Amazon’s New Refund Policy for Third Party Sellers
Amazon’s number one leadership principle is customer obsession.
It is the driving force behind why Amazon has a series of policies that are strictly enforced by sellers. It is part of the reason that sellers are suspended so readily in response to complaints – regardless if the complaint is legitimate.
Now, Amazon’s customer obsession principle is responsible for the most recent update that puts some third party sellers in a difficult situation. Those third party sellers who operate independently from Amazon’s FBA are now subject to meeting the same standards as FBA.
What does this mean for sellers?
It means that there are a few policy changes that they must abide by. First, sellers are required to have a return address documented. The sellers are responsible for refunding a customer upon return within two business days. What is unfortunate for sellers is that if they fail to meet the deadline, Amazon will conduct the refund for them, charging the cost to their account.
However, what is concerning sellers the most are 2 features: the automatic authorization for refunds and return less refunds.
Ari Levy from CNBC stated, “Marketplace sellers who ship products from their home, garage or warehouse — rather than using Amazon’s facilities — were told this week by email that starting Oct. 2, items they sell will be ‘automatically authorized’ for return. That means a buyer will no longer need to contact the seller before sending an item back, and the merchant won’t have the opportunity to communicate with the customer.”
Customers will have automatic prepaid return shipping labels for their convenience. This is done seemingly as an incentive to make the switch over to FBA since all sellers who do not use the FBA service will be subject to the same rules. Amazon wants to ensure that all of their customers receive the most convenient shopping experience. That includes having an easier time returning unwanted items. However, this automatic option hurts sellers.
Once the customer decides to automatically return an item, the seller loses its opportunity to find out why the issue occurred. Customers no longer need to explain why they no longer want an item. If the seller cannot resolve issues this not only deprives them of the opportunity to improve their business, but they also are at risk for suspension. If a seller is unaware of what caused the issue, then they cannot resolve the issue. As any seller who has been suspended would know, one major portion of writing an appeal is knowing the “root cause” of an issue. Unfortunately, sellers will not be able to learn why or what an issue was before the seller decides to return the item.
Amazon’s New Refund Policy for Third Party Sellers – Amazon Sellers’ Lawyer Thoughts
At Amazon Seller Lawyer, we suspect that this may cause issues for sellers down the line. Most sellers want to follow Amazon’s policies perfectly. They form their business around their customers and work diligently to resolve any issues that may occur. By removing the middle period where a seller can learn why a customer is dissatisfied the seller is harmed in the long run, as are the customers. If the seller does not know what is wrong with the item, they will not correct the problem, then other customers are exposed to the same issue. Further, sellers cannot resolve an issue that could prevent a return in the first place, such as a misunderstanding on how to operate an item.
Mr. Levy further mentioned, “Amazon said that it’s introducing ‘returnless refunds,’ a feature that the company said is ‘highly requested by sellers.’ The change enables sellers to offer a refund without taking back an item that may be expensive to ship and hard to resell.”
The returnless service, however, is allegedly optional since sellers are able to opt out of the option for items they sell. This feature, while not mandatory, is also of high concern for sellers. Many sellers are subject to fake customer complaints and reviews. There is an enormous amount of fraud that occurs on the Amazon platform, and some fear this new feature is an opportunity for abuse. Essentially, a customer could make up a complaint about an item, receive their money back, and never have to return the item.
Fortunately, Amazon is offing an appeal option where sellers can appeal the return. Unfortunately, as sellers know, the Amazon appeals process has been historically complicated. It is important for sellers to know that they have options with the new update when it comes to the return less service, and it is also important to be diligent with the new implementation of policies. It seems that with this update, customer satisfaction comes at the cost of the third party sellers.