Amazon informed third party sellers via email in early August about a new return policy. This new return policy dictates that all items sold on the marketplace will be automatically authorized for return. This was previously the case only for items fulfilled by Amazon. Now, third party sellers are expected to issue refunds for purchases immediately, and cover all associated return costs.
This new return policy took effect on October 2, 2017 despite heavy negative reactions from third party sellers. In effect, this new return policy means that there is no longer much distinction between merchant-fulfilled and Amazon-fulfilled. Moving forward, FBM and FBA sellers are subject to the same rules for shipping and returns.
How the New Return Policy Works
According to the email, dissatisfied Amazon customers have the option to directly print a prepaid return shipping label through the Online Return Center. This means that sellers will have no choice but to issue the requested refund. There is no more room for contacting the customer to try to understand and resolve their issue.
Once a return is received, Amazon takes the costs directly from the seller’s account and freezes them until the item is received. Sellers are notified by email, but have no real recourse. The only way the merchant can hope to see those funds again is if Amazon does not receive the returned item within the specified period – about 4-6 weeks.
This automatic refund option is convenient for customers, but seems like the other side of impulse buying. The ability to instantly apply for a refund and print a return shipping label will tend to encourage impulse returns. Customers who are upset with their orders will be able to react in anger. Merchants will get all the blame and suffer all the consequences, whether or not the customer’s reasons for the return are legitimate.
This new return policy leaves third party sellers with the additional burden of shouldering all the costs associated with returns. It basically removes that burden from the customer and transfers it to the merchant. By making it so much easier for customers to return unwanted items, it subjects FBM to the same terms as FBA. Many sellers who prefer not to go the FBA route are unhappy with the clandestine push towards Amazon fulfillment terms.
We all know that Amazon cares about the customer above all. This new return policy proves the extent of their commitment to customer satisfaction. Amazon wants to make it exceptionally easy for their all their customers to return items without suffering additional expense. Before the new return policy went into effect, only FBA orders were hassle-free. Third party sellers had the option of refusing returns, among other things, which often elicited negative reactions from customers. This did not sit well with Amazon.
It’s all about keeping the customer happy, regardless of how sellers may feel about the new return policy. Amazon sellers can take it or leave it – it’s always been this way.
Outraged Third Party Sellers
Most sellers don’t seem to recognize this new return policy as another part of customer satisfaction. Their initial reactions seem to show that they feel it is more of an attack from Amazon. It strikes them as either a random move that hurts them, or a push to further their logistics network by driving everyone to make the switch to FBA. It is likely that the latter is partly true, since it would serve their business interests, on top of the prime motivation of improving the customer experience.
Some sellers think that the new return policy it is not a wise move since it will encourage more customers to take more advantage of automatic free returns. But the burden of cost is transferred to sellers and does not rest on Amazon’s shoulders – unless the sellers choose to switch over to FBA. But it is rumored that customers pay more to access the automatic returns feature, so Amazon gains while sellers lose. Amazon denied that they levy a premium charge, however.
Whatever the reason behind it, the new return policy will hit small businesses most especially. Many third party Amazon sellers operate out of their own homes. They have no large networks to support them and not enough of a buffer. They are unsure that the new return policy will allow them to continue selling, let alone grow their Amazon businesses.
The effectivity of the new return policy also comes at the worst time for merchants. With Black Friday just around the corner, it is shaping up to be perhaps the most difficult season for third party sellers. For about four months from November to February is the busiest time of the year for sales, and many smaller Amazon businesses may not be able to make the numbers that they were hoping for. There isn’t much time left for them to prepare, either. Many may not be able to make appropriate adjustments to compensate for the impact that they anticipate from the new return policy.
Another aspect of note that has sellers up in arms is the new returnless refunds feature. Sellers can opt to waive returns for certain items and just issue the refund. This can end up less costly for them in cases where they cannot justify the costs of getting an item back. However, this also means that customers can take advantage and get items for free. It’s not a great choice for many since they can only choose to pay for return shipping or let the item go for free.
It’s Not All Bad
A few sellers don’t think that the new return policy is so bad. For one, the automatic pre-paid return labels are available at a much lower cost point. Plus, merchants will now have to focus less time and effort on returns, as Amazon noted. This reduces their costs and allows them to provide a better customer experience at the same time.
Additionally, Amazon is allowing sellers to list certain items in their inventory as exempt from the new return policy’s automated returns. This is perhaps the only real silver lining for most merchants. If they don’t want to join the FBA ranks to avoid return shipping charges, they can at least have Amazon exempt the few items which would mean huge losses for them with the new returns policy.