Business ethics question

[hoyaguru]

I have a small internet business where I drop ship orders direct from a factory out in California (I'm in New Jersey). Most of the time everything goes well, I get the order, charge the card, send the order to the factory, they ship it to the customer, and everyone is happy. Every once in a while, the customer is not happy with the product, and they have to return it. I try to do everything I can to make matters right, but sometimes I get the short end of the stick.

For example: A customer ordered two items for $100.00, and needed them overnight, for which he paid about $25.00 for shipping. He received them, and they didn't work. Turns out the manufacturer had a bad batch, and he got two of teh bad ones. It would take several weeks for them to get the parts in to make new items to send him replacements, and he can't wait that long, so he is sending them back for a refund. The factory does not refund shipping. Most online companies who sell the same items do not refund shipping either, and have it in writing on their policies page. In my opinion, the customer did absolutely nothing wrong, so he shouldn't lose his $25.00 for shipping, plus he has to ship the defective items back (UPS Ground, which is usually about $5.00).

So, I end up giving him back his $25.00 for shipping, plus another $5.00 for shipping them back, and I'm out $30.00. Doesn't seem fair to me, but I've been on the other end of this type of transaction (bought a non-working video card, sent it back, and lost my money for shipping and I didn't like it too much). So do I go with the flow, and change my policy to "No Refunds For Shipping Ever!" like almost everyone else, and piss off the few customers who have a problem, or keep losing money on returns? As a business owner, what do you do?

 

[Patt]

You did the right thing ... bet that customer comes back to you at some point in the future.

:beer: for good customer service.

 

[OulOat]

How much money are you losing to refunding shipping? Is it enough to offset the profits? If not, since you are a small business, you should just suck it up. Keep the customers happy and they'll come back (like Newegg with their free shipping). Discretely remind the customer in any communication email that your company is one of the few that offers refunds on shipping. That way, the customer remains a loyal customer and spread the word.

 

[Jzero]

It's a cost of doing business, but as the others have said, hopefully eating the $30 now will translate to more than $30 in revenue gained by repeat customers and referrals from the customers you made happy.

 

[cchen]

No, its not the cost of doing business. What you need to do is better coordinate your supply chain, and negotiate a contract where more of the risk is put onto the supplier rather than on yourself.

 

[hoyaguru]

Originally posted by: OulOat
How much money are you losing to refunding shipping? Is it enough to offset the profits? If not, since you are a small business, you should just suck it up. Keep the customers happy and they'll come back (like Newegg with their free shipping). Discretely remind the customer in any communication email that your company is one of the few that offers refunds on shipping. That way, the customer remains a loyal customer and spread the word.

Usually it's about $5 or $6 to ship the item to the customer, and $5 or $6 for them to ship it back, so I lose $10 to $12. A lot of the items I sell, I only make $2 or $3 profit, so it can take a few sales just to make one of these losses back. It's the overnight shipping that is a killer, some of the items I sell are very heavy (UPS batteries) so a customer might pay $75.00 for shipping, and if they have to send them back that's a huge loss.

 

[hoyaguru]

Originally posted by: cchen
No, its not the cost of doing business. What you need to do is better coordinate your supply chain, and negotiate a contract where more of the risk is put onto the supplier rather than on yourself.

Well, it's a huge manufacturer with 1200 resellers, I'm just one of them, so it's not like I can dictate policy to them. Problems are going to happen no matter how well I do my job, and how well they do theirs, returns are part of the business.

 

[LASTGUY2GETPS2]

Business has ethics?