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Is e-commerce’s after-sales protection for consumers “overdone”?

Since 2023, as competition among e-commerce platforms has intensified, in addition to focusing on price power, Pinduoduo's previously launched platform services such as "free shipping in remote areas, free shipping for returns, and refunds only" have also been quickly imitated one by one and become the standard of major domestic e-commerce platforms."Only refund"It has become the focus of public opinion recently and has been accused of being too biased towards consumers.

Does the after-sales service of domestic e-commerce really only favor consumers? Is it really "overdoing" the protection of consumers?

Image source: Canned Image Library

01

The History of “Refund Only”

Surprisingly,“Refund only” is not the first initiative of Chinese e-commerce platformsThis is the Returnless Refund, an after-sales service mechanism launched by Amazon, the world's largest e-commerce platform, on October 2, 2017.

In addition to facilitating consumers, this after-sales policy also has another major purpose.Help some sellers reduce costs,becauseThe logistics and labor costs caused by the return and exchange of some goods actually exceed the value of the returned goods themselves. In fact, the returned goods themselves have no value for recirculation. There is no need for merchants to pay extra costs again.After analyzing the reasons for the birth of Amazon's "refund only" policy, some industry insiders said that this is a special product that has evolved based on the return and refund of specific products.

A very obvious feature of after-sales service in the US retail industry isVery relaxed and long-term return and exchange serviceTaking the return and refund period as an example, domestic e-commerce platforms generally implement 7 days of no-reason return, while the refund period of American e-commerce platforms is much longer than 7 days. For example, the return period of most products on Amazon is as long as 30 days, and the return period of electronic products such as cameras is 14 days. Eaby implements after-sales policies such as free return within 30 days and paid return within 60 days.

In addition to online, the return policies of offline physical retailers in the United States are similar. Take Walmart as an example, it implements a 90-day return policy. Costco's regular products are unlimited, and electronic devices such as TVs, computers, cameras, etc. are 90 days. Even for electronic products, Bestbuy can give a 14-day return period for activatable electronic products, and premium members can have a maximum return period of 60 days. For example, Target's after-sales policy is a 90-day return policy for ordinary users, and a 120-day return policy for red card users. Even IKEA, a home furnishing store, has a 365-day return policy for unopened products and 180 days for opened products.

Image source: Canned Image Library

A friendly after-sales experience will make consumers more willing to buy.Looking back at the nearly 100-year history of retail in the United States, there are many cases where extremely friendly after-sales experience brings better business. For example, Stanley Marcus, the former president of the well-known luxury department store Neiman Marcus, mentioned an example he encountered in 1932 in his book "Minding the Store": a woman bought a high-end evening dress at Neiman Marcus, and soon after returned to the store with the dress that was completely unrecognizable and asked for a refund. The clerk readily returned $175, and the customer later became a loyal customer of the store, spending more than $500,000 in total. In fact, this super-long return and exchange policy has long evolved into a business practice for European and American retailers to attract customers and increase sales.

02

What do merchants think?

For consumers, convenient return services undoubtedly enhance their shopping experience, but for retailers, they may increase costs.How much loss will merchants incur from after-sales services such as returns? Are there any freeloaders taking advantage of these loopholes to make profits? How do overseas merchants deal with it?

According to statistics from the National Retail Federation (NRF), the total retail sales of goods in the United States in 2023 was 5.13 trillion U.S. dollars, the value of returned goods was 743 billion U.S. dollars, and the return rate was 14.5%;Fraudulent returns account for less than 2% of total retail sales.

In fact, for merchants,The costs associated with receiving returned merchandise can sometimes exceed the value of the returned merchandise when it is sold.As Sender Shamiss, CEO of return logistics company goTRG, said in an interview with CBS's "MoneyWatch," the costs associated with accepting returned merchandise can be as high as 75% or even 100% or more of the value of the returned merchandise. 59% of retailers said they offer "no-return" refunds because the merchandise is not worth taking back. Among these retailers, 27% said they offer "no-return" refunds for merchandise priced below $20.

Although malicious actors exist objectively, a large number of cases show that both online and offline merchants in the United States still try their best to meet consumers' return demands. At the beginning of the construction of their business model, they have reserved cost space, including return services, to ensure the after-sales consumer experience.

Image source: Canned Image Library

There was a best-selling book in the US retail industry called Customers For Life (author: Carl Sewell, a luxury car dealer). There is a chapter in the book that specifically talks about American customers who take advantage of loopholes and try to get a bargain. How do American merchants view and deal with this? The book says that merchants will certainly be cheated and taken advantage of. So do they mind being taken advantage of? “No,” becauseThese are the costs of doing business, and they are factored into the budget.。

03

Embrace consumers

What can it bring to domestic merchants?

Can domestic merchants absorb their own service costs and benefit from it like American merchants?

According to media reports, Cui Ping, a seafood merchant, sold seafood. Within a few years, his company's annual sales increased from several million to 200 million per store.

Cui Ping said: In the early days, fresh food did not support unconditional returns, but such products were prone to problems, so consumers had doubts about fresh food e-commerce, and many people did not dare to buy online. The transaction mechanism required the platform or merchants to guarantee the quality.

If a merchant or platform provides after-sales services such as full return if broken or refund only, and promises to cover the cost, but in the actual transaction process the merchant is favored, consumers will eventually believe that fresh food and fruits on a certain platform are not worth buying.

In the field of fresh food, by providing consumers with a higher set of after-sales standards such as "compensation for broken products, refund only",Only when buyers accumulate trust in merchants through transactions can they form a mindset of online shopping for fresh produce and fruits, and merchants can expand their business.This is also an important reason why his company has achieved millions of sales and 200 million per store.

Image source: Canned Image Library

Regarding the costs involved in providing after-sales services such as "refund if broken", he did some calculations: for the aquatic product category, for every 100 yuan of goods sold by the company, according to the after-sales rate, an average of 3.5-4 yuan is after-sales costs, 1-1.5 yuan is traffic costs, and the platform collects 0.6 yuan in payment technology service fees; these three costs are 5-7 yuan, and the overall after-sales costs are controllable and the proportion is not high, which shows that the vast majority of consumers do not abuse after-sales services. Similarly, compared with other e-commerce platforms, these three costs range from 12 to 27 yuan out of 100 yuan in revenue, mainly because the traffic costs are high, and the after-sales costs are not much different.

What bothers him most is not the "freeloaders" among the few ordinary buyers, but the peer merchants who are more familiar with the platform rules and have more diverse tools and methods. "They cause us greater losses and damage the competitive environment more seriously." But he will not give up because of choking, and will continue to provide all consumers with the best after-sales service possible.

According to Cui Ping's understanding of the actual situation,For malicious store bombings or gang crimes, the platform will not only remind merchants to preserve evidence and report to the police, but also cooperate to provide relevant evidenceIn fact, the resistance to group-based wool-pulling is getting bigger and bigger. If one or more accounts initiate refund requests multiple times within a period of time, they will be put on the platform's "blacklist."

Goodwill towards consumers may be exploited by some bad individuals or organizations, but when the merchants do the math, they actually do not lose money. All transactions are based on customer demand. Only when customers have demand can there be transactions and economic value. Industry analysts pointed out thatThe better you meet customer needs, the more profitable the transaction will be.Refunds are only provided as an after-sales service for special or small-value goods. Whether it is the platform, merchants or consumers, they are all in the process of running-in and adjusting. I believe that everyone will get what they need in the end.

What do you think about the after-sales measures such as "refund only" on e-commerce platforms? Let's talk about it in the comments section.