The New Amazon Refund Policy…
Is it a Stake through the Heart of FBM Sellers?
Last week Amazon announced a new refund policy that could be a stake through the heart to many Third Party Sellers on the digital marketplace.
Starting October 2nd, marketplace sellers who ship their products from their own facility rather than using an Amazon facility…were notified last week by email that items they sell will be automatically authorized for return. Let that sink in for a minute.
While the stated objective of this policy change is to make it easier for Amazon customers to send back items without having to worry about the costs associated with the return expenses….the other less obvious impact it will have is to either flush more marketplace sellers to Amazon fulfillment, or possibly force them out of the marketplace all together.
New Rules of the Game…
Under these new rules starting October 2nd, FBM sellers will have to automatically agree to issue refunds to their customers if requested to. This means that the seller will not have the opportunity to work with the customer to try and resolve any issues thus avoiding the need to issue a refund!
Another new facet of this rule is that customers will be able to access a prepaid return shipping label using the Amazon “Online Return Center.” This means they will be able to print out the label at no cost to them… and at any time…to ship back the purchased item to the seller.
This means that the refund expense will automatically be placed onto the Seller. Thus the financial burden of the return shipping costs will impact sellers big and small. Unfortunately, not all of the sellers who will have to absorb this burden will be capable of surviving another line item on the debit side of the ledger.
Buyers vs. Sellers…
“While Amazon’s new policy will make it much easier for consumers to send back items fulfilled by merchants…creating “parity” with Amazon’s own FBA terms,” says Pat Petriello, Head of Marketplace Strategy.
“…many Sellers have expressed frustration with how this will impact their own operations, the policy change is yet another in a move aimed at making the shopping experience better for consumers on Amazon,” according to Petriello.
However, it is Petriello’s opinion that this new policy will also encourage Sellers to move more of their inventory into Amazon’s fulfillment network…or adhere to the new “customer friendly” terms, both of which should improve the Amazon customer’s experience.
Petriello pointed out that, “…from a practical standpoint, marketplace Sellers who aren’t already leveraging FBA are at a significant disadvantage when it comes to maximizing product visibility and conversion with this update serving to accelerate that reality.”
The Bottom Line…
If a customer today decides to return an item they have purchased, Amazon will notify the seller via an email. Funds from that sale are debited from the seller’s account and held by Amazon awaiting the customer’s return of the product.
Normally, when a customer decides to return an item, Amazon gives them about 30-45 days to entertain that transaction. If a customer fails to return the product, Amazon will usually return any withheld funds back to the seller.
It is during this time frame that the seller will typically contact the customer to find out why they have inquired about returning their purchase. If it is because they do not understand how to use the product correctly or some other issue that can be handled by the seller’s customer service department, the merchandise may never be returned and the customer is satisfied.
Under the new policy this contact by Amazon to alert the seller will not likely take place nor will the seller have a chance to satisfy the customer to reduce the chances of the return taking place at all. On top of that, the costs for this return will fall directly upon the seller with no chance of intervention on their behalf.
October 2nd….and ticking
At Mosaica we are constantly attempting to provide our clients meaningful information that will assist them in protecting their profits. Most of the time this means we are focused on their international foreign exchange management, however, when we feel something as important as this new Amazon policy needs to be addressed, we make it our business to help protect your business.
Make an appointment with one of our Executive Account Managers today to discuss this new Amazon policy and how you can thrive under it without necessarily resorting to FBA if you don’t want to.
