Amazon’s New Pre-Authorized Returns Policy – What You Need To Know

Last Tuesday (August 1), Amazon sent out an email to Amazon sellers regarding a change in the returns process effective October 2, 2017. This email notified self-fulfilled marketplace sellers (those sellers that do not use Amazon’s FBA services) that processed orders will be authorized automatically for return. In addition to the “automatically authorized” returns policy, Amazon is implementing a “returnless refunds” option, which allows retailers to offer a refund without requiring the item to be returned.

Previously, merchants shipping items via their own facilities (whether it be their own home, a retail store, or a warehouse) had an opportunity to communicate with the buyer before processing a return. In October, buyers will no longer have to contact sellers to request a return. Instead, buyers will be able to print a prepaid return label that is included automatically in their shipping confirmation email.

Why Is Amazon Changing the Policy?
Amazon’s number one priority has been, (and always will be) their customers. To meet the expectations of demanding shoppers, Amazon is implementing this policy change not only to make the returns process more convenient but to make the process more consistent across the Amazon marketplace.

Typically, Amazon buyers aren’t aware of whether they’re buying products from Amazon directly, from sellers using Amazon’s FBA service, or from sellers using self-fulfillment methods. However, Amazon buyers expect (and want) the shopping experience and purchasing process to be the same on the Amazon marketplace regardless of who the seller is. Therefore, buyers expect to have a similar, convenient returns process as well, with the ability to print a prepaid return label if they purchased from a third-party seller, just as they would if a purchase was made directly from Amazon.

Disadvantages of the Policy Change
Many marketplace sellers have already formed strong opinions regarding these changes, and for the most part, they’re negative. Some merchants are downright angry. The main concerns for many of these sellers pertain to additional costs and premiums, dishonest buyers, damaged returns, and limited brand awareness.

Additional costs and premiums: Merchants will now experience an increase in return shipping costs now that the returns process is much more convenient for customers. These additional shipping costs can be extremely harmful to retailers that sell low-margin items because the shipping cost can exceed the value of the item itself and eat into their profits. However, the merchant could take advantage of the returnless refunds feature of the new policy, in which the merchant doesn’t have to receive the item (and pay for shipping) for the customer to get a refund. In addition to this cost, retailers also now have to pay a premium, which Amazon charges for the implementation of their return labels, forcing retailers to pay for a service they don’t necessarily want to offer their customers.

Dishonest buyers: Marketplace sellers sometimes have to deal with dishonest buyers or scammers, who may lie about receiving a defective product or an incorrect item in order to receive a refund, without actually having to send the item back. However, if merchants feel as though customers are taking advantage of the new returnless refunds policy, they can adjust the rule to exclude select items or to opt out completely.

Damaged returns: At times, merchants have to eat the cost of returned items that are damaged, missing parts, or in used condition. Assuming that the return rate increases, the likelihood of having to absorb greater losses for damaged returns increases substantially. Fortunately, Amazon does give sellers the option to appeal returns, although they must first file a claim and it would have to be for a very legitimate reason.

Limited brand awareness: As discussed in a previous blog post on the pros and cons on Amazon FBA, one of the benefits of independently fulfilling orders is the opportunity to improve brand reputation through positive customer service interactions. Because ecommerce retailers lack face-to-face customer interactions, they rely heavily on brand building to encourage repeat purchases. Now that Amazon manages the returns process, the opportunity to increase brand awareness through a positive customer service experience will no longer be possible.

Advantages of the Policy Change
Although the list of disadvantages may seem profound (especially to smaller merchants), there are some benefits to consider regarding this new policy.

Opportunity to improve customer ratings: Amazon makes a point to note a major benefit of this policy in their email notice: “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…” Managing this increased visibility is an opportunity to optimize your Amazon strategy.

The Amazon Effect: Amazon has been able to create and maintain their large customer base with their renowned ability to provide a convenient customer experience. It’s likely that this new convenience factor will drive even more sales to Amazon sellers. It might be difficult and costly to adhere to at first for sellers, but Amazon is the largest online marketplace because they have focused on continuously improving the customer experience. This has created a lot of money for sellers on Amazon.

Time savings: Again, implementing new processes to adjust to this policy change may require a time investment. However, many retailers who experience a high return volume will benefit from the time that is saved by no longer having to process returns. This time can be allocated towards improving other areas of their business, ultimately saving or making them more money in the long-run.

There’s time to ACT: In the past, Amazon only provided a few days’ notice on policy changes before they went into effect. Amazon sellers have two months to adjust their processes appropriately to accommodate this new policy. Specifically, merchants should make it a priority to complete the information Amazon specified in their email — update the return address on file with Amazon, request exemptions for certain items that are not eligible for prepaid return shipping, and respond to the survey to on-board by August 11, 2017.

Finally, if you’re managing ecommerce and marketplace orders with an order management system, reach out to your point of contact to discuss how these return policy changes will affect your processes and data flow regarding orders, inventory, accounting, and returns. For more information, visit the help page for prepaid returns for seller fulfilled orders on Amazon Seller Central. Don’t wait until the last minute to update necessary processes and information! An order management system will transform these Amazon policy changes into an opportunity to bring in more customers, improve the customer experience, increase seller ratings, and increase sales!