Will eBay Sellers Have to Pay for Customer Returns Soon?

eBay sellers need to watch out for the latest ploy by Amazon that one day could impact them. The online retailer announced this week that it would start charging marketplace sellers in fashion categories fulfilling their own orders for return shipping on customer returned items.

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Amazon self-fulfilling sellers will not be able to opt-out of the new automated returns program and must also offer free returns to match Amazon’s return standards in those categories.

This is an escalation in the returns game that may cause Amazon sellers to incur significant additional costs to sell on the platform.

While Amazon only said that the new policy is to provide a similar customer service experience to buyers as when they purchase items sold and shipped by the online retailer, it appears Amazon is trying to crack down on inaccurate fashion listings that may cause higher returns.

Apparel items purchased online are one the most returned products across all of online commerce, according to a recent report from the National Retail Federation.

The same NRF study found that out of $565 billion in online retail sales in 2020, buyers returned $102 billion in merchandise. That is 18 percent of all sales going back to the online merchant!

That is an ominous number for online commerce and not easily digestible for small sellers who often operate on thin margins when selling on marketplaces. In essence, paying for returns becomes a backdoor fee increase for sellers and not one many small sellers can easily absorb.

Will eBay Follow This Amazon Returns Policy?

Amazon has long been leading the way to set policies and customer expectations in online retail. There is always a concern when they make significant policy changes.

Many eBay sellers have bemoaned the company’s listing and return policies that are trying to match Amazon’s and other larger retailers’ “standards” which are more difficult for the typical small business sellers on eBay to match.

Certainly, there is a case to be made that sellers of all sizes must try to be competitive in today’s eCommerce world. Some of the seller policies eBay has implemented recently force sellers to adapt to the new customer expectations. That is not a terrible thing by itself, within reason.

Buyer expectations have changed from the early days of eBay. 20 years later, too many long-time sellers still seem stuck in the past, not willing to understanding that selling policy changes are a reaction to better meet today’s buyer expectations.

The real culprit here is Amazon, which keeps pushing the envelope as they can afford to accept some losses because of their size.

For the last decade or so, eBay has tried too much to compete with Amazon by focusing on attracting sellers that sold new products.

Without providing the logistics resources like Amazon’s fulfillment program, it was placing the burden solely on sellers to absorb the full costs to be a marketplace that operates like Amazon, but without the advantage of scale.

That strategy started under eBay CEO John Donahoe and continued with Devin Wenig, and really was doomed to fail from the start. It’s no wonder why eBay’s stock price remained flat. The only real growth the company experienced was through acquisitions and PayPal when they were still one company.

That train has left the station and eBay must now stand on its own two feet with full focus on its core online marketplace to drive sales and revenues.

To his credit, when Jamie Iannone took over as CEO 18 months ago, he deemphasized the push for New-In-Box (NIB) sellers and refocused on unique inventory sellers and not-new items.

Iannone said he wants to rebuild the company by growing listings of not-new products and give sellers tools to help them make better inventory mix decisions which should increase their business on the marketplace.

This could mean anything from certified refurbished items to one-offs found by small sellers at flea markets, garage sales, retailer clearance sections, or in their own closets.

While some updates have been rocky at times, Iannone seems to execute the new vision of what he believes eBay’s future should be.

eBay is Not Amazon

Most eBay sellers will agree that eBay is not and should note be Amazon, but that doesn’t mean the marketplace isn’t immune to customer expectations.

While eBay has introduced options for sellers to offer free returns, it has not forced the use of free returns on sellers (yet?). But with Amazon implementing the new policy on seller-fulfilled orders, that could change how eBay views such policies in the future on its marketplace.

On one hand, there is an opportunity for eBay to market to Amazon sellers that find their new policy unworkable, but there is also the long-known reality that eBay often follows on Amazon’s coattails.

Especially with apparel, improper fit is the most common return reason. Sellers that offer new products have a business scale advantage as they only must create one listing to sell hundreds of items, even if differently sized.

These sellers can better price prepaid returns into each sale which differs from one-off sellers who sell often unique second-hand items on eBay.

If something doesn’t fit or the condition of the pre-worn (or used) item is not as expected, promoting free returns would almost certainly increase product returns.

Let’s face it when buying anything used, there is a higher risk of buyer remorse because of dissatisfaction with the item bought. Small imperfections that were acceptable before would now become a reason for a return if there is no cost to the buyer.

eBay sellers offering pre-owned products would own the dissatisfaction risk as buyers would ask fewer pre-sale questions and just order an item to see if this is what they are looking for.

Amazon is setting a dangerous precedent for online marketplaces with its new policy, and there are already many sellers on Amazon’s forum that believe this could trickle into other categories.

eBay, and other marketplaces, need to be careful not just to follow Amazon blindly with this policy. The repercussions could be severe, especially for sellers offering unique and pre-owned items, as those sellers would face much higher return rates.

Sellers offering multiples of the same new products on eBay know their competition and they should be allowed to keep choosing if they would like to offer free or buyer-paid returns.

Amazon may be doing this to bring more sellers into the Amazon FBA fold where the company can better serve buyers through its own logistics operations. The company also offers many return options such as using local retailers which helps it keep the cost of returns down.

eBay is not Amazon and should really look at this new policy direction by Amazon as an opportunity to attract sellers from Amazon by promoting a more favorable returns policy on its marketplace.

Unfortunately, history has shown that eBay doesn’t always follow the best logic.

Let’s hope Iannone can see that his vision of eBay cannot include force-feeding the latest gambit by Amazon onto eBay sellers. There is a limit to the madness small and micro sellers can deal with. Forced prepaid returns doesn’t sound like an idea many would embrace.