Amazon Changes Return Policies For Third-Party Sellers, Who Worry About Fraud

Image courtesy of (Nic Rutterford)

One of the ways that Amazon has been able to offer such a wide selection of items has been through its Marketplace, or third-party sellers. These businesses or individuals would ship from their own bookshelves, garages, or warehouses, handling order fulfillment and letting Amazon expand its inventory without building any new warehouses. Now a new policy makes it clear that sellers who handle their own orders are at a disadvantage.

Returnless Refunds

CNBC reports that the change that Amazon announced to its sellers involves how returns work. If an item can be returned, the customer will be able to print a return label instantly, without having to first contact the seller and get the return authorized. This change applies to sellers who handle their own fulfillment, and who may not want Amazon generating free shipping labels for customers.

Sellers are also concerned about “returnless refunds” for sellers who fulfill their own orders, though this looks like an opt-in program. Have you ever had a problem with a product, and the seller told you not to bother to send it back? Sellers will be able to allow that for certain items, where customers can request a refund but the seller doesn’t want to bother to pay return shipping.

Fulfilled by Amazon vs. Fulfilled by me

Why this matters is that sellers who fulfill their own orders are deliberately not part of the Fulfilled by Amazon program. Sellers have the choice of storing and shipping their own merchandise, or sending it to an Amazon warehouse to be part of the Fulfillment by Amazon program. They effectively are renting space in an Amazon warehouse and also paying a commission. Some sellers prefer this. Getting merchandise out of your garage and eligible for Prime is an advantage, for smaller sellers. Other sellers who have their own robust shipping operations, and who might have their own employees, don’t.

This sometimes leads to consumer confusion, since from a shopper’s point of view, the thing they purchased ships in an Amazon box with free Prime shipping. Yet for the purpose of the manufacturer’s warranty or other problems, the shopper didn’t buy the item from Amazon; they bought it from Steve’s Headphone Store.

These return policy changes are meant to make the process of returning an item to Steve’s Headphone Store the same as returning an item to Amazon, or to a Fulfilled by Amazon seller.

Some sellers aren’t happy about the new system and having these rules apply to them. Sellers even expressed fear that scammers will find a way to game this system and defraud sellers, especially with returnless refunds. Will these policies crush small sellers, as some complained, or force them to use Amazon’s warehouses? At least Amazon is rolling out this change a few months before the holiday season.