Will Amazon's new return policy help or hurt Marketplace sellers?
Amazon has built its reputation on making it insanely easy for consumers to shop on its site, and hassle-free returns are part of that promise. That being said, some policies — including how to handle returns — were not universal for Amazon's products and those of its Marketplace sellers.
News that a new policy will require Amazon's third-party sellers to abide by the same rules — meaning that all orders placed through the Marketplace will automatically be eligible for returns beginning Oct. 2 — has some sellers fuming. Many sounded off on social media, and at least one emailed Retail Dive to voice their frustration with the new policy.
With each private label launch and each brand that agrees to sell on Amazon — Nike being the most recent — a discussion inevitably follows as to whether Amazon will introduce a similar product or undercut the price and brand equity of its partners.
This new return policy sparked a similar debate among Marketplace sellers, who believe the policy will hurt profits. One such seller, 4Thought Products, posted on an Amazon forum that, "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 see the new policy as a negative, though. Mav-Dak claimed to be involved in a beta test of the program for six months and responded to 4Thought Products with: "the fact [that] 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."
For it's part, Amazon believes the policy will improve the customer experience and aid Marketplace sellers. "These new features allow sellers to reduce time and cost associated with returns while providing customers with an easy and efficient return experience," Amazon said in a statement emailed to Retail Dive. "When a customer knows that a return will be easy, they are more likely to purchase a product from a seller. Automated returns are applicable to in-policy returns only and sellers can receive exemptions to have specific inventory excluded. Additionally, the ability to have refunds without a product return is a highly requested opt-in feature that can be cost-effective for many sellers; sellers can choose to participate if it makes sense for their business."
RetailWire asked its BrainTrust panel of retail experts the following 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?
Here are seven of the most provocative and insightful comments from the discussion. Comments have been edited by Retail Dive for length and clarity.
1. What took them so long?
Art Suriano, CEO, The TSi Company: 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.
2. Large-scale bullying
Tony Orlando, Owner, Tony O's Supermarket and Catering: 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.
3. The new table stakes
Paula Rosenblum, Managing Partner, RSR Research: I can appreciate the problem on both sides. Consistency is correct, but apparel returns (and jewelry) are hellacious. 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.
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