Amazon's new refunds policy will 'crush' small businesses, outraged sellers say

Key Points
  • Amazon sent an email to sellers this week announcing a new policy for refunds.
  • Merchants who ship products themselves are now subject to same rules as items shipped by Amazon.
  • One seller asks on an online forum, "Is this a joke?"
Amazon's new refunds policy will 'crush' small businesses, outraged sellers say

Amazon sellers are up in arms over a new returns policy that will make it easier for consumers to send back items at the merchant's expense.

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.

That means a buyer will no longer need to contact the seller before sending an item back, and the merchant won't have the opportunity to communicate with the customer. If a consumer is returning an electronic device because it's difficult to use, for example, the seller won't be able to offer help before being forced to pay a refund.

"Customers will be able to print a prepaid return shipping label via the Online Return Center instantly," the email said. 

Additionally, Amazon said that it's introducing "returnless refunds," a feature that the company said is "highly requested by sellers." The change enables sellers to offer a refund without taking back an item that may be expensive to ship and hard to resell.

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A third-party seller forwarded the email to CNBC and said these policies "will totally crush small businesses that fulfill their own orders." 

Online forums are already lighting up with angry sellers.

On the topic of returnless refunds, one merchant said, "In other words, customers get things from us for free! Is this a joke?" Another said, "Amazon is going to assume that a buyer would NEVER lie about the reason for the return so they don't have to pay for it."

And yet another: "So, now, those `semi' honest buyers are being encouraged to join the rest of the full fledged `scammers' at our expense." Amazon also charges a premium for use of its return labels, so it's forcing merchants to pay more for a service they don't necessarily want.

Some sellers noted in the forums that Amazon is allowing them to exempt a certain number of items from the automated returns process. 

Amazon confirmed in a statement that sellers can "receive exemptions to have specific inventory excluded" and said that the returnless service is optional.

"These new features allow sellers to reduce time and costs associated with returns while providing customers with an easy and efficient return experience," the company said in an e-mail. The statement also said that the rules only apply to in-policy returns and the company disputed the notion that it charges a premium for return labels.

It's no secret that Jeff Bezos' first, second and third objectives are to please Amazon customers, giving them more stuff at the lowest prices and at faster speeds. But increasingly, those upgrades come at the expense of sellers, who often build their businesses on Amazon and have few other places to generate revenue. 

The latest policy changes are directed at sellers who choose to fulfill orders themselves instead of using Fulfillment by Amazon. Amazon is making every effort to provide the same experience for customers regardless of whether the products they buy come from Amazon or a third-party merchant.

By starting in October, Amazon can get the process rolling in time for Cyber Monday and the all-important holiday rush.

-- Updated with a statement from Amazon

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