Flipside of Etailers’ Measures to Control Returns – from Amazon’s Runway to Limeroad’s Penalty Program

Lowering or at least controlling the rate of return is one of the main priorities of the Indian ecommerce players. In April 2017, Indian Online Seller (IOS) reported how Flipkart changed its return policy and sellers commended this move. But it turned out to be a perfect plan that was executed poorly as sellers were left confused because of the marketplace’s serial flip-flopping.

This brings on the surface the repercussions that sellers have to face as a direct result of ecommerce companies’ various strategies and measures to control their returns rate without giving any thought to the consequences. After Flipkart, US-based Amazon and fashion etailer Limeroad’s sellers share the consequences of etailers’ measures to handle high product returns.

Amazon’s imposes its Runway Program on vendors

Seller Anubha Saxena informs IOS that Amazon has made its Runway Program compulsory for Easy Ship sellers. Runway program ensures that the returns and refunds under Easy Ship are handled by Amazon. It is beneficial in a way that sellers don’t have to interact directly with customers. And since everything is handled by Amazon, negative ratings for delivery and shipping are removed by the online marketplace.

This program has been around for a while, but only recently Amazon India decided to enforce the service on Easy Ship sellers. We listed the positive aspects above. However, Anubha listed some of the negative aspects. Here they are:

• All the returns are accepted by Amazon blindly without determining whether returns are being made for genuine reasons or not
• Refunds are immediately made as soon as the product is picked up from the customer and sometimes the returned product does not even reach the sellers or reach in damaged condition. For that, Amazon expects us to raise cases and get reimbursements which consume a lot of time. Rather than focusing on core business processes, we waste our time in it as these problems are quite frequent
• Customers take advantage of the easy returns and refund policy and make reckless returns which result in losses for sellers
• Even if the customer has used the product or damaged the product, Amazon team does not check it and they simply return it. Partial refunds in runway are not possible

Because of the abovementioned reasons, Anubha had discontinued using the Runway service. But now that Amazon has made it mandatory, sellers like her are wondering about how to handle this decision and the losses that has come along with it.

“We were in Runway program initially when it was launched but we opted out of it due to a high amount of losses. The problem now is that Amazon is forcing Runway program on sellers who are into Easy-ship. The only option is to opt out of Easy-ship service and switch to self-ship but in that mode, no COD orders are allowed. When other E-commerce portals are trying to amend their policies into seller friendly ones, Amazon is simply forcing such policies on sellers. Many sellers are not happy with the decision but Amazon takes benefit of the fact that it gives significant orders and many sellers are dependent on it for their business,” shares seller Anubha while speaking to IOS.

Other sellers too reiterate the concerns raised about Amazon’s strategy

We asked the seller community about their view on Amazon’s attempt to handle returns by taking complete control over it from sellers. Two sellers spelled out the pros (few) and the cons (many) of Amazon’s Runway initiative:

Sanket Vaghani says – I was in Runway for over 6 months. They moved my account to runway automatically and no option to withdraw. But it’s an overall loss for seller because you can’t deduct any single rupee of buyers even for reason like order placed by mistake. Few benefits of runway are that we can be free from all the stuff of return request; no A-Z claim, which is better to avoid account suspension. This program (runway) is better for new sellers who don’t know anything.  As per my view, I can say it’s good for 30% and not good for 70%.

Mayank Goyal says – The only plus point for sellers is that when all the return requests will be accepted, there are no chances of account suspension. But in runaway program, as soon as the return request is accepted, the refund is initiated to the buyer. Amazon doesn’t follow their own policies for non-returnable products and seller has to bear the loss of commission and shipping fees. So for sellers, runaway program is bad because returned product seldom reaches the seller and product packed by ATS is in such a horrible condition that vendors cannot sell the product anywhere else.

Sellers can now focus on their core business due to Runway, says Amazon

IOS reached out to Amazon and asked them as to what prompted the company to make the runway program compulsory for Easy Ship sellers.

Amazon India’s spokesperson says, “With the help of this program, sellers are now able to focus more on their core business and are already witnessing a jump in their sales. In case sellers incur any losses due to incorrect returns or refunds to buyers, they can leverage the Seller Assurance for E-Commerce Transactions (SAFE-T) program to obtain reimbursement from Amazon. The program has been extended and made mandatory to all Easy Ship sellers to provide a consistent and enhanced experience to buyers and sellers.”

Limeroad’s Incentive & Penalty Program to keep quality in check

While Amazon is trying to gain complete control over the returns & refunds process, fashion etailer Limeroad has started penalizing sellers for returns due to quality issues. The e-fashion player launched Incentive and Penalty Programme in August 2016 for ensuring the quality of the products sent to their customers. This penalty is mainly for customer returns registered due to wrong, defective and damaged products that the vendors sent to Limeroad’s customers.

On paper, the initiative does sound great because it would dissuade sellers from listing sub-standard or defective products. On the flipside, the incentive & penalty has made several sellers unhappy.

Limeroad seller Sarthak Agarwal elucidates, “They updated their margin by 10% to assign a QUALITY TEAM who checks out the product received in return. For every return they mark if it’s ‘good’ or some ‘part is missing’ or ‘manufacturing defect’ only after receiving product from buyers in return. This is unfair. If they want to do that, then they need to make a check before the order is delivered to buyer.”

He adds further, “If it goes for quality check, and any part is missing, it’s considered as sellers’ mistake or manufacturing defect. Also, there is a penalty of Rs. 1000 along with delisting of that product. That is totally unfair because product might be damaged by the buyer too. But increasing our commission, then delisting the product and making us pay the penalty too because of buyers’ mistake is not fair.”

So Limeroad has not only increased the margin to carry out a routine activity (quality check), but sellers are being penalized because of fraud buyers. Ideally, the quality check should be done while dispatching the product to know if seller is at fault. This should be followed by a quality check of returned goods to determine if buyer is at fault.

Seller Devendra Goyal too is not happy about the penalty program. “In my view it’s totally illogical to check product QC on return and it’s always debatable/controversial point to prove who is at mistake customer or the seller. And Rs.1000 penalty is not acceptable at all by sellers. Although they have policy of reversing the penalty in case if in next month there is no QC failure but still its total illogical policy to check product on return and then levy penalty on seller,” reasons Goyal.

It doesn’t take much to determine if any policy could be misused by the buyer or seller. We understand that it is a task to come up with fool-proof strategies to minimize returns. But accepting all return requests, asking for extra commission for doing a service that is part of the deal and penalizing sellers for buyers’ fraud is definitely not the right way to go about it.

Online sellers, what’s your opinion on Amazon’s Runway Program and Limeroad’s Incentive & Penalty Program? Can you suggest some changes that could benefit all, buyer, seller and marketplace?