Should eBay Sellers Charge a Restocking Fee for Returns?
Restocking fees are fees charged when an item is returned to the seller. Sometimes restocking fees are based on the condition of the item and the fee is a percentage of the original sale price. If a customer returns an item and the seller has a restocking fee outlined in their return policy, the customer will only get back a percentage of the initial purchase price. This policy is common in retail for higher-end items like electronics, jewelry, or designer goods. Among eBay sellers, restocking fees are a point of controversy.
eBay's Policy on Restocking Fees
eBay's policy regarding restocking fees is actually contradictory and confusing. On one hand, on the "Sell Your Item Form," a restocking fee option is available for up to 20 percent. But on the other hand, eBays "eBay Help" page for Creating Your Return Policy, tells sellers:
- Don't charge a restocking fee. If you do charge a restocking fee, be sure to select a reasonable amount and limit it to instances where the buyer isn't returning the item in its original condition.
- If you charge a restocking fee for returns, we recommend that you only ask for a reasonable amount.
- You shouldn't charge restocking fees for items returned due to damage, defects, or not-as-described in the listing.
No wonder sellers are confused. While the selling workflow clearly has an option for restocking fees—and many sellers implement it—the eBay Help Center advises not to apply a restocking fee. It's a "do it–don't do it" situation.
Are Restocking Fees Legal?
Restocking fees are completely legal according to Consumer Reports, the bible of retail, which says that:
"At many retailers, restocking fees are allowed as long as the fee is clearly disclosed and as long as it isn’t charged if you’re returning an item because of a defect or missing part, or because it wasn’t what you ordered."
Large retailers are better able to absorb the costs of a return item, so they don't usually charge a restocking fee. In fact, the only large retailers known to apply a restocking fee to some items are Home Depot and Best Buy. Both are buried in the fine print, but nonetheless, are there if either store wants to apply them.
eBay, on the other hand, lives in its own universe with its own rules, protocols, and opinions—and the issue of restocking fees divides eBay sellers. Because many sellers are solo operators and every dollar counts, they charge restocking fees for all returns, regardless of the reason. Other sellers feel that a restocking fee is bad for business. These are the sellers that aren't penny-pinching but end up making other penny-pinching eBay sellers look bad.
Disadvantages of a Restocking Fee
Charging a restocking fee can deter buyers from your listing, which will result in lost opportunities. If there is a chance the buyer might return the item due to fit, color, size, or any other issue, potential buyers may not bother to look at your listings if there's a restocking fee. Keep in mind that it is up to the individual seller to implement the restocking fee, or waive it, in each unique situation. Meaning, just because a restocking fee is shown on the listing, does not mean that as the seller you need to apply it in every single case.
Also, you should consider that electronics and smartphones are high return items because they are often involved in scams. Therefore, avoid selling these items. Or, take steps to prevent returns by photographing the serial number or marking the item with a pen only visible under blacklight.
Advantages of a Restocking Fee
While there are no advantages to the buyer, there are situations where it is advantageous for a seller to charge a restocking fee. One situation is sellers who sell formal wear or wedding apparel. Formal wear is a high return category because consumers have figured out they can buy what they need on eBay, wear it, and return it within 30 days. If the item is returned in the same condition as it was shipped to the customer, the seller can simply sell it again. But, if the item is dirty, stained, torn, or otherwise damaged, the seller may not be able to sell it again or will need to spend time and money repairing or cleaning the item to make it sellable. High return items are good candidates for a restocking fee.
It Pays to Look at Your Return Policy
Before you decide to charge a restocking fee, take a look at your return rate and the reason for returns. Do you often get complaints that the item isn't as described? Are you selling an item in a high return category? Are your photos not showing enough about the product? A restocking fee won't solve your return issue if there is a larger underlying problem.
Ultimately, if you feel as a seller you are being taken advantage of, the problem might be your return policy, not a restocking fee. Are you losing money on items being returned in a condition different than how you sold them? If so, add a disclaimer in your return policy that the item must be returned in the original condition. If you receive an item whose condition doesn't match what you sent, you can take it up with eBay to help you resolve the issue. Just make sure you can document the condition of the item when it was shipped.