Improvement of the Refund Policy of EBay - Essay Example

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Proposal for the Improvement of the Refund Policy of eBay Prepared for the Management of eBay Inc California April 24, Table of Content Executive Summary.........................................................................................3 Informative Abstract........................................................................................4 Statement of Problem.......................................................................................5 Background and Review..................................................................................5 Required Action...............................................................................................8 Potential Benefits.............................................................................................9 Plan...................................................................................................................9 Objectives & Methods......................................................................................9 Time Table........................................................................................................9 Costs and Budget..............................................................................................10 Method 1: Identification of Universal Policy....................................................10 Method 2: Identification of a three-pronged Approach.....................................11 Method 3: Modification of the Status Quo........................................................13 Summary Costs of The Options........................................................................14 Expected Results...............................................................................................14 Feasibility..........................................................................................................15 Conclusion.........................................................................................................16 Request for Action.............................................................................................16 Works Cited.......................................................................................................17 Appendix 1: Exhibit of E-Bay Complaint.........................................................18 Appendix 2: Exhibit of Ripoff Report...............................................................19 Appendix 3: Sample Refund Policy...................................................................20 Executive Summary The proposal examines the challenges of refund policy in eBay and its impacts on the operation of the company. It identifies that refunds are a major issue and different gray areas ensure that several disputes and disagreements occur which is impacting on the reputation and activities of eBay. The report identifies that there are three possible approaches that can be used to deal with the issues at hand. The first approach is to identify a universal policy for refunds. This policy will include the identification of all stakeholder needs and integrate it into the new policy. The second approach is to provide a three-pronged solution which will include allowing customers to choose between the buyer's refund policy, eBay's refund policy or a third independent system. He third approach is to improve the status quo. The research recommends that the company must use a universal approach which will be setup by eBay in consultation with all the respective stakeholders. This is cost effective and competitively advantageous. Informative Abstract Since the advent of the Internet, more and more people spend time online instead of doing things in the real life. Due to this, a large range of economic activities take place online instead of in the normal mainstream space. Electronic commerce has increased due to the fact that people can easily place orders online and get the orders sent to them in the comfort of their homes. There are many online platforms where such sales can be conducted. eBay has emerged as one of the most popular outlets for this kind of transactions. This is because it offers an unprecedented platform for the liaising of the services of both buyers and sellers. People can easily register as sellers and make their products available online. This give them a wide range of consumers in the United States and beyond, who get access to the products by making very simple orders. However, due to the fact that most of these sellers are not adequately enlightened about the use of the Internet and other elements of commercial contracts, there are numerous cases of dissatisfaction of consumers. These consumers demand refund of their monies and there are numerous challenges that come with this. The effect of this is that the refund system of merchants on eBay turn out to be problematic. This paper enables the researcher to critique the system of sales and legal framework for sellers and buyers on eBay. This will culminate in the identification of a proposal for improvement. The proposal is being forwarded to the management of eBay and will be approved by the board of directors for implementation. Statement of Problem eBay is a platform for three main stakeholders: sellers (merchants), e-commerce payment companies (PayPal and credit card companies) and buyers (purchases. These three people are brought together on the eBay platform to interact and conduct electronic commerce activities. The traditional model is that sellers advertise their goods on the eBay portal and provide information about these products. Buyers who are interested log onto eBay and make orders. The orders are paid for with the e-commerce payment systems like PayPal or a credit card. Obviously, the fact that there is an open portal for anyone to get involved in the sales implies that people from different backgrounds are allowed to use the system. Also, the opened system means that consumers of all backgrounds can make purchases. This include problematic consumers and less problematic consumers. There is a problem of how refund policies must be regulated and controlled in eBay. This is because the fact that there are diverse sellers and consumers, there are numerous possibilities for dispute and disagreements. In such instances, e-commerce payment portals might just play an impersonal role and there is likely to be a dispute in the system. Now, the question is what should eBay do about its refund policy system? Is it better for them to adopt a unified refund system? Or should they place better clogs on their sellers or buyers to ensure that there is a better refund system? Or should they put the onus on the payment processing companies like PayPal? Clearly, there is an issue with the current refund regime and the laxity that comes with the system makes it difficult and completely cumbersome for people involved in the use of the eBay portal to get a useful trading system. Background and Review eBay is an online portal for the sale of goods to different customers in the United States and beyond (McDougall 142). eBay involves consumers making orders via an online portal and it uses third party shipping companies to ship out services to consumers. eBay provides important partnerships that allows them to link up with related service providers like e-commerce entities. The strength of eBay is that it has a user-friendly system that allows sellers and buyers to log on and conduct business (McDougall 142). This enables consumers to get very strong and productive systems or structures which promotes effective business. In order to conduct good business, a seller needs to set up the best and the most appropriate communication systems and structures (Ennico 80). In doing this, they will have to ensure that their legal matters and systems are in the right shape and form. This is because a breach of warranty and a breach of contract can always lead to requests for refunds (Ennico 80). The proforma system of eBay's sales portal makes it imperative for sellers to ensure that they follow the basic principles of caveat emptor which requires sellers to make proper inspections of the product before purchase (Ennico 81). Also, sellers are free to set up their own warranty standards and contract terms (Ennico 81). The warranties must be observed and the seller must ensure that all the pictures displayed on the eBay portal are in sync with the products they sell, otherwise, there is a breach of warranty and a breach of contract which will make the sale void and hence, the buyer can request for a refund (Ennico 83). On the part of the seller, Miller cautions that “happy customers are repeat customers whilst unhappy customers generate negative word of mouth – and leave negative feedback” (314). Hence, a seller is encouraged to come up with a positive refund policy and a money-back policy which must be stated clearly (Miller 315). However, this provision and caution seems to be very moralistic in outlook. This is because it is persuasive in nature and not legal in the strict sense. eBay does not invoke a strict obligation on sellers. They only need to do this as a gesture of goodwill. Thus, the quest for good services can only be invoked when a customer raises an objection (Lynne and Davis 123). In such a case, the e-commerce company or the sales outlet like PayPal will freeze the account of the merchant and require the merchant to either refund the money or get the customer to return the goods for a refund (Lynne and Davis 123). Some merchants use a no-refund policy which involves a system of making a sale a permanent transaction which cannot be reversed (Conner 168). However, in an instance where a customer makes a report, there is no option for the merchant but to make a refund of the money that has already been taken for the sale. The use of the ambiguous and optional sales system has caused so much confusion in the sale of goods through the eBay portal. This is because there is a large gray area and most customers get highly dissatisfied. In such events, most customers vent out their anger and dissatisfaction by reporting their case online. Appendix 1 shows an exhibit of a case where the buyer did not get the product he ordered. He blamed it on the seller. However, it is possible the seller shipped the product but it got missing in transit. This means that there is so much confusion that is not covered by the policy of the company. However, it is possible that the company could make it mandatory for shippings to be insured in order prevent such stand offs. The basis of the customer's report is that eBay refused to take responsibility for the situation. On a critical review of the situation, it can however be argued that eBay has little obligation for the sale since they just brokered the deal between the buyer and seller. In spite of this, one will say eBay bears some degree of vicarious liability and they ought to have known or supported the customer by putting up a stronger and more stringent policy making system to ensure that sellers do not just disappear in their operations and quest for the satisfaction of customers. Appendix 2 shows an exhibit of a customer from the infamous ripoff report website. This is a website that is mean to name and shame e-commerce entities who indulge in various forms of scams. In the complaint in question, the complainant is claiming that other buyers of products on eBay should reconsider their decision about purchasing from them. In the case, the buyer paid for the product and it was delivered to him. However, he realized that the product was not up to his standard and sent it back for a refund. The seller argued that the product was damaged by the customer so they refused to provide a refund. eBay argued that the buyer protection system did not cover the return of damaged goods. Hence, the refund was not provided. This is another policy oriented issue that played a major role in the general operations of the company. Required Action After the review of the situation in question, there are some important factors that need to be taken into account before any action is taken. First of all, the number of stakeholders in this situation are five and it includes: 1. eBay as the broker, 2. The seller, 3. The courier company that delivers the products, 4. The e-commerce company that executes the sale and 5. The buyer Hence, there is the need for the creation of an improved refund policy system. The sample system that has been recommended is show in Appendix 3. The sample system shown below is a recommended one and it does not encompass a strict system. It is therefore imperative for the company to define a more robust and comprehensive system for the clarification of the obligations of all the five stakeholders in question. This will help the company to maintain a good and recognizable image as one of the best sellers on the Internet. The system can also be replicated to other parts of the world to ensure that eBay's global outreach system attains a high and solid reputation. Potential Benefits The fundamental benefit of a reviewed refund policy regime in eBay is that it will help all the five stakeholders to be given their scope and their limits. Important barriers will be defined by the new system and framework for the completion of transactions and sales on the website. The absence of such systems implies that the sales will be opened to possible manipulations and falsifications which could lead to disputes that can potentially destroy the image of eBay as a global sales portal. Plan Objectives & Methods The main objective is to define a strict policy framework that will guide the sales systems and structure of eBay. This policy will define the fundamental objectives, limits and scope of the various stakeholders and this will be binding upon all the sales in eBay. The approach will be to choose one of three options which could vary in different forms and levels. This include: 1. Identification of a universal return policy 2. Identification of a three-pronged approach 3. Modification of the status quo Time Table Activity Start Date End Date Acceptance of Proposal 05/07/13 05/13/13 Stakeholders' Engagement 05/18/13 05/31/13 Selection of Best Policy 06/04/13 06/11/13 Implementation 07/01/13 09/30/13 Table 1: Timeline of Project Costs and Budget This section of the proposal will examine the different costs and commitments of eBay to the attainment of each of the ends. The activity will involve the identification of important approaches and methods that will be used and the implications for the company if they are implemented. Method 1: Identification of Universal Policy The universal policy will involve the identification of the different classes of responsibility for refunds and the distribution of these responsibilities amongst the different stakeholders. In order to do this, the parties will be given a proposition whereby the obligations for refunds will be shared amongst the various stakeholders: Stakeholder Who Sets Refund Policy Obligation for Refund Who Decides the Case Obligation for Insurance eBay Sets a universal policy Places it on the party at fault eBay decides on the case Dictated by eBay and parties must choose Seller Adheres to eBay's universal policy Must adhere to obligations eBay decisions are enforced by the E-Commerce entity Seller must opt in Courier Company Works within the mainstream eBay system. Where fault is from courier company, eBay must bear it Case must be heard by eBay For insured packages, parties pay insurance as part of the courier cost E-Commerce Entity Work within the scope of the eBay policy Block the account of guilty party when decision is taken Decision is taken by eBay and forwarded to them. Release account where insurance claims are paid Buyer Subject to the eBay policy framework Subject to proceedings and pay or claim refund Provide evidence in eBay hearings Opt into insurance programs and pay them where necessary Table 2: Obligations of Parties in Universal policy system The universal policy is meant to come up with some degree of requirements and demands. The main demand is that there will be the need for the following: Activity Potential Costs ($ '000) Redrafting of Refund Policy 350 Consensus meetings 50 Notifications 200 Potential legal suits (Provision) 1500 Redesign of systems and structures on websites (IT Commitments) 500 Total 2600 Method 2: Identification of a three-pronged Approach The three-pronged approach will involve three main options that will be carried out for the identification of refund policies for all the stakeholders. At the point of purchase, the buyer will select which of the three options best suits him or her. Stakeholder Who Sets Refund Policy Obligation for Refund Who Decides the Case Obligation for Insurance Option 1 Seller sets the refund policy The seller defines the terms for refund The e-commerce company will have to hold funds until the strict terms are adhered to Buyer pays for his own insurance Option 2 eBay sets up the refund policy and the customer shows it Case is heard fairly and the refund is given appropriately eBay decides on the case Insurance is not required Option 3 Independent unit defines the Refund policy The guilty party will pay the refund The independent unit will decide on the case Insurance is optional Table 3: Obligations of the Parties in a Three-Pronged System The table below show cases the financial obligations of eBay in setting up such a system and making it work for the company. Activity Potential Costs ($ '000) Redrafting of the three Refund Policy 550 Consensus meetings 150 Notifications 200 Setting up of an Independent Unit 500 Expansion of Insurance activities 200 Potential legal suits (Provision) 500 Redesign of systems and structures on websites (IT Commitments) 500 Total 2600 Method 3: Modification of the Status Quo This option will be a straightforward system and approach for the resolution of all the refund policy systems that exists at eBay. The approach will be to identify the best way of dealing with the current problems by way of resolving the issues and changing them. The demand for doing this will be to institute the following Activity Fixed Cost ($'000) Variable Cost ($'000) Formulation of a refund policy evaluation unit 1000 500 Formulation of supervisory unit 500 300 Case hearing 500 500 Totals 2000 1300 Gross Total 3300 The final approach will include the formulation of a more rigorous supervisory system to examine cases promptly and provide solutions on the basis of the agreed system of refund policy that will be used. The system will not change the status quo. Rather, it will involve the enhancement of checks and balances for the smooth running of the system and the speedily evaluation of cases and issues. Summary Costs of The Options Option Cost ($'000) Universal Policy 2600 Three-Pronged Approach 2600 Improvement of Status Quo 3300 Expected Results The expected results is to create a system of dealing with refund policies and systems to ensure that all the parties related to these contracts will deal with issues quickly and find solutions to them. The proposition is to find the best ways of dealing with the best way of providing refunds and to deal with disputes. An appropriate system will deal with disputes resolutely and provide solutions where the need arises. The result is that the different stakeholders will be able to control matters and find answers to their disputes. This will enhance prompt business activities and prevent issues and tensions which might be detrimental for the operations of the company. Feasibility A new system of dealing with refund matters will provide the best system for resolving problems. The changes to the refund policy structures will provide important elements and aspects of the operation of eBay. The following metrics should be identified and used to deal with the different options. Option 1: Universal Policy Option 2: Three-Pronged Approach Option 3: Improvement of Status Quo Flexibility High: This is a simple one-way approach Medium: Quite complicated in application High: Quite easy to do. Ease of Dealing with Issues High: The universal policy can provide a quick and easy method of dealing with matters High: This can help to provide a variety of solutions to problems Medium: Not so easy to deal with pressing issues and matters Cost implications Low: The price is amongst the lowest Low: The prices are low High: The cost of establishment and running is fairly high Ease of design and implementation Medium: Quite complicated to set up Low: The system of setting up the design is quite complicated. High: This is an upgrade of existing systems Legal matters High: The legal structure can be built to promote best results Low: It leads to many possibilities Medium: This will be an improved system Competitive Advantage High: eBay will be unique in the use of this policy Medium: It will be better than other competitors Medium: The existing system will be improved. Conclusion The formulation of a universal eBay policy is likely to provide a flexible, all-encompassing, affordable and easy system that can help to promote efficient and effective refund policy systems. The analysis indicates that the method of identifying a centralized eBay policy on refunds and returns is better than all the other options. The three-pronged system is complicated and difficult to implement. Improvement of the status quo might not be good enough. This is because the system is expensive to set up and manage and it is a replication of the old model which could prove problematic. Request for Action It is recommended that a proposal for the implementation of a universal system for eBay's refund policy system. The universal method will provide the framework for the completion of the eBay proposal discussions. Within the proposal discussion, all stakeholders can put forward their views on how a universal system must operate and the implication for the different units of the company. The propositions will be input to the existing structure and used to help to provide a blueprint for the implementation of a new structure for refunds. Works Cited Conner, Nancy. eBay: The Missing Manual. Sebastopol, CA: O'Reilly Publishing. Danyl Allen. “Ebay Complaint”. My 3 Cents. . Web. 2013. Ennico Cliff. The eBay Seller's Tax and Legal Answer Book New York: American Publishing. 2007. Print. Lynne, Jacquelyn and Davis, Charlene. Make Big Profits on eBay: Start your own Business. Irvine, CA: Entrepreneur Press. 2010. Print. McDougall, John. Expand Your Business Using eBay. Irvine, CA: Entrepreneur Press. 2007. Print. Miller, Michael. Tricks of the eBay Masters. Indianapolis, IN: Que Publishing. 2011. Print. Ripoff Report. “Ebay Refuses to pay Refunds” Web. 2013. Appendix 1 Exhibit of E-Bay Complaint Appendix 2 Exhibit of Ripoff Report Appendix 3 Sample Refund Policy Consideration and examples of return policies. Sellers.. This is the best we found: ITEM  MUST BE RETUNED WITHIN:    7 DAYS REFUND WILL BE GIVEN AS:  merchandise credit Return Policy details: If the items are not as described, we will offer a Merchandise Credit. In most cases this will be minus shipping and Ebay fees, although if it was a blatant mistake by us we'll pick up everything . Bottom line, we want you happy! Could be improved to set limit on credit to six months, though. WHY HAVE A RETURN POLICY? 1. Buyers like it. A return policy can make a buyer more comfortable.  2. Sellers need a return policy to cover & protect yourself.  3. Some credit card companies are honoring seller policies. A well written policy can possibly prevent seller from having to do a full credit card refund if the buyer returns the item and this is not in accordance with your policy. 4. Even simple policy, such as noting "no returns", "shipping charges are not refundable" or "restocking fee may be charged"  is good business.   5. Sound policies protect the seller. You can always make exceptions for your best customers. RETURN POLICY - possible components: We have included some examples..possibly good or bad. See how they sound to you. We try to be fair and accurate with all my auctions and descriptions. Please read each auction and bid carefully. We give you the information that is supplied by our vendors. If this information is incorrect, please email me before leaving negative feedback. This is not a retail store. All sales are final.  We do not offer refunds on any item unless is grossly misrepresented. If a refund is given it will only be for the cost of the item. Shipping and Handling is non refundable. Restocking and other fees may be charged. If there is a problem, we can work together to resolve the problem. I have always been extremely fair and always try to work with my reasonable customers. Negative feedback doesn't go away and should only be left as a last resort! I strive for positive feedback, harmonious relations and even some friendships. We will make every attempt possible to resolve the issue if we made a mistake.(It happens). Please do not assume a mistake is intentional. Let us know if our service could be better!! *** Your EBAY Listing Tips 1. Picture of actual object being sold protects you. If you use a stock photo, note. 2. Note any discrepancies from objects in picture.{If you show a gorgeous girl next to your object wearing a $90,000 diamond tiara someone might think it is included. If you show two items to show different views , then they may think two are included.} 3. List item(s) included (and excluded). Note accessessory NOT included, which typically might be [like printer cable with printer] or note "anything not listed is excluded". 4. Note if used. Note condition. Note scratches, or "as is". Note working condition or "untested". 5. Understand there are PEOPLE LOOKING FOR STEALS. A few unscrupulous people want unreasonable deals. Even those that sell the exact same items and KNOW the true cost/price may abuse you if your listing can be in anyway construed differently. If you offer 75 different colors...YES you guessed it, they will think all are 75 included for one low price. People may have zero business acumen or have no concept of quid pro quo. New buyers are especially a challenge. 6. Consider carefully if offering media mail (cheaper shipping) is worth the risk of bad feedback. Only offer it as an alternative and not as the default. 7. Consider carefully if offering "as is" items..is worth risking your EBAY reputation. 8. Consider carefully if offering "designer -types' is worth it..or... 9. Develop a tough skin, leave feedback only after it is given, cover yourself with policies and if you get a bad feedback..DO NOT PULL THE LISTING. That is YOUR chance to tell your side.  Make an addendum to the listing and in the most positive terms possible, explain again what you are selling. Then terminate the listing if you want. It could just be one person's opinion of your item and the fact they want something for nothing. People will search for your listings with negative feedback. make sure anything left reflects favorably on you.  You can also reply to feedback left. My unofficial refund policy "one hundred percent refund, good feedback left by both parties, cooperation in getting seller fees refunded, and BUYER did not have to return the item." I have repeatedly had buyers NOT comply. Hard to believe/comprehend, but true. Give the refund AFTER the buyer has cooperated in getting seller fees returned. Be a good seller. I also have completely replaced off-Ebay orders (where they had no recourse)..where a product leaked. We replaced the damaged product and more. WHY? Integrity.   If  I mess up an order, I often add more product.  Then we revise how we do things so not to have the same mistake(s).   Be a savvy seller. Calm down when you get an upset buyer. It happens. Watch your tone. This is a business transaction. Yes it can get under your skin when the item is as listed and they are not happy. Look for improvements. Investigate thoroughly your listing. I've changed confusing listings. I've changed packaging after missing items, and seek detailed feedback, so I know what happened.   I've gone to thicker envelops for reeds. threw old plastic chinese perfume tubes (stress crack and leak) Put reeds in envelop with box so they don't overlook them underneath. Decided not to send items unless delivery confirm.YES..it was cheaper ship with stamps and to replace some small items  however it is also risky -you are hanging out on feedback. I replaced the same bendel three times and still got a neutral.  Now I make padded packages with peanuts to meet the  three quarter inch rule to go through Paypal shipping where a high number of small items got lost. Accepting cash is BAD. Cash and checks take time to get. Buyers won't allow time to receive and cash..they get antsy. Risky. I do not take them. US mail will lose a percentage of your stuff.   May want  to require insurance. Else risky. No the post office is not my friend. They took five days to do on a overnight to Hollywood. Took way too much of my time to replace, and get a refund. If you do not wait at the counter for a receipt you have no recourse with the USPS for overnight.   Sellers: Only offer services that make sense to you and in consideration of your time. However I may do a signature required on my dime  If I send to NY city..or Miami..or Washington DC....where I think there is a greater liklihood of loss. Although..if it was delivered, then the buyer is reponsible for the loss. The seller only needs to show delivery confirmation. itmes are usually scanned as delivered when placed at the buyers location. I think signature required is a good alternative to insurance. Block bidder Block any bidder that  ask question such that you do not have a comfortable feeling about dealing with (or further dealing with)  the person. Bad sales take so much time. Try to set up clear and complete ads. This is a block bidder link. http://offer.ebay.com/ws/eBayISAPI.dll?BidderBlockLogin This can be simply a bidder that misunderstands terms...if you cannot get it clear before the sale, you are just asking for trouble. I just blocked a zero feedback bidder from buying because they merely asked if I had a return policy. Why? This is not Wal-mart. I unfortunately sell very low dollar items.  If the buyer is unsure what is the likelihood you will get good feedback if you  do not refund shipping? No this is simply asking for trouble and I said at the first HINT of a problem bail and block them. Best practice is to check the buyer's reputation when they ask a question..and block them if they look bad. You can always unblock. Protect yourself and your reputation. Remember one thing in setting up your refund policy. I have YET to have a product returned in salable condition. The packaging was smushed. Lately, I just offered a couple dollars off (partial refund) then they did not have to return, and they were happy. BUYERS: Be a savvy buyer.  Are Return policies the answer? Bulky items or heavy items cost more in shipping...so being able to return really does you no good. As a buyer when I got a DOA (non working printer) I helped sell it and it was resold and sent from my place.   CONSIDER the seller reputation and feedback. Many electronics can be DOA (Dead on Arrival). Look for how the seller handles those..and whether or not they have good and timely customer service.  I've had bad batteries replaced free no questions asked. Remember EBAY has $25 minimum they charge you to recover..for buyer protection.  Inexpensive items, the return shipping makes the return untenable.  I've had bad jewelry too..where they just snap in stone.. I sent one back and never got a refund nor a return...they refused refund without return.....cost me mopre money and then hassle hassle ...that's why never buy unless rating is 99 or above. TRUST me on that. Always get a receipt delivery confirm if you return. Then just notify and charge your credit card. Be prepared for Paypal to contest..and they will NOT represent YOU. Your credit card company does. Some charge for this. Buying something where parts are hard to get is risky.  I bought a watch from Germany and lost the pin day one. It was on oversize one. Even though I already left feedback and it was a private transaction..the seller for no money, mailed me a new pin. I bought a second watch from this German seller. It quit working after a few days, He sent me a new one (no return on old one). Great seller.. Some sellers have integrity. Don't always buy from the cheapest...remember service after the sale. Check items right after you get them. make sure they work and parts are there. Check expiration dates... To protect yourself..as a buyer..copy all the materials ...and correspondance. Also check your purchases immediately. Some sellers only allow 24 hours for returns. The web site for Certified Fraud Examiners (as requested by somone reading this) is www acfe com    As a seller, I always try to sell honestly. It is hard to always write every listing so it is clear to everyone.  The seller service after the sale is good to evaluate.  Don't expect to return something just because you do not like it. This is not Wal-mart. If unsure do not buy. Go to a Bricks and Morter store. Be considerate of the Seller's time. Rarely is a Seller compensated for all the time of Ebay. Good Luck and happy Ebaying. Hope this helps. This is my perspective. You may feel differently. That is fine. Read More