Will Amazon's new refund policy crush small businesses?

Amazon’s newest refund policy is stirring up controversy with their sellers as reported by CNBC.  Marketplace sellers not using Fulfillment by Amazon (FBA), but rather their home, garage or their own warehouse, received an email earlier this week on changes to take effect starting October 2.   As part of the revised policy, items that they sell will be “automatically authorized” for return.

The email states that “customers will be able to print a prepaid return shipping label via the Online Return Center instantly.”  This new feature means that there will no longer be communication between the buyer and seller before returning an item. 

An even bigger punch to the gut is the introduction of “returnless refunds.”  This feature enables sellers to offer a refund without taking back an item that may be expensive to return or too hard to resell.  Outraged, sellers believe that Amazon assumes all customers are honest and would not take advantage of the program by ordering, refunding, and receiving free items that they otherwise would have accepted. In addition, Amazon charges the seller for use of its return labels.  This extra cost is certainly not something that the sellers want.  However, CNBC notes that some sellers have stated in the forums that there will be a certain number of items exempt from the automated return policy.  This has not yet been confirmed by Amazon.

So why shake things up?  The most important objectives for Jeff Bezos is to please Amazon customers, give them more stuff at the lowest prices and at faster speeds.  Unfortunately, these changes come at the sellers’ expense.  Amazon’s strategy is to give customers the same experience regardless of how the order is fulfilled.

The new refund policy roll-out starts in October and should be in full swing by Cyber Monday and the holiday rush.

For more information, contact Schneider Downs or visit the Our Thoughts On blog.