Amazon 'charging small businesses' for refunds over delays amid postal strikes

Small business owners say they are counting the cost of having to fork out crippling refunds to unhappy customers this Christmas amid Royal Mail strikes.

Deliveries have been delayed as postal workers took industrial action on four days this month already, with further strikes planned by the Communication Workers Union (CWU) for Friday and Christmas Eve as part of a dispute over pay and working conditions that stretches back to the summer.

Some say they have taken fewer orders than usual for the festive period as customers fear their package will not arrive before Christmas Day, while their bills rocket as the cost of living crisis bites.

On top of this, some small business owners say they are being hit with refund requests from customers whose Christmas deliveries are delayed, and forced to pay out of their own pockets.

Some even told ITV News that third-party platforms such as Amazon and Etsy had issued refunds to customers on their behalf without them knowing, and debiting them for the cost.

The Federation of Small Businesses (FSB) told ITV News compensation systems imposed by several online platforms mean small business "take a double hit" and call on third-party vendors to "balance" their approach to delivery delays.

Amazon says it has measures in place to ensure sellers are "not adversely impacted by ongoing disruption." According to its website, sellers have 30 days to appeal against claims granted against them.

One such business owner affected by this issue is Taeya Abdelmajeed, co-founder of low-sugar cake company No Guilt Bakes.

Taeya said she relied on Royal Mail to ship 95% of her orders before the postal strikes, but had now reduced that to 20% and started using other couriers including Fedex, which can be pricier.

She says she continually ends up refunding a customer when their order does not arrive on time - through no fault of her own - to preserve the reputation of her business and avoid negative reviews, which has cost her hundreds of pounds.

Not only this, but because Taeya's business is a bakery, if orders get delayed they can go out of date, meaning she has to replace them. Even if she does get a refund for what she spent on shipping, she won't receive anything to cover the cost of baking a new cake.

Taeya explained this often leaves her in a situation where the customer eventually receives their order and a refund, while she is left financially worse off.

Some online businesses say they had to shut up shop early this year, knowing orders would not arrive before Christmas due to the strikes.

Taeya is one of them. "It's had a very clear effect on our sales compared to last year. We're probably down about 25%," she said.

'This adds to the mix of woes'

At the same time as Taeya is squeezed by issuing refunds, she says her business is struggling due to the cost of living crisis.

"Already we've faced fuel surcharges on all the deliveries, electricity and gas has gone up, packaging has gone up," she said.

"I'm a bakery, so my eggs have increased by 20% over this year, my butter has gone up by 30%, and it's still going up... and now I've got Amazon and Royal Mail adding to the mix of all the woes."

While Taeya said she was a "full supporter" of the Royal Mail strikes that took place before the festive season, she said she does not agree with strikes that affect Christmas and mean a lot of presents will not arrive on time.

Taeya said around 25% of her business comes via Amazon, adding she purchases Royal Mail shipping through the e-commerce giant.

She claimed Amazon has refunded her customers over deliveries that didn't show up and charged on multiple occasions since the strikes began.

Taeya also said Amazon refunded a customer who claimed their order had not arrived despite a photo of the parcel next to their front door that appeared when it was tracked on Royal Mail's website.

"The customer didn't even email us, they just said that their order wasn't sent and then Amazon refunded it. It was very irritating," she said.

Taeya said Amazon had done this around four times in the last month. "Let's say if I've made £1,000 on Amazon, I've lost 10% of it for automatic refunds, which is ridiculous," she explained.

The CWU said on Thursday that their message to the public and businesses is that postal workers "do not want to be here" but are facing an "aggressive, reckless and out-of-control chief executive committed to wrecking their livelihoods.”

Royal Mail have said they are sorry for the impact of the strikes and “urge the CWU to seriously consider our pay offer of up to 9%, and to work with us to bring the company back to profitability."

Taeya is not the only small business owner who claims Amazon is issuing automatic refunds on her behalf as a result of Royal Mail delays.

Sophie, from Surrey, who did not want to reveal the name of her small business, claims Amazon sent her a notification that a customer has processed a claim after an item arrived ten days later than hoped.

"I had no choice in the matter, they just processed the refund, the customer hasn’t event returned the item," she said.

"I have raised a complaint with Amazon, and haven’t heard back - Amazon always put everything in favour of the customer and it’s crippling small businesses. We also had lots of negative feedback and comments from customers all because of Royal Mail strikes."

'In my mind, it's completely wrong'

Andrew Goodacre, CEO at British Independent Retailers Association said this is "just another example of large companies making life incredibly difficult for small retailers and suppliers."

"I must admit, I didn't know that was happening, and if it is, and it sounds like it is, that's completely wrong," he said.

"This is one of the problems when trading through Amazon and Etsy and other such marketplaces - that they tend to manage the relationship with the consumer, so they kind of say, 'okay, it's come late so yes, you get a full refund,' and the retailer or the supplier at the other end is the last in line for their thoughts and considerations.

"It's disappointing to hear it happening and in my mind it's completely wrong."

Tina McKenzie, FSB Policy Chair, said: "It’s understandably disappointing for customers when an item takes longer than expected to arrive, but the compensation system imposed by several online platforms means the small business they’ve bought from takes a double hit, leaving them out the cost of the goods in transit and having to issue a refund.

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"Small businesses are caught between a rock and a hard place: they need to be on platforms in order to get their goods in front of customers, but have little recourse when a transaction turns sour due to factors outside their control.

"We’re asking the platforms to balance their approach to delivery delays, so that the Ts and Cs aren’t so unforgiving to small sellers.

"Small retailers should also manage customers’ expectations wherever possible, and communicate clearly that they should expect longer than usual posting times."

What do Amazon and Etsy say?

A spokesperson for Etsy said: "Etsy closely monitors carrier activities and works to keep our sellers informed of changes that may impact their ability to deliver to customers on time.

"For listings where Royal Mail is the shipping carrier, Etsy also helps communicate potential delays directly to shoppers by adjusting estimated delivery dates.

"Etsy recommends sellers purchase insurance when fulfilling their orders.

"Additionally, Etsy’s Purchase Protection program is a benefit that automatically covers the cost of qualified buyer-requested refunds for items that do not arrive, up to $250 [roughly £207] for sellers who meet all eligibility requirements."

An Amazon spokesperson said: "We have more than 85,000 small and medium-sized businesses selling on Amazon in the UK, and we work with them closely to help them grow their businesses and succeed online.

"We currently have measures in place to support sellers and ensure they are not adversely impacted by ongoing disruption."