Online marketplaces are wholly buyer-centric. Meaning, their approach is to side with consumers even at the expense of the sellers. It was of course Amazon that set the tone on this. This is what Jeff Bezos said on the acquisition of Zappos way back in 2009, “Zappos has a customer obsession which is so easy for me to admire. And that is a very key factor for me.”

Amazon and the rest of the online marketplaces embraced this obsession in the decade since.

So? You might be asking, what’s the problem with a great shopping experience backed by exemplary customer support? Absolutely nothing. Hence the insane growth of the Amazon marketplace - consumers love it.

But every coin has two sides (food for thought - there’s still no Amazon coin.)

The Problem

Leaving aside the incredible spoils consumers get - like free two day shipping, soon to be one - the problem accentuates when there’s a conflict between buyers and sellers.

Conflict is a big word, but on a marketplace a conflict can be about a shade of blue.

A consumer in Germany purchases a light-blue button-down shirt from a US marketplace seller. The shirt is shipped across the ocean, an excited consumer opens the package and his face crumbles. The light-blue is darker than he was expecting. Disgruntled, he complains about this to the seller, writing he doesn’t want the shirt.

The most common resolution is to return the item and get a refund. Who’s paying for the return shipping? That’s the crux of the buyer-seller conflict.

If the seller accepts the shirt back, meaning refunds the buyer and ships it back to the States, he’s in the red. He suggests to refund the buyer for the shirt if the buyer ships it back on his expense. The buyer already paid for the shipping, the thought of paying for the return as well and be left with no shirt puts him in an angry red.

There you have it, a conflict in blue and red. When the buyer contacts the marketplace the conflict will most likely be resolved in his favor.

Marketplace sellers face a harsh reality defending their ‘seller ratings’ in front of the marketplaces. They pay a price for this, quite literally, sometimes to the point of losing money on a deal. Multiply it across a double-digit percentage of deals, and you’ve got a profitability issue, especially with cross-border transactions where the cost of shipping becomes a burden on the seller.

Before the Solution, a Bit of Expansion

Obviously the solution won’t come from either side, meaning the buyer and seller, and for obvious reasons - it doesn’t make any financial sense for any of them to shoulder the risk and possible cost of a resolution.

But remember the problem? The marketplace will most likely verdict in favor of the buyer, which if looked at a wider perspective creates a real predicament for marketplace sellers - is it a smart business decision to sell internationally? The world indeed is big and round and filled with lots and lots of shopping-hungry folks, but the same folks can be fickle at times. More than that, online marketplaces have been teaching them for more than a decade that it’s quite alright to be fickle.

Not that there’s anything wrong with that. When I’m shopping brick-and-mortar I can be as fickle as I want, even though I can touch, feel and tryout the product before I buy it; buyer remorse is best manifested at home. The online has no other option than to match up to the real world. It’s doing pretty swell so far but still is far behind. Allowing fickleness is definitely part of the deal.

It’s also in the seller’s best interest to allow the buyer as much latitude as possible as part of the grand shopping experience consumers expect. No shortcuts or hidden passageways here - shoppers want it all and will gravitate toward those who offer it.

So how online sellers can be able to offer the experience buyers demand? As Ringo said, with a little help from friends.

Now the Solution

So. If the solution won’t come from either side, the only viable option is to have a third-party entity step in and solve it. Since this article isn’t about altruism in eCommerce, we need to add to the equation a profit for that third-party solver.

On the surface, it seems to mighty complicate things. Not only both seller and buyer need to not lose but another needs to profit. How can you profit from taking the loss of others? Stranger things have happened.

As we’ve detailed above, both the conflict and its solution stem from shipping, so it is the shipping company that holds the best hand to handle this. In order for the shipping company to stand the chance to make a profit, one assumption must be set in stone - the initial shipment of the product from seller to buyer must be paid. By whom it’s less of an issue, but must be paid, in full, to the shipping company, securing the profit of the shipping company from the transaction.

Quick summary so far: A product has been purchased and shipped from seller to buyer by a shipping company. Seller profited from the sale, shipping company profited from shipping. Moving on.

Now let’s introduce a conflict into the equation - product is damaged; came out of production damaged, damaged in transit, damaged by buyer’s dog - doesn’t matter. Shipping company steps in and ships it on its own expense back from buyer to seller. Conflict resolved.

From the three parties involved, the shipping company is able to ship in the most cost-effective way, so the ‘loss’ it suffers is also the most cost-effective.

Obviously if this happens in 100% of transactions the shipping company will soon stop shipping all together. Yes, alright - 80% return rate would also kill the shipping company, but that doesn’t happen. The shipping company needs to figure out what the magic percentage here that would allow it to achieve profitability. If that percentage of returns is realistic based on real numbers (this of course differs from niche to niche, destination to destination) then voila, it sounds very much like a solution to the problem of international returns.

The cool thing about it, by achieving profitability the shipping company also ensures deal profitability for the seller and protected shopping experience for the buyer.

If you’re thinking that all of the above is a nice theoretical exercise well, it’s not. Our Free International Returns feature is live and kicking since March. It's only one of a few key differences between Hipshipper and eBay Global Shipping Program. And yeah, we feel pretty good about solving the international returns for online sellers.