Will Amazon's New Refund Policy Destroy FBM Sellers?

By Tinuiti Team

Earlier this week, Amazon announced a new refund policy that could be the final blow to some Third Party Sellers on the Marketplace.

According to CNBC, “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.”

The objective of the policy change is to make it easier for Amazon customers to send back items without having to worry about the burden of expense.

What You Need to Know About The New Return Policy:

1) Third Party / FBM sellers will have to “automatically” issue refunds to their customer without the opportunity to communicate (aka offer repairs or helpful services).

2) Using Amazon’s “Online Return Center” customers will have automatic access to a prepaid return shipping label, which they can print out and use to send back items.

Now that the refund expense is automatically placed onto the Seller, there is growing fear among some small operating FBA sellers that they will go out of business due to the financial burden of return shipments.

“Amazon’s recent policy change will make it easier for consumers to send back items fulfilled by merchants, creating parity with Amazon’s own FBA terms,” Pat Petriello, Head of Marketplace Strategy said.

“While many Sellers have expressed frustration with how this will impact their own operations, the policy change is yet another in a move aimed at making the shopping experience better for consumers on Amazon.”

“This shift will encourage Sellers to move more of their inventory into Amazon’s fulfillment network or adhere to the new customer friendly terms, both of which improve the user experience.”

“From a practical standpoint, marketplace Sellers who aren’t already leveraging FBA are at a significant disadvantage when it comes to maximizing product visibility and conversion with this update serving to accelerate that reality.”

How Do Amazon FBA Returns Currently Operate?

In the event a customer decides to return an item they have purchased, Amazon will notify the seller via e-mail and funds from that sale are taken from the seller’s account and held by Amazon awaiting the customer’s return of the product.

Typically when customer decides to return an item, Amazon gives them about 30 – 45 days to do so. If a customer fails to return the product, Amazon will usually return any withheld funds back to the seller.

If you would like to learn more about Amazon’s return policy, check out “How to Reconcile Amazon Seller Returns & Reimbursements

For more information on Amazon’s latest return policy, email [email protected]

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