Sunday, 12 March 2017

All Essential Trading Laws with returns

One thing that any seller has to know is the trading laws. These can be a minefield but the essential thing to know is that you have to make sure your customer is happy.

I hear a lot of people complaining of returns, lost and faulty or dmaged goods from both ends of the spectrum by both customers and sellers.

If a customer buys a product they expect that product to be exactly as described and work in exactly the way they expect, that is something that should never be in dispute and the laws in place are very effective at making sure that happens.

For a seller you have to ensure you factor in the cost of returns into your pricing and recover any loss you make if you encounter one of those occasions, so you do not have to be disputing a return or worrying about any potential loss.

If a customer tells you they are not happy with something they are usually genuinely not happy and are not a scammer trying to get a free return. The issue should be resolved by immediately offering a return on the item and paying for that return, once you get the item back you can check the item over and re-offer the item for sale with a correct description or dispose of the item.

The accounting treatment of these lost, faulty or damaged goods can also be a bit of a minefield but there are some good guides available online to give you a head start on how to correctly deal with the financial accounting in these situations.

If you are VAT registered this gets slightly more complicated, but here is a good guide for reference on how to treat the VAT element on damaged, lost or stolen items by HMRC.

The one thing to remember is that if you do encounter these situations is that you yourself are also covered, for example I had a bad experience with a drop ship supplier which ended up costing me over £5,000+.

The supplier was sending to my customers damaged and faulty items, this was a Christmas period so I would like to assume that through their bad business practices they took on more than they could handle and ended up loosing control of some of their stock, I would rather think this way instead of assuming they purposefully thought they could offload a load of junk onto my customers at my cost.

I ended up paying for the return plus giving customers refunds and then sitting on a pile of damaged stock that the supplier refused to either replace or return, these were not cheap items either, each one came in at a cost of £125 each and return for each one was in circa of £35 each. so you add this up, for each item damaged I paid the original cost for the product, the refund to the customer plus return postage so each item I purchased at £125 cost me double plus associated costs such as ebay and paypal fees, my losses ended up circa  £275+ for each one returned.

I used the power of Paypal in the end and recovered a huge majority of those costs and recovered further cost through selling on the damaged items, in an attempt to reduce my loss.

Of course the supplier was not very happy that I had broken the terms of their agreement which stipulates no refunds, only credits to the account, but not a chance did I want credits on my account that I would not used due to me deciding our trading partnership was irreparably damaged through their incompetence, therefore they broke their own contract by not providing the service they were contracted to providing the return repair or replacement.

They assumed that they had all the power and that there was nothing I could do, so I was happy to find that the law was on my side and protected me from unscrupulous companies such as they were.

They sent me a threatening letter asking for the monies that I had managed to recover through Paypal, but as I had already been prepared due to their despicable treatment of me for the previous few months, I replied with a counter claim detailing my costs and figures for the restoration to the point of where I should have been if they had provided goods that were what the customer expected and I also updated them on their limited knowledge of the law.

For a number of months they had insisted the selling regulations did not apply to me and it only applied to the consumer, due to me being a sole trader, I was very happy to inform them that the law now applies to everyone, I was more than happy to see them in court with my counter claim.

The company in question I had worked with for a number of years and any issue that my customers had, were dealt with quickly and efficiently.

What I did not know was the law, and through not knowing these laws I made loses that I should not have made and the companies attitude was not one of being educated in anything so I would assume they have gone on to treat others in the same manner, so it is important to know the law to not get caught out like I did.

As the laws stands your supplier is obliged to send you or your customers goods that are fit for purpose.In the unlikely event this does not occur they are obliged to rectify that situation, for you as a seller, you ensure the customer you are dealing with gets a paid return and gets a replacement, repair or refund, for your supplier they should be giving you the same courtesy, if they do not and the situation ends up in court, the compensation is that you are restored back to the position that you should have been in, if the sale had gone well in the first place.The onus falls back onto your supplier.

It is surprising how many companies try to write of their own errors and you find in small print lots of fancy words that basically tell you that if you receive a faulty item from us then quite frankly it is tough cookies, but that is not the actual case in law.

Always make sure that you do read any small print within your contracts that you sign for any supplier that you choose, particularly when you are dealing with dropship items.

There should be no disputes along the chain as the manufacturer is ultimately responsible for any manufacturing defects and that is where the supplier needs to look towards if any defect are found, the middle men just need to treat each other with respect and ultimately a repair replacement or refund should trickle through the chain effectively, of course that is not reality but one can hope.

The important thing to remember is that if you are a sole trader, you too still have rights, just as much as your customers, so do not let your suppler tell you otherwise as they too have rights of protection from their rmanufacturer.

These laws are there to be used and are not as scary as you may think, the most common reason for a seller to have issues and be defensive of returns for damaged stock from a customer is not knowing the law also protects you in multiple ways including with the accounting treatment for tax purposes.

If a courier damages your item in transit then as long as you follow the required procedures then you can use their claims procedure, always check the claims procedure before you use them, Royal mail has the poorest of them all and you will find it difficult to get any compensation, avoid couriers like that and find one that meets your needs, otherwise ensure you factor in those possible costs into your sales price.

Overall returns refund and replacements are rare and if they are not you need to look at the problem and find out how to stem the tide as something is clearly wrong.

As with any business you live and learn but as long as you are learning how to make things better and go with the flow of changes in the whole system then you will get there in the end.

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