Why Restocking Fees

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Yamaha Motorcycles Street Event - Ride Motorsports


Returning Merchandise and Feeling Like you got - Dinged?

Returning merchandise isn't always as easy as getting all your money back. Here's why.

Several years ago I bought a few parts and later realized I didn't need one of the items, valued at $100. Of course I wanted my money back. But when I brought it to the dealer they wanted to charge me a 15% restocking fee. For what? Just gonna put it back on the shelf - right? Is that worth $15.

Nowadays it's easy to buy all kinds of gear on the internet. And when it doesn't fit a lot of customers want to return the item either for their money back, or the correct size.

In all cases there are expenses to the retailer, brick & mortar or online, that must be dealt with. In most cases it's only fair they be covered by the customer. You'll see why in a minute.

Let's remember too, that a lot of online purchases come with free shipping. Well, it was free to you at least, the consumer, but someone paid it. Right - it was the retailer.

The scenario: Karl and his wife are going on a trip and buy $250 worth of gear from a internet retailer they've never done business with before. Because he purchased so much stuff, he got free shipping on his order. Just prior to the trip, Karl's mom comes down with a rare bone disease and Karl and his wife have to cancel their trip. Karl contacts the retailer and request a Return Authorization for the entire order. He gets one right away along with a notation that anything he returns will be subject to a 15% restocking fee (which is also noted on the retailers website, and many brick & mortar locations stamp it right on the receipt or have it posted at the counter). Karl isn't happy about this and fires an email back wondering why the fee. After all - he didn't open anything yet.

Here's some of the reasonable reasons for the fee:

1. Processing the original order - The retailer has to cover the overhead on processing the original order. This may involve the cost of his website server storage and backend as well as anyone involved with taking the digital data from one format to the invoice/packing slip format.

2. Pulling the original order - Someone got paid to go into the warehouse and pull that order.

3. Shipping the original order - If the order is shipped, someone had to be paid to ship it as well.

4. Shipping charges on the original order - Karl got free shipping, which the retailer basically covered the cost of. The retailer is willing to do that, but if product gets returned should the retailer have to eat that and suffer a negative profit? No.

5. Unrecoverable credit card fees - When a retailer runs a credit against a credit card, the consumer gets the entire amount. But did you know that the retailer does not recover the transaction fees already paid to the credit card processor on the original order? More negative profit if they don't charge a restocking fee.

6. Processing the initial RA - A customer service rep had to be in touch with Karl over several emails to provide him an RA and later explain all these things we're talking about right here.

7. Checking in the return - Once the return arrives, someone gets paid to check in the return.

8. Processing the credit - ... and then someone over in accounting has to get paid to run the credit and advise Karl it has been issued.

9. Restocking the items into a warehouse - The product then gets sent back to the warehouse where someone is getting paid to restock it.

10. Repackaging - Some retailers will charge an additional repackaging fee as well, which is reasonable if the item was not returned in a resalable condition and has to be repackaged or cleaned up before it can be sold again.

All things considered, in the case of Karl's $250 order, do you think it's unreasonable to only give him back $212.50. Do you think the retailer is actually making a profit by witholding $37.50? Based on what we know from above the answer is obviously No.

Now, good customer service comes into play here of course. Many retailers leave the restocking fee open ended as an option, not as an absolute. If a retailer has a good customer who routinely comes back again and again, it may be worth their business not to enforce the fee, and reviewing each request on a case by case basis is always a good idea.

If it was a small single item and the customer paid the shipping initially, the retailer may once again forego charging the restocking fee and keep a customer for life.

Companies like REI, Nordstrom and others have built a reputation on strong customer service. In the motorsports world there are a number of companies who do it well too. But don't think it's unreasonable or out of line for any of them to have a restocking fee policy.

And keep in mind that whenever you buy gear, parts and accessories, you may be hit with a restocking fee on anything you return. And that's reasonable.

Patrick Thomas/Summer 11

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