Amazon’s Refund Policy for 3rd Party Sellers
Amazon’s #1 leadership principle is devotion to customer service.
It is the driving force behind Amazon’s policies that are strictly enforced and practiced by sellers.
It is part of the reason why sellers are suspended so readily in response to complaints – regardless of whether or not the complaint is legitimate.
Now, Amazon’s customer service 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. Amazon states that:
“sellers must match or exceed Amazon’s return policies”.
Click here to view Amazon’s policy for managing seller-fulfilled returns.
What does this mean for Amazon sellers? It means that there’s a few policy changes they must abide by. The new refund policy for 3rd party Amazon sellers are:
First, sellers are required to have a return address documented.
The sellers are responsible for refunding a customer upon return within two business days. Unfortunately, if sellers fail to meet the deadline, Amazon will conduct the refund for the seller, charging the cost to the seller’s account.
2 parts of this policy are raising concern: the automatic authorization for refunds & 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.”
Amazon has stated that customers will have automatic prepaid return shipping labels at their disposal and convenience. This is done seemingly to incentivize sellers to switch over to FBA since sellers who aren’t using FBA are subject to the same policy. 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 can hurt sellers. Once the customer decides to automatically return an item, the seller loses the opportunity to find out why the issue occurred. Customers no longer need to explain why they no longer want the item. If the seller cannot resolve these issues, this not only deprives them of the opportunity to improve their business, but they are also at risk of an Amazon account suspension.
If a seller is unaware of what caused the issue, then how can they resolve it? As any seller who has been suspended would know, a major portion of writing an appeal is stating the “root cause” of an issue. Unfortunately, sellers will not be able to learn why an issue occurred or what the issue is before the seller decides to return the item.
Our thoughts on the new refund policy for 3rd party Amazon sellers:
At Amazon Sellers Lawyer, we suspect that this new policy 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 with the seller’s product, the seller and customer are harmed in the long term.
If the seller is unaware of a problem with an item, they will be unable to remedy it and another customer may be unknowingly exposed to the same issue. Furthermore, sellers cannot resolve the issue that could have prevented a return in the first place, such as a misunderstanding regarding the operation of the item.
Mr. Levy further mentioned:
“Amazon said that it’s introducing ‘return-less 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.”
However, this return-less service 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 Amazon’s platform, and some fear this new feature is an opportunity for abuse. Essentially, a customer could make up a complaint about an item, receive money back, and never have to return the item.
Fortunately, AMZ offers an appeal option where sellers can appeal the return.
The caveat is that the AMZ appeals process has been historically complicated. It’s important for sellers to know that they have options with the new update when it comes to the return-less service. It’s also important to be diligent with the implementation of policies. It seems that with the update, customer satisfaction comes at the cost of 3rd party sellers.