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Re-stock fees?

How should small businesses deal with PayPal's policy?

  • Charge a restock fee in the event of a refund?

    Votes: 10 45.5%
  • Raise prices to anticipate the additional liability?

    Votes: 12 54.5%

  • Total voters
    22

Rockdiamond

Ideal_Rock
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HI all,
I'm looking for ideas and opinions on how to live with the new world PayPal has created processing credit cards.
When a merchant takes a charge, ( approx) 3% PayPal commission ( also called a processing fee) is withheld.
Used to be, in the case of a refund, PayPal returned the 3%.
Been that way forever.
Now, as of a few weeks ago, PayPal decided that it's keeping that 3% regardless of return.
In fact, they will keep it even if a consumer presses "buy it now" by accident and immediately cancels the sale.
I should also note that other processing companies have always kept the commission in the event of a refund.
PayPal was special in that regard.
Which is how they pretty much cornered the market for processing small business credit card purchases.
Now that they have cornered the market, they put the hammer down on the same people who got them where they are.

Do you feel small companies should charge re-stock fees to cover the liability?
It seems like the only other answer is to raise all prices to cover the issues that small percentage sales create....

But 3% is a lot for sellers of diamonds and jewelry to loose.....
Any and all suggestions welcome!!
 

missy

Super_Ideal_Rock
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That sucks and is a hardship for small companies and consumers alike. Maybe split the difference? IDK it sucks. How about offer a different way to pay. Do CC companies also not return the fee if the product is returned? If they do return the fee that is the way to go IMO. Accept CCs not through PayPal.

Otherwise I guess you could 1. split the difference so this way there is a risk to the buyer knowing he/she will have a restocking fee and it's a compromise or 2. Increase the price to absorb the loss on your end.

It's a no win situation for all (but PayPal) involved.
 

distracts

Ideal_Rock
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As a consumer, I'd prefer raised prices. I'd rather pay half or 1% more to be able to return with all my money back in the case that I don't like an item. I never buy from places with restocking fees - though at least "3% restocking fee that is nonrefundable by the processor on this purchase, vendor isn't making money, it's just the fee you paid to do the transaction" is nowhere near as bad as the 10-20% restocking fees at some jewelers. If you do go with a restocking fee, I'd put the explanation as to why on each page. But still I'd prefer you anticipate what percentage you would lose in returns and raise prices to account for that.
 

JPie

Ideal_Rock
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I voted for raising prices. As a consumer, I expect merchants to factor the cost of doing business into the final price of the product. The whole restocking fee concept feels like I’m being nickel and dimed and that prices are deceptively low.
 

diamondseeker2006

Super_Ideal_Rock
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Neither. Only accept cash or credit cards which, as far as I know, do not charge the fee in the case of a return.

It's absolutely NOT fair to the cash or CC customers to raise prices across the board to cover the PP users' returns! So if you want to accept PP, I'd let them know that returns with PP payment will result in the 3% deduction.
 

kenny

Super_Ideal_Rock
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You say PP's policy now matches that of CC companies.
So customers using PP should just get the same terms and refund policy as customers using a CC.
Same cost for retailer.
Same cost for customer.

Many diamond sellers offer the lowest price for cash (wire) and another higher price for CC to cover that 3%.
 

Rockdiamond

Ideal_Rock
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You say PP's policy now matches that of CC companies.
So customers using PP should just get the same terms and refund policy as customers using a CC.
Yes- we have the ability to process charges outside of PayPal, so I can state with surety that the credit card companies have not been returning the commission for at least 15 years. Amex used to give back their 3.5% ( higher than any other non rewards US card)...but they stopped returning the commissions back in around 2004

PayPal was a boon to small business- many smaller businesses could not qualify to accept charges outside PayPal- and the refund policy which returns the money to the client in full without punishing the merchant made life simpler for the smaller merchants.

Many diamond sellers offer the lowest price for cash (wire) and another higher price for CC to cover that 3%.
As do we.......
That's great for the purchase itself- but does nothing to deal with re-stock fees on the credit card purchases.
 

telephone89

Ideal_Rock
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Can people not use their credit card directly? I understand the nominal fee to use a credit card, but if that % returned in the event of a refund? If so, I would just state something like:
-Cash or wire X price
-Credit card X+3%
-Paypal X+3% (3% restocking fee if returned)

I don't think its fair to raise prices because ONE specific payment method has a downside.
eta - I see now that CC doesn't return it either.
So maybe:
Cash/wire - X price
Credit card/paypal - X+3% (3% restocking fee if returned)
?
 

Rockdiamond

Ideal_Rock
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It's absolutely NOT fair to the cash or CC customers to raise prices across the board to cover the PP users' returns! So if you want to accept PP, I'd let them know that returns with PP payment will result in the 3% deduction.

I am so in agreement with this, especially on principle. ( as discussed, this really applies to ALL CC purchases at this point)

Think of it this way....on the backs of small businesses and consumers, PayPal just increased its profitability. Do you believe they were losing money till they did this?
So all of us are forced to pony up so that a minuscule number of folks makes another 3 or 4 million on top of many millions they're already raking in.
 

yssie

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As a buyer I also detest restocking fees - I would much rather pay 3% more for something I want to keep than be out 3% of something I didn’t care for.

I rarely do wire transfers. My CC gives me 3%, and my bank charges a nontrivial flat fee for wire transfers, so for me (again - as a buyer) covering the 3% increase nets at worst neutral.
 

kenny

Super_Ideal_Rock
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Okay PP did what it did.
Nice party that was getting that 3% back on returns when PP was used since CC companies kept the 3% all along.

Now CC and PP have identical costs to the retailer - they all keep the 3% on returns.
With CC that 3% was gone forever, which is why retailers charge more for using CC than for cash.

So, since CC and PP costs the retailers the same amount, retailers should now offer identical terms and policy all CC or PP payments.

I fail to see how PP changing their policy to match CC companies justifies price increases or restocking fees.

Why raise prices, or start restocking fees?
Did you lower your prices for all those years you benefited from PP's 3% reimbursements?
If not, why raise them now?
 
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kenny

Super_Ideal_Rock
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Think of it this way....on the backs of small businesses and consumers, PayPal just increased its profitability.

Think of the other side of the same coin:
For years small businesses enjoyed increased profitability on the back of PP.
Send them a thank you card for all those 3% refunds you enjoyed, which you would have lost had those PP customers used a CC directly.

After all, You wrote, "But 3% is a lot for sellers of diamonds and jewelry to loose."
That means that same 3%, being returned to you all those years, is a lot of money PP gave you.
It goes both ways.

Instead of complaining and looking for sympathy and an excuse to raise prices, I'd look at this glass as half full.
 
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Rockdiamond

Ideal_Rock
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Kenny- to run a small business requires a lot of creative thinking - as well as compromises. These are made far more difficult by the current business environment.
Companies that have billions of dollars in revenue have different considerations.
One of the trends I see is "Amazonian". Dominate the market.
Instead of people having thousands of choices, now they have one. This gives that larger single company the ability to destroy smaller companies.
If you're selling something on Amazon that's profitable enough, they will create the product outside your control, and put you out of business.
Then, they can limit selection, and increase prices.
That's exactly what PayPal did.

For years, we ( and other smaller merchants) have been able to give benefits to our clients due to PayPal's policy- that part is true. In return, we've paid PayPal bokoo busks in fees over the years- while NOT giving those fees to PayPal's competition- and also NOT charging our clients more.
It's not like the diamond business of today is anything like what it used to be. No one is "rolling in profits"
In our business, the massive companies ( 2) that dominate the market have put many smaller sellers out of business.
Look at 47th street where at least 1/2 the retail space is shuttered.
Or Main street- how many jewelry stores have closed over the past ten years?

I can never express my gratitude for the ability to post here- much less get the opinions of such an educated caring bunch of consumers.
But I'm not looking for sympathy. After all, we're still here, and doing well, thank you.
I agree with Yssie- I personally don't like re-stock fees. Nor do I relish the thought of raising prices. In my mind, that punishes ALL the clients for the actions of a few- all the while, putting that extra money into the hands of the .00001%
 
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kenny

Super_Ideal_Rock
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RD, if you want to raise prices and start charging restocking fees just do it.
Stop whining. :roll:
Trying to use PP as the reason is disingenuous.
PP's change in policy is just bringing it in line with the CC companies.
You enjoyed years of refunded 3% fees from PP for years.
That must have been nice.
Free money.

New companies offering something free to attract people is common these days.
Youtube's first years had no advertising, but now there's lots.
Photobucket was free for years ... no longer.
Sure big corporate giants have unfair power.
So. What's that got to do with you raising prices and starting restocking fees?
All your competitors swim in the same waters.

BTW, glad you're "doing well".

What you've tried to do with this thread makes me less likely to give you my business.
 

Rockdiamond

Ideal_Rock
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After all, You wrote, "But 3% is a lot for sellers of diamonds and jewelry to loose."
That means that same 3%, being returned to you all those years, is a lot of money PP gave you.
It goes both ways.
PP truly gave us nothing. Sellers don't make money on returns- just the opposite. Returns add to the cost of selling, and this adds to the cost of returns.
Who is going to pay that cost?
Consumers. One way or another.
Higher prices, or restock fees- every single seller will need to make that choice. It's not just our company.
I'm sure that there are companies that earn high enough margins that 3% won't put a dent in their bottom line.
Or, companies that are large enough to write it off till more small business go under- then they'll be able to impose even higher re-stock fees.
 

Daisys and Diamonds

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i don't know anything about the dismond retal trade or selling really big ticket items
but hardwear i do
just quietly put up the prices a teeny amount
 

kenny

Super_Ideal_Rock
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PP truly gave us nothing. Sellers don't make money on returns- just the opposite. Returns add to the cost of selling, and this adds to the cost of returns.
Who is going to pay that cost?
Consumers. One way or another.
Higher prices, or restock fees- every single seller will need to make that choice. It's not just our company.
I'm sure that there are companies that earn high enough margins that 3% won't put a dent in their bottom line.
Or, companies that are large enough to write it off till more small business go under- then they'll be able to impose even higher re-stock fees.

You wrote that for years PP refunded the 3% fee on returns, while all CC the companies kept the 3%.
That means returns paid for with PP LOST you 3% less than returns paid for with CC.

Not losing 3% is better than losing 3%.

Way to manipulate and twist my words.
Ugh! :doh:
 

AprilBaby

Super_Ideal_Rock
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I would think twice about buying something I was unsure of if there was a restocking fee so I vote for the fee. It’s not a problem if I’m absolutely sure in going to love it. The fee gives me more time to think about my purchase instead of an impulse buy that I know I can easily return.
 

Rockdiamond

Ideal_Rock
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Kenny- this is, after all, Hangout.
I've been here quite a while- and even though I am a trade member, I find that the folks here are sensitive, intelligent and offer amazing insight. ( except @Dancing Fire :lol: of course)

Although I don't post much here, I will admit to being a closet lurker on hangout because the discourse is far more civilized than places like FB.

Personally, I'm upset and this, to me, feels like another brick in the wall of us losing something important.
I appreciate the opportunity to participate.
I know there are things about me you just never liked- and I regret that. So many things we have in common....
But we are what we are.
 

kenny

Super_Ideal_Rock
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Upset or not, you are a for-profit business and PS if chock full potential customers.

IMO you're using HO to soften the blow of a pending price increases and/or the introduction of restocking fees.

Besides being disingenuous, I think this violates the terms trade members agreed to.
 

Rockdiamond

Ideal_Rock
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All due respect Kenny ( which I fervently wished went both ways)....but you don't know me. My love and respect for people are not based on if they buy from us or not.
My participation, in a professional sense, is ALWAYS done with the intent of sharing almost 50 years of hands-on experience with diamonds and jewelry.
Do we get a benefit to our company from my participation?
I believe we do.
But that's not my motivation for posting.
The average intelligence of PS'ers is quite high. If my sole and primary goal was only to try to increase sales for my company, at the expense of integrity, I'd have been gone a long long time ago.

Peace brother- come to NYC for a jam session.....I have access to an awesome studio, and some killer drummers and bass players....
 

Lisa Loves Shiny

Ideal_Rock
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I would prefer the item to just cost 3% more.
 

Rockdiamond

Ideal_Rock
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I very much appreciate everyone's input thus far.
I hope that other small and mid-sized business people who are faced with the same quandary get value from reading this thread as well.
 

jordyonbass

Ideal_Rock
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As a vendor who is also perplexed about how to navigate this, I am quite surprised by the responses on this thread.

For me, I'm as transparent as I can possibly be so customers are aware that my pricing is as fair as I can possibly make it. I also try to ensure that customers get the right stone and not the most expensive one as I understand the dilemmas for consumers of buying online, I have a very low return rate and I feel like it's for those reasons despite the fact that I do have a re-stock fee.

My concern with raising prices to cover this is that it may not look good for me as a vendor to be doing so, however with so many responses here saying to just raise my prices to factor it in if it happens - I can't help but feel a bit confused on what I should do.
 

distracts

Ideal_Rock
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As a vendor who is also perplexed about how to navigate this, I am quite surprised by the responses on this thread.

For me, I'm as transparent as I can possibly be so customers are aware that my pricing is as fair as I can possibly make it. I also try to ensure that customers get the right stone and not the most expensive one as I understand the dilemmas for consumers of buying online, I have a very low return rate and I feel like it's for those reasons despite the fact that I do have a re-stock fee.

My concern with raising prices to cover this is that it may not look good for me as a vendor to be doing so, however with so many responses here saying to just raise my prices to factor it in if it happens - I can't help but feel a bit confused on what I should do.

The thing for me is that I almost never buy from a place with restock fees. As @yssie said - I would rather end up paying a bit more if I keep an item I like, than pay anything to return an item I don't like. No matter how confident I am that I will like an item, there is ALWAYS a chance I won't like it in person. And I don't want to have to pay to return it. If I want something where the vendor has a restock fee, I either negotiate no restock fee in the event of a return or I don't buy from that vendor. To me it's not worth the risk, and unlike a business, I can't adjust the prices on everything to account for maybe having to pay a fee if I return.
 

jordyonbass

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The thing for me is that I almost never buy from a place with restock fees. As @yssie said - I would rather end up paying a bit more if I keep an item I like, than pay anything to return an item I don't like. No matter how confident I am that I will like an item, there is ALWAYS a chance I won't like it in person. And I don't want to have to pay to return it. If I want something where the vendor has a restock fee, I either negotiate no restock fee in the event of a return or I don't buy from that vendor. To me it's not worth the risk, and unlike a business, I can't adjust the prices on everything to account for maybe having to pay a fee if I return.

I'm starting to understand this more now, thank you @distracts. I always offered exchanges for the same value but I'm now considering a price adjustment and going to full refund for purchases via my website. I am hoping that my willingness to help people find the right stone in my inventory instead of the most expensive one they can afford will keep me on the right side of this.

It's incredibly hard with Etsy to do full refund though as they're taking about 10% of proceeds from each sale as it is and also do not return it for a refund (not including the variety of other fees they charge sellers). 3% doesn't sound like much but once you're at 10% it starts to really sting. It's not 10% of your profit due to all costs to create the item, it can be a lot more. If a seller's profit margin is only 30% on a certain piece then they can easily lose half of that on a return via Etsy if you factor in the pickup of the item, the time it takes to check it is still in original condition and re-list it on all selling platforms etc. If it gets returned a second time it's now sent the seller into the red.
It's a really touchy thing for us to navigate, especially in an industry where returns are a normal and accepted thing.
 
Q

Queenie60

Guest
@Rockdiamond and @jordyonbass - as small business owners I hope you can find a solution to this dilemma. I have purchased from the both of you and find you to be very honest and easy to work with. I am sorry that there are a few who feel you're being deceitful. I would suggest a small price increase over a restock fee as I too don't wish to be nickeled and dimed by vendors, just incorporate the cost into the product. Wish you the best -
 
Q

Queenie60

Guest
Upset or not, you are a for-profit business and PS if chock full potential customers.

IMO you're using HO to soften the blow of a pending price increases and/or the introduction of restocking fees.

Besides being disingenuous, I think this violates the terms trade members agreed to.

@kenny - I don't think @Rockdiamond is being disingenuous at all, simply asking consumers how they feel about restocking fees vs raising prices. I'm sorry that you have such harsh feelings toward him, I have personally met David and he is very fair and willing to work with the consumer.
 

Wewechew

Ideal_Rock
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I would recommend offering wire/cash prices, and up your credit card prices to cover any restocking fees. I feel that covers all your bases financially but also gives the customer the option of saving money if they pay in cash.

I, for one, am not a huge fan of PayPal. It’s unfortunate that they are so popular that you have to use them at this point.

Have you checked out Stripe? That is who we use for my husband’s business. I will look today when I’m by my computer how much their merchant fees are. Of course we’ve never had to give a refund (service business), but even if Stripe still keeps the fee it may be nice to get away from PayPal.
 
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