eBay Refund: Should eBay Sellers Offer Refunds?

If I was limited to using one word to answer this question I would simply say – Yes.

But I have some free time, so let me break it down 😉

We always did international transactions on eBay, which are much more prone to problems, mainly having to deal with shipping damages and late arrivals.

One of our biggest eBay fails was when we found ourselves with $20,000 worth of internationally shipped packages, being lost – without anyone being able to provide answers as to their whereabouts.

At least one aspect was clear – this was no fault from our customers side, they did nothing wrong, so they deserved a full and immediate refund from us.

But In this post, I want to talk about the less obvious situations, when the customers are asking for unreasonable refunds.

We’ve learned early on that the most important asset we have as an online business is our reputation and trustworthiness.

eCommerce is still scary for most people.

We were 2 guys from Israel, shipping items from China to customers from Australia who made the purchase on a US based platform (eBay). It’s almost a miracle that all the parts worked and customers actually got their items in time!

There are a lot of TRUST issues involved with eCommerce (we previously wrote a post with eBay tips and tricks that include a lot of trust signals to win eBay sales).

Sellers often complain about how unfair it is that eBay favors buyers over sellers when disputes arises.

I will argue that this is the main reason buyers come to eBay in the first place! If they didn’t feel like they had the power to get their money back if anything goes wrong – they would never pay anonymous guys from Israel to ship items from anonymous suppliers in China, with an anonymous shipping company.

Do some people take advantage of this bias towards buyers? Hell yeah. Should this effect your eBay refund policies and business offering? Nope.

I’ve never heard of an eBay business who suffered so much fraud and unreasonable refunds that it was a question of “to be or not to be.” Yes, it’s annoying and can drive you mad, but at the great scheme of things, being right and demanding not to issue refunds (unless the customer is 100% right) is not what is going to make your business sustainable and profitable.

Check yourself: Would you refund the buyer in the following situation?

ebay refund dilemma

Let’s break it down:

1. The seller offered a defected item for sale
2. Images showed the defect clearly but it wasn’t stated in the description
3. Buyer didn’t notice the defect and was negatively surprised
4. Seller has a “no shipping return” policy
5. Buyer demands the seller to cover the return shipping costs

What would you do? Refund? Demand a return fee to be paid by the buyer?

The seller clearly showed the defect in the image even though he didn’t mention it in the description.

Who is right?

Here’s my advice; If you’re building a long term business, think and act for the long term.

Your tactical decisions should be derived from your strategical goal – to build a sustainable long term business.

If you demand the customer to pay for the return postage, (even if you are 100% right) you will probably receive a negative feedback which will affect your reputation and trust from current and potential future transactions. And for what? For being right? For saving a few extra $$?

Think for the long run – how will this decision effect your future customers?

Pro Tip: Leniency in return time reduces return rates

In 2014, product returns totaled about $280 million across all U.S. retailers. New research from UT Dallas examined existing studies on return policies to quantify the policies’ effect on consumers’ purchase and return behavior.

Science Daily – Researchers examine effect of return policies on consumer behavior

The study shows that offering longer return times actually reduces returns and refund requests

If a retailer wishes to curb returns, longer deadlines to make a return would be more effective. The study found that leniency in time reduced return rates. Freling said a possible explanation is the endowment effect, which suggests that the longer consumers possess a product, the more attached to it they become and less likely they are to return it.

Amazing, right?

On one hand – longer return / refund policies will attract more buyers, while on the other hand it will also decrease your returns and refunds according to the study.

What did we do with unreasonable eBay refund requests?

Here is what we did in case customers asked for unreasonable refunds –

1. Answered: “Sorry, the clearly stated refund policy is that return shipping is only refunded in case the received item is not as described / dead upon arrival [or whatever your terms are], in this case the items condition is clearly seen in the images”
2. If they give you trouble, threaten with a negative feedback, bombard you with tons of messages, or complain about it on social media? Give them the refund.

Yeah, sometimes customers can give you hell, they will be absolutely out of line and demand unreasonable refunds. They will threaten with negative feedback and badmouthing your business all over the social media.

Last year, retailers reportedly lost $14.4 billion (up from $9.4 billion in 2009) to fraudulent returns such as wardrobing, in which people buy products like big screen televisions or party dresses to use for an event, and then return them.

Time magazine – Why a Good Return Policy Is So Important for Retailers

My advice is – consider these RARE unreasonable refunds as the cost of doing business online.

I would always prefer a stellar reputation at the cost of an immediate profit.

Here’s what Zappos do –

Several online retailers have found that it’s wise to be especially accommodating with returns. Shoe and clothing e-seller Zappos offers free shipping on deliveries and returns, as well as a return policy that’s as hassle-free as they come. They’ve built a wildly popular business, in part, on the philosophy that frequent returners are also frequent buyers.

Remember, you are building a long term sustainable business. The time and mental resources it takes to deal with these “bad guys” simply isn’t worth it.

Bite your lip, focus on winning your next sale and forget about this “unfair refund”. You have more important things to do to grow your business.

Forget about the money you’ve just lost and focus your energy on improving your listings, listing new items, sourcing new stock and suppliers – in the long run, you’ll do 100x better.