RANT: How free returns destroyed my business model...

[samgr**r]

I never thought I say this, but I am starting to think I’m burned out on eBay. Suddenly, eBay is attracting the unreasonable impulsive buyer who cares nothing for the seller and just wants free rentals for 3-4 weeks and then a return, or the person who likes to buy a brand new item, open it up, mess it up, and then demand a full refund several weeks later, even though they got the item for significantly less than retail. Here is my experience over the last 60 days.

1. My return rate went from <3% to >20% (money not volume). I have $2930 in returns just this week alone because of ‘ordered by mistake’ or ‘changed my my mind.’ I have several other people courting me for a return or extra cash back. 
2. I went from making a good second income to making absolutely zero. That’s right. The losses have been staggering to the point where I am almost better off shutting down completely and going to other sales channels.
3. EBay returns are malfunctioning and customers are getting insufficient postage labels (First class postage for items sent out priority). This results in the item being returned back to the customer returning the item. This creates a huge disaster for me when I have to buy and send a new label and then beg a customer to return an item that eBay’s system thinks was returned to me. 
4. The Post Office not only lost $390 in insured mail and refused to pay out, but they have returned over $1400 to sender for various bizarre reasons.
5. Shipping items in out of zip code (which are closer to me than the in zip code) post offices has resulted in items being crushed and more recently items being returned to me in torn open packages with angry messages written on them in permanent marker about how mailboxes are not package drops.
6. I have never seen so much fraud. My funds are constantly being held at PayPal because people are claiming they never ordered items and filing chargeback cases. Between returns and chargebacks, I have to keep a huge rolling reserve in PayPal.
7. A major brand suddenly removed all my listings after we had over a thousand successful sales. Yes, eBay allows any brand the right to shut down any listing they want for any reason. If you are a successful seller and didn’t know that, you will soon enough. 
8. I used to operate on small margins of only 10% on entire product lines and used volume to make up for the occasional return. Now that I am getting massive returns and some losses this model has collapsed. 
9. The items being returned to me are not in the same condition I sent them in. Sure, I could go to war with customers and give a partial refund, but then my feedback score would get hammered. 
10. Most items I get back have to be marked down 20-30% off the original sales price. I buy something new, mark it up around 10-15% and sell it, pay shipping to the customer, let them keep and use it for 2-4 weeks, pay return shipping, give a full refund, mark it down 20-30%, and pay to ship it to the new customer and hope they keep it. Seriously?

I must now rethink my entire business model because what once worked no longer works for me. I am curious to see how others are doing in this new climate? What is going on?

[ten_o_nine]

I am sorry about this but still don't understand the business model? and why the business model can not adjust to accommodate a simple change now for future results?

[ed8108]

We must always live in the present and let go the past.

The challenge that confronts you today is to identify the changes you need to undertake to better deal with self centered, impulsive and sometimes unreasonable buyers.

Good luck

[castlemagicmemories]

OP, you have been slammed with issues and my heart goes out to you.  Things must seem overwhelming.  How sad you have been through so much.

Wish I had some answers for you.  One thing that did strike me was your margin of 10% to 15%.  Perhaps you can increase your margin sufficiently to offset these issues.  That may take away your ability to be competitive, however.

I checked your listings and it seems to me that the things you sell, Blue Tooth and Ipad, electronics, are things that are very problematic to sell anyway.  Certain items bring a heavier risk of issues than others.  

But if you can raise your prices and still be competitive, you might consider that.

[membersinceaug2001]

Thank the Big A for making this mess.  Their goal is to run every other seller out of business and it appears to be working.

[vintagecraze50]

Many of the big brands are also experiencing nightmare scenerios with returns. You being a smaller seller are not alone. This is a major problem and the platforms that encourage free for all no matter what  are courting this disaster. Amazon has finally publically announced near permanent bans on shoppers who return too much.  It wil not get any better that's what the current news on this is. People get away with this more on the web than in brick and mortar.

[vintagecraze50]

O yeah, even they. The big A are loosing money.  Now, they also have the problem of USPS not going along with their deal to deliver on Sunday and they gotta employ more delivery drivers as well.

[vintagecraze50]

Thye might drive themselves out of business too. LOL.

[samgr**r]

Thanks for the responses. To answer this question: My business model has been to calculate if something is profitable after shipping and fees even with small margins. I have never shied away from 10-15% margins with a loss or return every once in a while Thats the only way to remain competitive.

[samgr**r]

Good suggestions. Honestly, I have four choices and I don’t think any one if them are a path to success.

1. Mark everything up to account for shipping three times and loss, which will mean my prices are too high.

2. Give up my TRS badge and charge people for returns which means my listings will drop on best match to where no one will see them.

3. Only sell product lines with giant margins to absorb fraud, loss, and return. This means way less stuff because I rarely find high margin items.

4. Retire from eBay for good and use other sales channels.

[orangehound]

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@samgr**r wrote:

2. Give up my TRS badge and charge people for returns which means my listings will drop on best match to where no one will see them.

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eBay's algorithm uses free returns as just one of the criteria for your ranking.  If you have a multi-item listing with a lot of sales velocity, you will be high in the rankings (and perhaps at the top).  This, in my observation, is the most important factor for ranking ... that is, the sale of one item prompts eBay's algorithm to say to itself "hey, if one person bought this, maybe others will as well so I'm putting it at the top."

[goodluckselling]

OP I went ahead and reviewed your sold page to get a better understanding, and I guess I need to ask you if you know the money back guarantee very well or not?  This is the policy buyers have to make returns or item not received requests.  This policy is only good for 30 days after they receive the shipment.  How are these returns being handled?  It looks to me based on your sold page, that the higher priced transactions would be out of the time frame?

I am not seeing enough sales on this account to add up to your totals?  Not even for 90 days is there enough showing.  I will assume you have several selling accounts.

I do see some higher priced items, so this is more than likely the products you are having issues with?  If your night vision equipment and your watches are the problem areas I would try to add some description to help a buyer know what they are better.  For your night vision equipment you do not seem to have any description?  Your watches seem okay with the info you have.

If you are getting remorse returns and requests from buyers for partial refunds, then spend some time describing your items so buyers will know what they are getting before they buy which should lower your return rate, which is your problem.

For your fitbit dongle  you are using the same UPC code for all the units?  I am sure or not if your listing practices for this item are eBay legal or not?  Well I know you are in violation with the picture policy but I am speaking more about the title which seem to be the same except you are adding a model name or number at the end.  I assume the same unit will work all the models since you have the same UPC number of each listing.   This certainly looks like duplicate listing manipulation to me.

After doing a general search for the fitbit dongle, there really are not a lot of listings for this item.  I would suggest making a single multi variation listings with all the different models you have  as a variation in the one listing.  This will do several good things for you. 

• As a GTC listing it will create a lot of transactions against this one single listing which will show excellent buyer engagement and that only should bring you up in very good search placement. 
• It will also help you out with google search as well because they are more than likely blocking your items because of the misuse of the UPC and title differences.  You would also have to get rid of the text you have in your pictures as google also will not show your item when it violates with text and added content to pictures.

• About your issues with shipping labels  that is completely your issue.  You are the one creating the labels. 
• The damaged packages should tell to start preparing your packaging with better protection.
• You seem to be having a lot of issues with the post office as your carrier and this is a sign that you should look for a new carrier.

I agree you do need to rethink your entire business as you said.

Good Luck Selling!

[lacemaker3]

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@castlemagicmemories wrote:

OP, you have been slammed with issues and my heart goes out to you.  Things must seem overwhelming.  How sad you have been through so much.

Wish I had some answers for you.  One thing that did strike me was your margin of 10% to 15%.  Perhaps you can increase your margin sufficiently to offset these issues.  That may take away your ability to be competitive, however.

I checked your listings and it seems to me that the things you sell, Blue Tooth and Ipad, electronics, are things that are very problematic to sell anyway.  Certain items bring a heavier risk of issues than others.  

But if you can raise your prices and still be competitive, you might consider that.

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@samgr**r, I agree with this, I think that your small margins are the problem. Such a small margin makes you very vulnerable to any and all market changes. Electronics are hard to source with better margins though, and this kind of product also typically has more returns. 

I remember speaking with (or reading about) a successful eBay seller who targeting buying items for inventory only if they could be sold for at least ten times her purchase cost.

I would suggest that you look for another kind of product that you can source with better margins, and which would have a lower return rate.

[gracieallen01]

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@vintagecraze50 wrote:

O yeah, even they. The big A are loosing money.  Now, they also have the problem of USPS not going along with their deal to deliver on Sunday and they gotta employ more delivery drivers as well.

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I just love the way big corps dictate how things 'are going to be' and expect everyone, from seller and all other businesses, to fall in line with their dictates and lock-step behind their leadership.

Running a corporation isn't a matter of what one knows - it is a matter of how big is one's ego.

[ymeagainlord]

If buyers are using eBay RETURN labels then they should not be being returned for "insufficient postage". They are RETURN labels and eBay is billed for whatever the actual postage cost is.

The other one about torn open envelopes with angry messages in black marker.

It sounds to me like you have some serious issues with USPS.

a call to their postal inspectors might be needed.