eBay’s Managed Returns Process – EXPLAINED!

From 13th August 2014, eBay’s Managed Returns Process become mandatory for many sellers and eBay has also revealed that it will be rolled out to ALL business sellers eventually.

So if you haven’t already received an email from eBay, it’s time to learn all about Managed Returns on eBay, so that you are fully prepared when the time comes.

But first of all, what is managed returns and how does it work?

Well basically, it is an automated return process available to buyers on eBay which means that they can return an item for a refund, without having to first contact you.

This is how it works:

1. The buyer selects that they want to return an item via My eBay.
2. The buyer selects the reason for the return.
3. The buyer is then given a label to print and attach to the item.
4. They then take the item to either a Collect+ drop-off point or Royal Mail (depending on which they chose in Step 3) and the item is sent tracked back to you.

Then, as the seller, you have to:

1. Inspect the item once it’s received.
2. Issue a refund and get your final value fee credit automatically (plus you can relist your item for free).

Now on the face of it, there is nothing wrong with this at all…

All good sellers know how important a clear and simple returns policy and process are to buyers so in theory, this ‘retail-like’ system introduced by eBay should increase buyer confidence, and therefore sales.

And, there are a lot of benefits to you as well –

• You don’t have to go backwards and forwards sending countless messages to your buyer setting up every return.

• Returns are completed through the managed returns system, rather than a buyer opening a case in the Resolution Centre.

• The return labels provided to buyers are tracked, so you can easily monitor the return of an item.

• You get your final value fees credited automatically (though this should really be the case with all returns on eBay – the ‘cancel transaction’ request is a ridiculous system!).

So theoretically; there are a number of positives and no downsides to this – after all, as per the new Consumer Contracts Regulations you have to offer a refund for whatever reason for 14 days after the buyer receives their item, so this shouldn’t mean that you give any more refunds than you would before.

But as we should all know by now, in practice; it’s not quite the same and there are a number of difficulties with managed returns.

The most obvious problem is that as the whole system is automated and there is no need for the buyer to ever contact you, which means it is much more open to abuse by unscrupulous eBayers (i.e. serial refunders).

In step 2 of the process outlined above, the buyer has to select the reason for the return. There are a number of specific choices here but they basically all fall into one of two categories – the item is faulty/not as described OR the buyer just wants to return the item (as is their statutory right).

So what this means is that if the buyer selects one of the reasons that says the item was not as described, you’ll automatically have to pay for the return postage.

You cannot dispute this or ask for any extra info from your buyer at all (remember, the whole process is automatic) until you receive the item, by which time you’ll already have paid for the return postage and refunded the original purchase amount.

Now according to eBay:

If you disagree with the reason selected by a buyer for returning the item, you can report a return issue, add pictures of the item, and we’ll prompt the buyer escalate the return to eBay for review. 

If the case is resolved in your favour, it won’t be counted against your seller performance and you won’t pay return postage costs.

But as we all know, eBay is heavily buyer-biased so there is very little chance of the review being found in your favour plus it means a lot of extra hassle and time wasted – exactly what this is supposed to avoid.

What can you do to counter these claims?

Not much, I’m sorry to say. It’s just one of the pitfalls of selling on eBay and something we have to accept. In return for the huge traffic, sellers on eBay are not in charge and have to play by the rules! It’s a fair trade off really but can make for a stressful business if it’s your only income source and that’s why I always talk about diversifying your business and expanding to further platforms such as Amazon and your own eCommerce Store as soon as you can – eBay vs Amazon vs eCommerce.

The second main problem that you’ll face when using managed returns is that the buyer has a choice between using Collect+ or Royal Mail to send the item back. And if they’re not paying for the postage themselves, they won’t be too concerned with the cost difference and will just choose whichever shipping option is more convenient for them.

And as shown in my Guide to Shipping for Online Sellers, this difference can be quite large – in particular with smaller items as Collect+ costs a minimum of £4.50 up to 1kg.

And once again there is very little you can do to stop this – you could add something to your Returns Policy that says something along the lines of “When returning an item via the Managed Returns process, please select the cheaper option between Collect+ and Royal Mail to save on postage costs” but really how many people will actually read that? And for those that do, it may just add confusion and put them off buying from you – exactly the opposite of what managed returns is supposed to achieve!

And the third main problem that you’ll face when using managed returns is probably the most difficult and troublesome for us sellers – through managed returns an item can only be sent back for a FULL REFUND.

NO partial refunds, NO repairs and NO replacements.

This in itself is a huge problem and it’s the thing that most sellers have complained about since managed returns was rolled out on eBay UK.

In response, eBay have tried to implement some features and changes to address this problem:

If it’s not worth your while to have an item returned, you can specify on the listing that an item doesn’t need to be physically returned, but will be refunded.

When you opt in to managed returns, you’ll be able to set your preferences, and you can set a rule up to make sure that anything under a certain value doesn’t need to be physically returned. You can also set preferences for individual items or particular categories.

If a buyer starts to use managed returns to return such an item, they’ll be informed that they can keep the items and they won’t be able to print a postage label. We’ll monitor how often a buyer does this to protect you from bad buyer behaviour.

But really this doesn’t help at all…

You have to set this for each category or for all items under a certain value so you cannot make changes on an individual basis.

Plus it still doesn’t allow for partial refunds, exchanges or replacements – it’ll only save you the return postage cost.

And this leads to another problem; this is practically the ideal situation for buyers who return items falsely in order to get a freebie! They can now get a full refund and keep the item – without ever having to contact anyone!

In my opinion, this feature hasn’t been thought-out by eBay at all and doesn’t address the limitations of managed returns in the slightest – in fact; it may have just worsened the situation.

Conclusion

Overall, I think that Managed Returns was a good idea.

It’s obvious to anyone who sells online that having a clear and simple returns process will increase buyer confidence and conversion rates and therefore sales and profit.

But, as is so often the case on eBay, the program is badly implemented and is open to abuse from dishonest buyers.

Diversifying your risk by expanding to other selling platforms like Amazon’s Marketplace and your own eCommerce Store is something I talk about so often, for this very reason!

On eBay, you are NOT in charge and have no choice but to follow the rules if you want to continue selling to the millions of buyers who use eBay.

I’m not saying you should quit eBay because of this – not at all! For smart sellers who deal in niches with good margins, these changes will not destroy your business. Yes, you will have to make some adjustments and your profitability may be affected slightly as a result but that’s it.

I just want to make sure you know how important it is to GROW your business and expand to other platforms so that if a change is introduced that affects you severely, you have other channels to fall back on.

With Amazon it’s the same thing of course, but with an eCommerce Store you are in complete control and can do everything pretty much exactly how you like.

Though it does require more investment and work to get started, creating your own successful eCommerce store should be the main goal for everyone selling online and that’s exactly why I created eCommerce Magnates – THE most comprehensive guide to creating, launching and managing your own highly successful eCommerce store.

For those of you that haven’t received the 13th August deadline message, don’t worry, that just means it’s not mandatory for you yet. eBay have said that you will be given at least 2 months’ notice for when you have to comply with managed returns so look out for a message letting you know soon, as I expect eBay will want to get everyone on board by Christmas.

All the best and until next time,

Andrew