 fee is nothing new for most DoorDash users, who are used to paying a delivery fee for food and grocery orders.

In fact, it seems that including the delivery fee was quite strategic. Initially, Package Pickup was run as a beta test in a few unspecified markets, and in-app screenshots indicated the service was planned without a delivery fee. Testing appears to have given DoorDash the confidence to bake in that charge without fretting about demand.

Another change from the beta test is the exclusion of store delivery drivers, who were originally indicated to be working alongside DoorDash couriers.

Believe it or not, this isn’t the first time a food delivery app has attempted to take on returns. In 2015, Uber introduced its Returns service through UberRush, a unit of the company that was shut down in 2018. The company’s reverse logistics service ended along with it. 

Now, DoorDash has the opportunity to either vindicate or invalidate its rival’s early efforts.

Click for more Modern Shipper articles by Jack Daleo.

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