Amazon Pays Customers For Pickup to Cut Delivery Costs

Amazon is offering customers a deal to lower delivery costs: Pick up your items, get $10.

As Reuters reported Monday (May 8), the eCommerce giant has recently begun emailing Prime subscribers offering them $10 to retrieve purchases of $25 or more at pick-up points like Amazon Fresh, Kohl’s stores and Whole Foods.

Among the customers getting the offer was Dean Maciuba, a shipping consultant from upstate New York.

He told Reuters the program can help Amazon avoid expensive package drop-offs and is “a huge opportunity for Amazon to reduce the cost of delivery,” while also helping consumers get used to returning products directly to the company.

PYMNTS has contacted Amazon for comment but has not yet received a reply.

The move comes weeks after reports that Amazon announced that customers returning items at UPS stores could have to pay a $1 fee if they have another method of free-return — such as Whole Foods or Amazon Fresh — available at the same distance away, if not closer.

Soon after this announcement, Amazon rival Walmart began doubling down on the free delivery, shipping and return services that come with Walmart+ memberships.

As PYMNTS wrote last month, consumer reaction to Amazon’s move is important because while the company “still dominates the subscription market, customers wishing to cut ties may end up on Walmart’s doorstep,” as having to pay to make returns will only compound the frustration shoppers feel with a product they already don’t want.

But Amazon isn’t alone in this practice. In March, PYMNTS reported that retailers had begun either scaling back on free shipping offers or attaching conditions to them.

That meant upping the minimum order size necessary to qualify for free shipping, reducing the speed of delivery, levying additional fees for faster delivery, and increasing the price of subscriptions that offer free shipping benefits.

And some retailers have also hiked prices to compensate for the expenses of free shipping or even eliminated their free shipping offers altogether. As noted here, these companies face a host of challenges, such as increased expenses for products and shipping, a downturn in eCommerce growth and worries about a recession.

Amazon, meanwhile, is paying customers to pick up items at a time when consumers are trying to avoid delivery in other transactions, such as ordering food.

“There has certainly been increased demand for pickup relative to delivery throughout this inflationary period,” PYMNTS wrote recently, after pizza chain Domino’s reported a 13% increase in pickups and a decline in delivery.

Research from PYMNTS’ study “Connected Dining: Rising Costs Push Consumers Toward Pickup” found that 39% of restaurant customers picked up their most recent orders, while just 10% chose to have it delivered.