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12/27/2010
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Amazon Patents System For Returning Bad Gifts

Process cuts e-retailer's high cost of product returns by allowing recipients to exchange undesirable presents before they're even shipped.

40 Tech Gifts For The Holiday Season
(click image for larger view)
Slideshow: 40 Tech Gifts For The Holiday Season
Garish sweaters, dry fruitcakes, and plaid hats from Aunt Edith could become gifts of Christmas Past, courtesy of technology Amazon has patented that allows people to approve gifts before they receive them, thus allowing recipients -- along with aggregation and distribution companies -- to avoid the cost and headaches associated with returns and exchanges.

Although Amazon's innovation was not ready for the most recent holiday season, the online retail giant is working on a solution that could reshape gift-giving, according to the Washington Post, which reviewed patent documents. One option allows recipients to, for example, "convert gifts from Aunt Mildred" into something they'd prefer, the article said. The recipient would be notified of the prospective gift, and then approve receipt or request a comparably priced -- and wanted -- item in return.

"For example, the user may specify such a rule because the user believes that this potential sender has different tastes than the user," patent papers said.

There also is a "gift conversion rules wizard," so recipients can set guidelines based on preferences and allergies. Consumers could select "no pink clothes" or "no food with nuts."

Already the process has generated some negative feedback from people who believe that the system detracts from spirit of gift-giving. One objection is that recipients receive an email notifying them of both the anticipated present and its cost, and another is to an option within the system that generates a thank you letter.

"Gift giving is not just about the loot. It's about the fact that someone thought to get you something, and took the time to do it. That's no small thing in this world," Anna Post, great-great-granddaughter of late etiquette author Emily Post and spokeswoman for the Emily Post Institute, told the Washington Post.

But gift-returns are a costly, time-consuming proposition for both consumers and businesses, said some analysts. In fact, up to one-third of presents purchased online are returned, according to estimates, and Amazon's system could save billions of dollars once it's in place. In addition to shipping, e-tailers must deal with labor costs, processing at distribution centers, and, frequently, the losses associated with selling opened products at dramatically reduced prices.

This year, shoppers spent about $28 billion online: That means etailers could see up to $9.3 billion worth of returns in the next few weeks.

"This is absolutely a huge business problem. If you can get the right gift to a person the first time, this could be a huge cost-saving invention. From a retailer's perspective, this is like gold," Carl Howe, a Yankee Group consumer technology analyst, told the Washington Post.

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