Amazon's latest policy change has sellers worried over extra costs on returns, especially because the charges will be completely out of their control and is solely dependent on the customers.
An Additional Burden on Sellers
Amazon announced that starting January 14, 2023, FBM sellers will be responsible for shipping correction charges on returns of seller-fulfilled orders. These charges occur for two reasons:
- When the dimensions or weight of the returned item does not match the one provided in the return label and
- When the return address is invalid
An $18 charge for every package will be incurred by sellers if the item is undeliverable to the address provided, while the amount varies depending on the excess measurement or weight for the first reason.
The announcement does not specify a cut-off order date for orders that will be covered by these changes, which means that as long as the customer is still allowed to return an item and it is done on or after January 14, 2023, the seller will have to shoulder the additional costs.
More Vulnerable to Returns Fraud
Unsurprisingly, sellers expressed their concern over this new policy, especially because it covers orders made during the holidays, and Amazon also recently extended the holiday returns window.
While there are legitimate reasons why customers return items to sellers, our own study shows that more than half of Amazon customers admitted to lying about their intention in returning an item. But because Amazon is customer-centric, it is almost always the sellers who bear the brunt.
Returns fraud is not new to Amazon. One person even managed to scam Amazon for a total of $300,000 before he was discovered. There’s already financial damage to sellers in having the wrong item returned. But with these changes, sellers will have to pay extra if the fraudsters decide to use a bigger box.
What makes it worse is these additional charges don’t just apply to scammers but also to legit returns when the customer is unaware of the financial burden they will be imposing on the seller.
What Can Sellers Do to Avoid Charges?
Amazon gave some tips on how to avoid being charged unnecessarily: ensure that the dimensions, weight, and return addresses are correct.
However, this precaution applies only in situations where the customer returns the item in the same box, which is not always the case. Amazon says “return shipping corrections can result in a positive or negative credit depending on whether you over or under paid.” But of course, experienced sellers know getting a positive credit is highly unlikely.
Not the First Cost Shifted to Sellers
In its announcement, Amazon emphasized that it absorbed these costs for sellers before, but “in line with industry standards” they have to shift this to sellers.
We find similar verbiage used in previous announcements that transferred more financial burdens to sellers. For example, Amazon also mentioned it previously absorbed the costs when it announced the increase in seller fees during the holidays, reasoning that “seasonal expenses are reaching new heights.” This was also the case for the 5% fuel and inflation surcharge.
It seems like over time, Amazon is shifting more and more financial burdens to sellers, which makes it more expensive to sell on the platform. Many FBM sellers have expressed their disappointment over these changes and are thinking about focusing their energies on other marketplaces.
It’s understandable that Amazon wants to make returning items easier for customers. However, if it keeps on adding burdens to sellers, it may just drive them away, starting with small business owners.