Costco has one of the most generous return policies in all of retail.
The chain calls it a “Risk-Free 100% Satisfaction Guarantee” and explains its merchandise return policy as follows: “We guarantee your satisfaction on every product we sell, and will refund your purchase price.”
There are, of course, exceptions, and those are listed on the warehouse club’s website.
It’s not uncommon for me to order something and then not use it for months. That has, on occasion, left me with clothes that don’t fit or items that don’t meet my needs, which are no longer returnable.
That’s why Costco’s no-time-limit-on-returns policy is particularly useful for me. At the warehouse club, I could walk in with the item, and while it helps to have a receipt, they can often process a return many months later without one. It’s a very member-friendly policy that consumer advocates applaud.
“In general, Costco’s return policies are as good it gets,” according to Consumer Reports.
Unfortunately, its generous return policy leaves Costco with merchandise that may be opened, used, or otherwise unsuitable for resale in its warehouses.
That problem is compounded by the fact that the chain carries a rotating selection of merchandise, so by the time some items get returned, they may no longer be something the chain stocks on its shelves.
Costco has a solution for its returns problem, but it’s not one that members can participate in.
Costco holds liquidation auctions
Slashgear, a technology and car reviews and news website, detailed how Costco handles its returned and unsold merchandise.
“As it turns out, thousands of those returned items then head to the retailer’s liquidation process. There, Costco sells them in bulk to approved businesses through Costco Wholesale Liquidation Auctions: the company’s official business-to-business liquidation marketplace,” Slashgear shared.
The auctions give Costco a way to recover some value from merchandise that it may no longer be able to sell through its regular warehouses.
“Operated through B-Stock, the marketplace sells everything from apparel to electronics, major appliances, furniture, toys, food, and sporting goods. That’s not to suggest it’s all open-box stuff, either. Costco’s B-Stock auctions get their inventory from several sources beyond customer returns, including overstocked merchandise,” Slashgear added.
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These auctions, however, have strict requirements for participation.
“In order to view and bid on Costco auction listings, you must be an approved buyer. To successfully apply to the marketplace, you must provide A) a valid state-specific resale certificate for U.S. buyers OR B) a Proof of Business for international buyers, when applying for marketplace approval. Please ensure that you provide a valid U.S. address, as shipment must be accepted in the U.S.,” B-Stock explained on its website.
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Costco’s return policy is among the most generous
Consumer Reports researched 24 retailers that sell small electronics and found that it remains at the top of the pack.
“Costco’s return policy is the most flexible. There’s no time limit for returns, and the highly rated warehouse store covers return shipping costs for items purchased on Costco.com,” the magazine shared.
The warehouse club even teaches its employees about its return policy in its orientation documents.
“Costco offers a ‘Double Guarantee’ — 100-percent satisfaction guaranteed on all
merchandise and membership fees. If members are dissatisfied with anything they
purchase at Costco, including their membership up to the 365th day, they may
return it for a full refund,” the chain shared with new employees.
Related: History of Costco: Company timeline and facts
Costco’s return policy does have limits
There are, however, limits to Costco’s generosity, at least when it comes to members who try to take advantage.
“Costco allows returns on most items with no official deadline, but the company does track return history and can flag shoppers for excessive returns,” Consumer Affairs reported.
The chain does not share its criteria for flagging a member for abusing its return policy.
“The exact percentage that gets you banned from returning items is not known, but one employee said that members who return at least 50% of their purchases will get flagged. This is especially true for shoppers who appear to use products temporarily and then bring them back after heavy use,” Consumer Affairs added.
The magazine shared a list of examples that employees often complain about, including:
- Returning mattresses years later because they became “uncomfortable”
- Returning patio furniture after summer
- Bringing back a dead Christmas tree after the holidays
- Returning large TVs the day after the Super Bowl
Consumer Affairs shared what it called a “Pro Tip” for not running afoul of Costco’s generous return policy.
“Think of Costco’s return policy as a customer satisfaction tool — not a free rental program. Occasional legitimate returns are no problem. It’s the repeated high-dollar returns that will attract their attention,” it wrote.
Related: Loss of Costco deal helps push beverage brand into Chapter 11
