Amazon Changes Returns Policy, Ends Commingling

Amazon is making changes to its returns policy and is also ending commingling for sellers who use its fulfillment program. Amazon informed sellers of these and many other changes at this week's Accelerate conference.

On day two, Amazon Vice President of Transportation Beryl Tomay gave a presentation on the changes to returns, telling attendees that the company was launching Manage Your Returns, "a new, unified platform for Fulfillment by Amazon (FBA) and Merchant Fulfilled Returns management" that brings together tools, data, and insights.

She also said Amazon was launching the following new product-support features "to reduce returns and keep customers happy":

1) FBA sellers in the US will be able to provide replacement parts to customers. "Now, let's say a customer is missing a small attachment for their expensive vacuum cleaner. Instead of processing a full return, you can now send them a replacement part."

2) FBA sellers in the US can offer customers a partial refund. "This gives you flexibility in handling minor, cosmetic product issues, while retaining more revenue. It's a win, both for you and for the customer."

3) Sellers can help customers with product support and troubleshoot issues instantly through chat or phone. "Early participants have prevented more than 60% of potential returns from customers who contacted their support agents."

During her presentation, Tomay used an example in describing Amazon's new partial returns policy. A customer who orders a $200 premium tent from a seller (Riley) notices a small scuff mark on the tent storage bag and a scratch on the surface of one of the tent poles. 

"These cosmetic issues don't affect the tent's functionality at all. It sets up perfectly, it's fully waterproof, and it's structurally sound. Instead of processing a full return, Riley can now offer the customer a partial refund of $20. The customer gets to keep the tent with a nice discount, while Riley avoids the costs and logistics of a full return."

While this may be positive news, it fails to take into the fact there may be many buyers willing to abuse the system in order to get a post-purchase "discount."

In a post on the Amazon Seller Forums, a seller was skeptical of the changes. "For third party sellers, what is Amazon doing to prevent buyer return fraud? The details presented are all about how to give in to the buyer, making them happy. Amazon does not address the root cause in this situation. How it is caused by the RFS program." (Amazon explains RFS on its Refund at First Scan help page.)

Amazon also announced the end of commingling of identical products from different sellers in its fulfillment centers in a blog post under the section, "Supply Chain Efficiency."

It said as a result, "brand owners will no longer need to apply an FBA sticker to products that have a manufacturer barcode (e.g., UPC, ISBN) when sending inventory to Amazon fulfillment centers. This move to “stickerless” inventory management is expected to save sellers approximately $600 million annually, while giving sellers more flexibility in managing their inventory across different sales channels."

We immediately thought of Kevin Harmon, former CEO of Inflatable Madness, a large business that sold books and DVDs on eBay and Amazon. We reported on his plight in 2012 and 2013 when Amazon terminated his company's account due to what he believes was a problem caused by the commingling of his inventory stored in Amazon fulfillment centers with those of other sellers - a problem compounded by the legal force of Warner Bros., which sued him over the sale of a single commingled DVD.

"It's been over a decade now, but the Amazon comingling program cost me my $5 million dollar Amazon reseller account and business - over a single dvd boxset that wasn't even mine," he told us on Thursday. "Hearing the announcement yesterday that Amazon is finally ending the comingling program both gave me PTSD over what they did to my company because of it and gave me a sigh of relief that Amazon sellers will no longer be in constant fear that someone else's item can wipe out their account."

Now Director of Ecommerce at TekReplay, Harmon pointed us to a post he had written in 2013, archived on the Wayback Machine (the page make take a while to load), chronicling his experience with FBA commingling which he said drove his business into bankruptcy.

The impetus in ending commingling sellers' inventory in Amazon fulfillment centers may have been the desire to appease big brands. The fact that Amazon is now acting as a fulfillment service for sellers on a growing number of rival platforms, including Walmart, may also have been a factor.

You can watch Amazon executives announce the changes to returns and commingling in the keynote presentation in the following YouTube video. Nadya Dhalla, Director of Supply Chain by Amazon, explains the changes to commingling at the hour-and-six-minute mark, followed by Beryl Tomay, who explains changes to returns at the one-hour-and-eleven-minute mark. Let us know what you think of these and other changes announced at this year's Accelerate conference.

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