If you haven’t yet heard, there’s a new Amazon return policy and it’s causing quite a stir among sellers who handle their own fulfillment.
Amazon has decided to change its returns policy starting on October 2nd, 2017 by automatically authorizing returns to third-party sellers who fulfill their own orders, a.k.a. MFN/FBM sellers.
That’s right: If buyers initiate returns with MFN sellers, Amazon will automatically authorize them and issue prepaid return shipping labels beginning on October 2nd, 2017 (to view this, you must be logged into Amazon Seller Central).
And if you don’t process a refund for a customer quickly enough, Amazon “reserves the right to refund the customer” on your behalf and then charge it to your seller account.
According to Amazon:
“Once you receive a return, we expect you to process a refund to the customer within 48 hours. If you do not process a refund within 48 hours, Amazon reserves the right to refund the customer and charge the amount to your seller account.”
On top of that, Amazon’s new returns policy includes an option for “returnless refunds.” This lets MFN sellers allow automatic refunds to be processed for certain items without the need for those items to be returned.
How might these new Amazon returns policies impact MFN sellers and the marketplace at large?
Keep reading for all the details!
Amazon’s new returns policy email announcement: Part 1
Below is the first half of Amazon’s email to sellers from late July:
Amazon is simplifying the returns process on items fulfilled by sellers. Starting October 2, 2017, returns of items that you fulfill and that fall within the Amazon returns policy will be automatically authorized. Customers will be able to print a prepaid return shipping label via the Online Return Center instantly.
We are also introducing 'returnless refunds,' a feature that is highly requested by sellers. If you so choose, you will now be able to set rules and automatically issue a refund without requiring an item to be shipped back to you. Sellers have requested this because, in many cases, it allows you to save on both return shipping and processing costs.
We hope these changes will reduce the effort required to manage your returns and decrease your customer Return Dissatisfaction Rate (RDR), thereby improving your ratings. Additionally, you will have full visibility into the end-to-end return process through shipment tracking information located on the Manage Returns page in Seller Central.”
Amazon does its best to soften the blow of its new returns policy, stating that it’s “simplifying the returns process” for MFN/FBM items.
It’s also worth noting that “returnless refunds” were introduced as “a feature that is highly requested by sellers.”
“Sellers have requested this because, in many cases, it allows [them] to save on both return shipping and processing costs.”
We’ll never know how many sellers actually requested these changes. And, it will take some time before we can assess how these new Amazon returns policies truly affect smaller sellers.
For now, one thing’s for sure: Many Amazon MFN sellers are NOT happy about these changes:
Two sellers react to the new Amazon returns policy for MFN sellers in Amazon’s Sellers Forum
New Amazon returns policy email announcement: Part 2
The next part of Amazon’s email includes in-depth information about sellers’ responsibilities within the new returns policy:
“Below are a few key details:
1. You are required to have a return address on file. If you want to specify a separate return address, please update your information in Seller Central (https://sellercentral.amazon.com/gp/on-board/configuration/global-return-address/index.html). If you have not specified a return address by October 2, your business address will be used as the return address.
2. You are required to issue a refund within two business days of receipt of a return. If you do not take action regarding the refund request, Amazon may refund the customer on your behalf and charge the amount to your seller account.
3. You might be responsible for the cost of return shipping in accordance with Amazon's policies.
4. Certain items are not eligible for prepaid return shipping. You can request exemptions for specific items in your inventory after August 31.
5. You can appeal return disputes directly to Amazon.
To learn more, visit the Prepaid returns for seller fulfilled orders help page: https://sellercentral.amazon.com/gp/help/202072200
Early participants have seen RDR go down by an average of three times after offering prepaid return shipping. If you would like to begin offering automatically authorized prepaid returns to customers before October 2, please respond to the survey below by August 11 to on-board by August 25.
Thank you for selling on Amazon.
The Amazon Selling Team”
Clearly, the new Amazon returns policy is a lot to take in, and sellers are unsure of how to react. Some have already predicted doomsday for small-scale sellers; others don’t think it will be so bad, depending on how sellers prepare.
The new Amazon returns policy in detail
Amazon has already updated Seller Central with a page reflecting the new MFN returns policy:
This is just the first part of Amazon’s new page on MFN returns. More from it later…
As you can see, it’s vital for sellers to ensure their accounts are properly set up to support prepaid return shipping. That means setting up a global return address for all prepaid returns to be shipped back to (more on the effects of this in the next section).
It’s also crucial for sellers to verify that the product weights and size dimensions for each of their listings are correct, as Amazon will be calculating return shipping costs based on those numbers.
Perhaps the most important information to familiarize yourself with is the section on ineligible items and exemptions, which we’ll examine in detail later in this article.
The implications of the new Amazon returns policy on dropshippers
This second part of Amazon’s email is very important to familiarize yourself with, as it explains how sellers:
- Must have one return address on file
- Must issue refunds within two business days of receipt of a return
- Can disallow prepaid shipping labels from being automatically printed for specific listings by getting them exempted (Professional sellers only)
The first bullet above has an especially profound effect on MFN dropshippers.
That’s because dropshippers tend to source from a multitude of locations. And, having to set one global return address for automatic returns forces sellers to pay for returns to one centralized location and then pay a second shipping charge to return the shipment to its original source (or, in some instances, to another storage facility).
All of these extra shipping charges might push MFN sellers to opt into “returnless refunds,” as some products will inevitably cost less than the price of return shipping and, thus, it won’t make financial sense to pay shipping to have them returned.
It may also push more MFN dropshippers into using FBA for fulfillment, further padding Amazon’s revenue.
More potential effects from Amazon’s new returns policy
If you scanned Amazon Seller Forums, then you saw some unhappy, even shocked, responses to the changes:
After all, it’s tough enough competing against bigger sellers on price and fulfillment, and MFN sellers have made a conscious choice to avoid using FBA and fulfill (at least some of) their own orders.
Now, many sellers are grappling with the idea that returnless refunds could cause a major increase in fraudulent returns. After all, if a buyer does her research, she can easily discover that paying for return shipping can be avoided simply by selecting certain reasons for a return.
That means that slick, underhanded buyers can manipulate the Amazon system to get certain items for free—if they know what they’re doing.
The chart below shows the first 15 reasons for returns that buyers can give to sellers, as well as who’s liable for paying return shipping (shown in the Fault column).
These are just the first 15 of 72 potential reasons for Amazon returns - full list here
Because Amazon always puts customers first, the company wouldn’t dare insinuate that its customers ever might lie about a reason for returning something.
Sellers, on the other hand, are facing what could potentially amount to direct hits on their bottom lines with these new Amazon returns policies making it easier than ever for buyers to commit fraud.
But not all sellers are worried about Amazon’s new return policy.
In fact, some sellers believe Amazon’s new returns policy will benefit them, even as others are preparing for an eCommerce apocalypse:
While some sellers will surely suffer because of these new MFN returns policies, it may just be another case of Amazon Darwinism coming into play. The smartest, most adaptable sellers will survive; the ones who can’t adjust will be devoured by superior competitors.
How to best handle the new Amazon MFN returns policy
Not all is lost: MFN sellers do have some ways to mitigate the effects of the new Amazon returns policy.
The main strategies are using exemptions for certain types of items (so buyers who initiate returns don’t automatically get a prepaid shipping label) and charging restocking fees to customers who initiate returns (when applicable).
First and foremost, Professional sellers should become very familiar with items that are ineligible to receive prepaid return shipping labels even when their returns auto-authorized (see screenshot below):
In instances when returns are initiated for items ineligible for prepaid shipping labels, sellers must handle returns the old-fashioned way, completing manual reviews and contacting buyers to coordinate return shipments. And, they still may be liable for issuing refunds.
It’s also noteworthy that sellers must file exemptions for items that require special shipping and/or handling.
This is highlighted again in Amazon’s next section on exemptions:
Sellers can begin filing exemptions for specific products after August 31st, 2017.
It’s in a seller’s best interest to file exemptions for heavy/bulky and hazardous materials right away to avoid any headaches from these types of goods receiving prepaid return shipping labels.
While not all exemptions are guaranteed to be approved by Amazon, the good news is that sellers can request exemptions for up to 50,000 SKUs at a time by following the process outlined in the screenshot below:
As mentioned, if an exemption is approved, sellers can handle returns of exempt items according to their default return settings.
The next way for sellers to mitigate the negative effects of the new Amazon returns policy is to take advantage of the opportunity to charge restocking feesto customers who return items.
This can only be done in specific situations and up to a certain, predetermined amount, as outlined below:
Final thoughts on the new Amazon returns policy for MFN sellers
While the initial reactions are often overblown by anxious sellers, some policy changes, such as the new MFN returns policy, warrant such a response.
In truth, some MFN sellers may have to adjust their product mixes to reflect the effects the new rules have on their potential profit per listing.
Some sellers may opt for FBA over MFN as a result of this update. Others may not feel comfortable selling low-priced items anymore out of fear that abusive buyers will take advantage of Amazon’s returnless refunds policy to score “free” goods.
On the flipside, buyers may feel more comfortable knowing that Amazon’s returns process is easier than ever, leading to an increase in overall sales.
We encourage all sellers to read up on what Amazon believes are the most important things to think about before issuing a refund, as seen in the screenshot below:
Lastly, understand the effects that other players will have on you when it comes to this new policy. If a return is lost or damaged in transit, sellers are liable for filing claims directly with the carrier (and will get nowhere trying to deal with Amazon on the issue).
Also, note that for listings where the shipping weight displayed on the Product Detail page was provided by another seller, Amazon Seller Support will require proof of the correct shipping weight to initiate a change.
We hope this article helps clear up the logistics of the new Amazon returns policy!
If you still have questions about it, please feel free to send them to firstname.lastname@example.org and we’ll do our best to provide you with an answer quickly!