Will Amazon’s new return policy help or hurt its marketplace sellers?

Discussion
Source: Amazon
Aug 04, 2017
George Anderson

Customers who have had a problem with an order placed on Amazon.com know that returns for products sold directly by the e-tailer are a no hassle affair. The policies of third-party marketplace sellers, however, can be decidedly different, often leading to frustrating experiences, as some do not accept returns. That, according to a CNBC report, will soon change as Amazon has informed third-party sellers that all orders placed through the site will automatically be eligible for return starting on Oct. 2.

While the new policy can be viewed as further evidence of Amazon’s commitment to its customers, some marketplace sellers see it as an arbitrary move that will hurt their businesses.

One seller, 4Thought Products, posting on an Amazon forum wrote, “This policy is stupid and costly to Amazon for FBA (Fulfillment by Amazon), and now they want to expand it further so more buyers can fraudulently ‘game the system’ on third-party sellers as well. … This is nothing short of BS and another way to shift the cost of creating ‘great customer buying experience’ into sellers’ pockets. Like every other bad policy change by Amazon, if you don’t like it, too bad, they run the racket.”

Not all sellers were critical of Amazon’s move, with some suggesting that those voicing complaints hadn’t looked at the change closely enough to see its benefits.

One seller, Mav-Dak, who claimed to be involved in a beta test of the program for six months, wrote in response to the 4Thought Products post, “The fact the buyer gets an immediate approval and pre-paid label is a benefit to the buyer — and to us since I did not have to process it. If we are responsible for the return shipping costs, I pay less since Amazon’s labels are at a much lower cost point than I am able to get. If we are not responsible for the return shipping we get the reimbursement. … Our return rate and reasons have not changed on this new program either.”

DISCUSSION QUESTIONS: Will Amazon’s new returns policy prove detrimental or beneficial for third-party sellers on its marketplace? Does Amazon need to work on its communications and, overall, its relationships with its marketplace sellers?

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19 Comments on "Will Amazon’s new return policy help or hurt its marketplace sellers?"

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Art Suriano
BrainTrust

I’m surprised it has taken Amazon this long. Consumers buying products online are always more comfortable when they know they can return them. It adds credibility to the company selling the items. I would see most of Amazon’s third-party vendors as being fine with this. If a vendor finds themselves with too many returns, then that is a wake-up call to find out why and not a reason to blame Amazon. Overall, I think this will prove to be successful for Amazon, its third-party vendors and its customers.

Tony Orlando
BrainTrust

Amazon is flexing its muscle and it is their way or the highway. If the third-party sellers don’t like it, too bad. This is what a powerful mega-company can do with its vendors, just like Walmart. Some third-party sellers will either go along or get out, as fighting this will be a waste of time. I talk to many vendors who have been dealing with Walmart stores for years and they are powerless to stop the bullying on delivery times, pricing and service, so now it is Amazon’s turn to let their third-party vendors know exactly who is in charge. Meanwhile back in the real world, life goes on and we need to stay focused on our strengths to improve our bottom lines.

Paula Rosenblum
BrainTrust

I can appreciate the problem on both sides. Consistency is correct, but apparel returns (and jewelry) are helacious. Attempts to reduce returns have been around as long as direct-to-consumer has existed.

Still, it’s part of the table stakes and it’s simply the only way to go.

Sunny Kumar
BrainTrust

If third-party vendors truly believe in the quality and value of their products then why should they have a problem with this? I understand that returns are a big issue and there will always be those who will play the system, but I would imagine providing a place to buy where the returns policy is simple and consistent can only lead to increased reassurance, trust and sales. For reputable vendors this can only be a win-win.

Gene Detroyer
BrainTrust

Unfortunately, some marketplace retailers tend to think of returns as something coming from the enemy. And I have found some of their policies a bit convoluted.

As a result I avoid buying from all marketplace retailers, period. I don’t even give them a chance. To their credit, however, I have never had a problem — but why make it harder for me than it has to be?

The marketplace retailers should join the 21st century.

Harley Feldman
BrainTrust

This return policy will hurt some of Amazon’s sellers. A friend who sells products to Apple and Amazon has seen the difference. Apple has a no-hassle return policy. The Apple customers who return his product are given a full refund which his company must eat. Amazon does not have that policy right now and will re-sell his products as used. His product profit margin turns out to be higher at Amazon due to the policy difference. He has given up on Apple sales due to the lower margin. If Amazon goes to a no hassle return policy, it will lose a lot of its sellers for the same reason. Good for the consumer but not good for the seller.

While Amazon should be applauded for its no-hassle return policy, it needs to work with its suppliers so the supplier does not eat all of the cost when returns happen.

Steve Montgomery
BrainTrust

Amazon is doing this because it can. The third-party sellers elected to work with Amazon because it gave them access to customers they might not have had before. However, Amazon customers found it confusing that when buying from Amazon in some cases that got free returns and in other cases they did not.

This makes it simple. You buy from Amazon’s site you get free returns. I am not sure if this makes it better or worse for the third-party sellers, but it does makes it better for Amazon and the people who make purchases on their site. It also may make items bought from the third-party sellers a little more expensive.

Camille P. Schuster, PhD.
BrainTrust

If sellers do not want satisfied customers, want to stand behind what they sell and do not like Amazon’s new policy, then they can stop selling through Amazon. Amazon does value consumers and stands behind what it sells — that is why consumers continue to purchase more from Amazon. If third-party sellers do not want to support that philosophy then they can stop selling on Amazon.

Anne Howe
BrainTrust

I learned a lesson via this policy last week when I ordered a $7 part that didn’t fit. It shipped to me FBA free due to Prime, but the return shipping was $6.30 leaving me a .70 cent credit on the return. I will no longer be too lazy to drive to Lowe’s.

Kevin Graff
BrainTrust

I’ve told retailers for years that an open return policy isn’t designed to just give money back to customers, it’s designed to make selling to them much easier. Stop thinking about the marginal few who will abuse the system and start thinking about how you can promote the policy to make more sales. The cost of fraudulent returns pales in comparison to what retailers pay the credit card companies every year.

Kiri Masters
BrainTrust

Amazon has always required merchants who fulfill their own orders to provide a customer-focused return policy. It was easy for customers to dispute issues with sellers who didn’t accept their product return, so Amazon is essentially automating something which was previously enforced reactively.

Anything Amazon can do to improve the customer experience and help shoppers feel comfortable buying on Amazon, no matter who fulfills the order, will help maintain trust and therefore sales on the platform. By lessening the “risk” of buying from a third party on Amazon, more customers might be willing to venture outside of buying only products which are Prime eligible.

To be fair, the policy will be a challenge for many sellers, especially those in categories where returns are very costly (e.g., furniture). And Amazon does face customer fraud issues where customers don’t actually send back the product at all or are dishonest about the reason for returning a product. But in order to consistently deliver on their brand promise to be “Earth’s most customer-centric company,” Amazon had to clean up the policies of sellers who fulfill their own orders.

Doug Garnett
BrainTrust

First, this seems like a no-brainer. Amazon needs consistency in return policies among all sellers.

That said, Amazon’s error was allowing other practices to develop — and now they are hurting the resellers who allow Amazon to have the appearance of offering “everything.”

This is yet one more bit of damage to third-party sellers — and I’ve been hearing a LOT of complaining about Amazon using heavy handed policy changes to damage their businesses. Many feel like it’s been a “bait and switch” — after relying on Amazon to build effective businesses, Amazon is now taking away their profit.

I’ve warned before that those relying on third-party Amazon selling need to watch out for a big pivot — as Amazon finally takes profit seriously it seems likely that Amazon will make big changes that hurt them, like pivoting to brick-and-mortar.

Shep Hyken
BrainTrust

Good move by Amazon. Creating the consistent experience, even with returns, is important to maintaining the customer’s trust and confidence. If I buy from a third party through FBA and the retailer doesn’t honor returns at the same level, it will reflect not only on that retailer but also on Amazon. Amazon is saying that if you aren’t good enough to guarantee your merchandise with a customer-friendly return policy (Amazon’s is exactly that) then go find another place to market your product. In the end, the customer will trust Amazon and any other retailer working through Amazon. This is good for everyone.

Ryan Mathews
BrainTrust

It will benefit honest sellers and hurt the scam artists who over-promise and under deliver. If Amazon wants to be fully trusted by its customers it has to make certain that the standards that it applies to itself apply to everyone who sells on its platform. As a consumer when you get burned by a seller on the Marketplace you — more than likely — believe you had a bad experience with Amazon. Will it make it more expensive for sellers? No doubt. Will it build Amazon’s brand? No question. As to the second question, today Amazon is holding most of the cards. Tomorrow? Who knows.

Kai Clarke
BrainTrust

Welcome to retail in the U.S.! All sellers, both Amazon and FBA sellers, should be held to Amazon’s return policies — including hassle free returns. This will make returns simple and without concern for any of the customers. The rest of the retail world (not online) here in the U.S. follows simple, hassle-free returns this way. Why wouldn’t sellers on Amazon expect to do business here the same way?

Ed Rosenbaum
BrainTrust

I would think the third party retailer would know the rules of the game when they decide to play. Not that I think Amazon is right; but they are customer centric.

Ricardo Belmar
BrainTrust

This is what consumers demand and Amazon is delivering on their promise of customer service. It’s the right move for them to bring more consistency to their shopping experience. For better or worse, it’s what all sellers need to do to keep customers happy or risk losing sales. Are marketplace sellers right to be upset? Maybe, but you have to believe that trusted, reputable sellers won’t notice a difference.

While there are the select few who abuse the system, the majority of shoppers do not, and those shoppers will now be more open to buying from marketplace sellers where before they were hesitating.

Jett McCandless
BrainTrust

Amazon doesn’t have to work on their relationships with sellers, sellers have to work on their relationship with Amazon. They have all the leverage in this situation. It might hurt sellers to some degree, but nowhere near as much as being left off Amazon. This will simply serve as a means to drive efficiency for sellers, which might have some growing pains associated with it, but it will be a good thing in the long run.

Dan Frechtling
BrainTrust

I agree with Kevin’s point that the those who take advantage of the rules are outnumbered by those who follow the spirit of the rules.

However, the “fraudulent few” do exist. We see them in brick and mortar returns, false complaints, credit card chargebacks, even frivolous lawsuits. They hold multiple accounts and can be spotted load balancing offensive activities.

Amazon has the ability to identify those abusing the system and (1) warn them, and (2) share a watchlist with third party sellers of those who defraud Amazon or its sellers. That reduces the friction of buying, because honest marketplace shoppers aren’t committing to irreversible decisions. It also can reduce friction out of selling by limiting sellers’ long tail losses.

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