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Amazon rolls out another policy that has sellers on edge

Boxes move along a conveyor belt at the Amazon.com Inc. fulfillment center
Michael Nagle | Bloomberg | Getty Images
Boxes move along a conveyor belt at the Amazon.com Inc. fulfillment center

One of the features consumers love most about Amazon.com is the ability to return anything for almost any reason, no questions asked.

It's yet another way the e-commerce juggernaut has beaten smaller competitors, who can't afford to give customers so much flexibility.

Amazon's obsession with consumers stands in stark contrast to how it treats sellers. The company is now expanding the returns policy in a way that has third-party merchants on edge.

Until now, businesses that sell on Amazon's marketplace and handle shipments outside of Amazon's fulfillment centers have not been subject to automatic returns. Instead, they've been able to review return requests individually and enforce certain policies, like refusing to accept items that have been used. They've also been able to impose restocking fees.

But heading into the holiday shopping season and the Cyber Monday rush, they're losing at least some of that control. In late September, many sellers received the following e-mail from Amazon:

"Dear seller, Starting on November 1, 2016, US seller fulfilled returns that are within Amazon's returns policy will be automatically authorized, and Amazon will provide customers with prepaid return labels on your behalf."

The letter goes on to say that this change should benefit the seller because it reduces "the time you dedicate to processing returns."

While it's true that sellers will no longer have to spend time and resources on returns, they're also worried about losing the ability to withhold refunds when products are damaged by the buyer. In cases where they deem a product used or damaged by the consumer, the seller now has to file an appeal with Amazon.

It's unclear how many vendors would be impacted by this policy change, but about half of Amazon's e-commerce business is from marketplace sellers, who number in the millions.

Seller concern is based largely on how they've been regarded by Amazon. Account suspensions have surged this year as Amazon cracks down on a growing counterfeiting problem. In August, Amazon imposed a fee for businesses to sell certain big brands.

Forums have exploded on Facebook, Reddit and WhatsApp, with merchants looking for answers they say they can't get from Amazon's official support team.

"Automated returns are really going to send shockwaves," said Fred Ruckel, who sells a cat activity playmat on Amazon called the Ripple Rug. "People are suddenly going to get thousands of returns after Christmas."

Ruckel said that people try to return Ripple Rugs, often with cat hair and nails on them. When he gets a used product returned, he cleans it up and donates it to charity, but he can make up some of the loss on a restocking fee.

In a statement to CNBC.com, Amazon said the new return policy is "designed to simplify and improve the experience for customers and sellers."

The Seattle-based company said sellers currently offering the automated, prepaid option haven't seen any increase in the volume of returns. Furthermore, Amazon says that nothing else is changing. In other words, restocking and shipping fees can still be applied.

"Customers consistently tell us that they love the Amazon return experience, and expect it to apply it to all purchases on Amazon," the statement said. "We've created an easy way for sellers to provide the same experience for seller-fulfilled orders. When a customer knows that a return will be easy, they are more likely to purchase a product from a seller."

Merchants will soon discover if the new returns policy is truly helpful, or just another way for Amazon to lure consumers at their expense.

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