Vendor Experience: Restocking Fees Reasonable?

[ChibbMD]

Hey folks. Like many of you, I spend thousands of dollars a year with online retailers for my car, truck, and motorcycles. I consider myself very experienced and understanding when it comes to dealing with vendors both small and large. I had a recent experience with a vendor that left me feeling a little disappointed. I honestly wanted to share the experience and ask for some feedback. Maybe you'll share in my disappointment. Maybe you'll shed some light on the business logic behind the vendor's approach. Either way, I'll feel better. I have no idea if this vendor has any association with the site (I don't think so), but I'm not trying to call them out and don't want to name them specifically.

So here's my story. I purchased a set of wheel spacers and extended wheel studs. They came together in a combined kit (H&R spacers/studs that are sold on a number of popular sites). Order total was $199.90. They offer free shipping on orders of $200 or more. I didn't qualify and never thought twice about it. Shipping to me was $16. A little more than I wanted to spend, but no big deal.

When I got the parts in I realized the studs were shorter than I needed for my application (only 3-4mm longer than stock). There was no mention of the stud length in the product description. I decided I'd just send them back for a refund and buy the parts separately. I contacted the vendor as indicated on their website. I did take a look at their return policies and it did clearly state that the buyer is responsible for return shipping and potential restocking fees.

When they got back to me they said that in addition to paying for return shipping a restocking fee would apply and it was 20% of the purchase price (almost $40). So doing some quick math... I spent $200 on the original item, $16 on shipping to me, $20 on return shipping, and a $40 restocking fee. I just didn't feel good about spending $76 in fees in addition to my actual purchase and the $60 in return fees is close to 30% of the cost, simply to return a brand new unused item.

This just didn't feel consistent with what I've come to expect from most online retailers these days. Many would ask you to cover return shipping but not charge a restocking fee. You'd still be out your initial shipping, but I could live with that loss. The best offer to deduct discounted shipping from your return and send you a return label. What do you guys think about my experience?

[villainous_frx]

This is just speculation and my .02... *Usually* restocking is to cover their credit card/site fees (Shopify/Stripe/Woo) which still apply even if the item is returned. The rest is the cost to have to now actually stock the item instead of drop shipping it, or eat the restocking fee to their distributor (+associated shipping if applicable). Credit card fees are ~2% total order price and still apply even if the item is refunded.

It really sucks, I totally get it, but unfortunately that seems to be the way it goes.

The company I work for (non-car related) just eats any fees and has the buyer pay return shipping. Even then, we're pretty nice and will refund any outbound shipping + give a return label at a flat $7.50 return for small items or $50.00 for the heavy stuff.

[CSG Mike]

Originally Posted by villainous_frx

This is just speculation and my .02... *Usually* restocking is to cover their credit card/site fees (Shopify/Stripe/Woo) which still apply even if the item is returned. The rest is the cost to have to now actually stock the item instead of drop shipping it, or eat the restocking fee to their distributor (+associated shipping if applicable). Credit card fees are ~2% total order price and still apply even if the item is refunded.

It really sucks, I totally get it, but unfortunately that seems to be the way it goes.

The company I work for (non-car related) just eats any fees and has the buyer pay return shipping. Even then, we're pretty nice and will refund any outbound shipping + give a return label at a flat $7.50 return for small items or $50.00 for the heavy stuff.

Card fees are typically 2.9-3.9%, specifically, for online type purchases. Anything lower always needs to be in-person with a chip.

The lowest I've ever seen is at the DMV, which is 2.3%, which I am 100% sure is a government only rate.

Clover/Square for example charges 2.7% + $0.10, which is a very typical POS system for in-person purchases for smaller items, like drinks and food.

Sounds like you work for a larger company, but I know CSG waives the restocking fee for most items as long as the customer isn't a jerk about things, and keeps it to a minimum of just the actual processing fee + shipping.


Sadly, even with policies in place, and acknowledgements at checkout, people file chargebacks for the restocking fee and win the dispute, more often than not.

[CSG Mike]

Originally Posted by ChibbMD

Hey folks. Like many of you, I spend thousands of dollars a year with online retailers for my car, truck, and motorcycles. I consider myself very experienced and understanding when it comes to dealing with vendors both small and large. I had a recent experience with a vendor that left me feeling a little disappointed. I honestly wanted to share the experience and ask for some feedback. Maybe you'll share in my disappointment. Maybe you'll shed some light on the business logic behind the vendor's approach. Either way, I'll feel better. I have no idea if this vendor has any association with the site (I don't think so), but I'm not trying to call them out and don't want to name them specifically.

So here's my story. I purchased a set of wheel spacers and extended wheel studs. They came together in a combined kit (H&R spacers/studs that are sold on a number of popular sites). Order total was $199.90. They offer free shipping on orders of $200 or more. I didn't qualify and never thought twice about it. Shipping to me was $16. A little more than I wanted to spend, but no big deal.

When I got the parts in I realized the studs were shorter than I needed for my application (only 3-4mm longer than stock). There was no mention of the stud length in the product description. I decided I'd just send them back for a refund and buy the parts separately. I contacted the vendor as indicated on their website. I did take a look at their return policies and it did clearly state that the buyer is responsible for return shipping and potential restocking fees.

When they got back to me they said that in addition to paying for return shipping a restocking fee would apply and it was 20% of the purchase price (almost $40). So doing some quick math... I spent $200 on the original item, $16 on shipping to me, $20 on return shipping, and a $40 restocking fee. I just didn't feel good about spending $76 in fees in addition to my actual purchase and the $60 in return fees is close to 30% of the cost, simply to return a brand new unused item.

This just didn't feel consistent with what I've come to expect from most online retailers these days. Many would ask you to cover return shipping but not charge a restocking fee. You'd still be out your initial shipping, but I could live with that loss. The best offer to deduct discounted shipping from your return and send you a return label. What do you guys think about my experience?

Larger businesses can absorb that kind of cost. Smaller ones can't.

Amazon is not in the business of selling product; it's only there to support other actual revenue streams, and as such, they don't really care about absorbing smaller costs.

Really depends on if you choose to support a small business that also offers you support, or if you want to go for the best price/convenience.

[soundman98]

yep, some of it is the dramatic difference between large business and small business.

a large business with 400,000 orders can easily absorb the cost of 1,000 returns.

a small business that ships 100 orders, 10 returns quickly eat their entire profit margin.

i used to work for a small electrical company. we would process maybe 25 credit card transactions in 1 full year. so the prices were based on paying by check/cash. anyone that wanted to pay by credit card, there was a 3.9% surcharge.

you don't know how many people would absolutely flip out that we didn't just include this extra credit card processing cost in the overall cost. in a highly competitive market where even a cost increase of 2% would allow other electrical companies to out-bid us for the work. the larger firms could easily keep the costs competitive and absorb it based on performing more work over the same year. but any other smaller company was caught in the same crossfire. raise prices to cover overhead of assumed processing of credit cards all the time, but get priced out of the work and go out of business, or assume the lower pricing, and deal with the fallout for the few customers that try to pay with a credit card, and need the fee increase explained to them.

restocking fees have always been conflicting to me.

extremely custom stuff that was special ordered from the factory, or the place that you ordered from was the middle man/distributor, restocking only makes sense. they're going to have an impossible time reselling the stuff. so it makes sense to make it more difficult, or at least cost-worthy for them to limit returns on such items.

but restocking fees on normal unopened/undamaged items that are stock items and easily re-sold always feels excessive to me.

[ChibbMD]

After a little back and forth the vendor agreed to 3.5% restocking fee which I have to assume was the cost of credit card fees. I can live with that. I still feel like paying shipping two ways plus restocking is a little excessive, but I can understand the business rationale behind it.

I think we're simply in a day and age where free shipping and free returns from the big companies have become prevalent enough it's kind of set the standard/expectations for many consumers (including myself). I feel bad that it squeezes the little guy, but I'm afraid it's what's needed to stay competitive with many consumers. To Mike's point, maybe other additional support would provide enough value to offset the cost differential, but in this particular case that wasn't my experience.