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How The Amazon Return Policy Affects FBA Sellers

In this video I explain the Amazon Return Policy and how the refunds and returns process works as an Amazon FBA seller, the costs involved and what you can do to reduce the number of returns you get.

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How The Amazon Return Policy Affects FBA Sellers - Audio file

How The Amazon Return Policy Affects FBA Sellers - Video transcript

Hey guys and welcome back to my channel. In this video I would like to go over how the Amazon return policy affects you as an FBA seller, so be sure to watch all the way through so you don't miss any of the important details as we do have a lot to cover.

Now, before I hop into this video, if you are new to this channel you're going to want to subscribe as I talk about the best ways to make a full time income with Amazon FBA and always get straight to the point.

So please consider subscribing and turning on your post notifications if you like channels that don’t waste your valuable time, with that said let's get right into this video.

Now, no matter if you’re a brand new seller or own a multi-million dollar brand, there’s something that all ecommerce businesses have to deal with, and that’s processing customer returns.

It’s always a little frustrating and disheartening when you see a return request come in. It’s not just that you’ll lose money on that sale, it also means your customer was unsatisfied with their purchase of your product.

Returns are just a part of life as an ecommerce seller, and there’s no reason to panic if and when you face one. In this video, I will go over Amazon’s return policy, what has changed, and how it affects sellers. Then, I will show you how to understand and reduce your return rate so you can earn more happy customers.

Now, with FBA, Amazon handles fulfillment and customer service on behalf of sellers, which includes customer returns processing. Amazon operates by its own customer return policy when determining if the item in question is eligible for a return.

As a seller, you have no control over whether a product is accepted as a return, even if it is clearly the buyers’ fault that the product is damaged or defective.

In most cases, customers can request returns within 30 days of receiving their order. But Amazon can and does make case-by-case exceptions and accept returns beyond that 30-day limit.

In the case of an exception, Amazon emails the seller notifying them that they have initiated a return and deducted the cost of the order from the seller’s account balance.

So what happens when the item is returned to Amazon’s warehouse?. After Amazon receives the customer’s return, it evaluates the condition of the product to determine if it is sellable or not. If the item was unused and still in new condition, Amazon will return that product to your inventory to be included in a future order.

If the item is damaged or in an unsellable condition, Amazon determines who caused the damage, which could be either Amazon itself, during fulfillment, or the customer. If Amazon caused the damage to the product, you’re reimbursed for the product return.

However, if the customer or shipping carrier caused the damage to the product, Amazon will not reimburse you, and the product will be marked “unsellable.”

For any item that is categorized as “Defective” or “Customer Damaged,” sellers must submit a removal order within 30 days after the returned item arrives at the fulfillment center.

If the customer does not return the product to an Amazon fulfillment center within 45 days of initially receiving it, Amazon will recharge the customer if they were already refunded, and will reimburse the seller for the item. Typically, Amazon automatically reimburses you after 45 days. In some rare cases, you’ll have to open a support case to get your reimbursement.

Returns for sellers who fulfill their own orders work a little differently from FBA. Amazon states in their seller-fulfilled return policy that FBM sellers must match or exceed Amazon’s return policy. That means you must accept returns within Amazon’s 30-day return window.

Also, all returns will be sent back to the address listed in your seller account, not to Amazon. You are required to refund the customer within 2 days of receiving the return shipment.

If you are a professional seller on Amazon, you will be automatically enrolled in the  Amazon Prepaid Returns Label program. So, if a customer requests a return and it falls within the accepted time frame, Amazon will automatically send the customer a prepaid return shipping label on your behalf through Buy Shipping Services. Individual sellers must opt-in to this program.

For any return requests made outside of the return policy, or those that are deemed exempt, Amazon will send you the return request for manual review.

What does this mean for FBM sellers? Unfortunately, it means the seller won’t have the opportunity to communicate with the buyer to try to remedy the situation before the customer is automatically refunded.

Now, what if a customer requests a return outside of Amazon’s return policy or the product is returned damaged? In some circumstances, Amazon allows sellers to charge customers a restocking fee when an item is returned.

A restocking fee is a percentage of the item’s price, shipping costs not included, and depends on the condition of the returned item. If you as a seller decide to accept a return outside of the 30-day return window or the product is returned is used, damaged, defective, or is materially different, you may charge the customer a restocking fee.

Items returned in original condition, within Amazon’s accepted time frame, cannot be charged a restocking fee.

Now, when an Amazon customer submits a request to return their order, they must choose a reason for the return. This will determine who’s responsible for the return shipping costs, the customer or the seller.

Amazon lists 72 different official reasons for a customer return. Generally speaking, customers are responsible for reasons related to preference, ordering the wrong size, or changing their mind about wanting the product. Sellers are deemed responsible if the customer cites functionality or damage-related reasons like “damaged due to poor packaging ” or “missing parts or accessories.”

Here are some reasons customers cite in the returns process, “Arrived too late”, “Not satisfied with the quality”, “Better price is available” or “Did not like color”.

So how do you find out why customers are returning your product. You should expect to incur some returns over the course of running your business. But you should also keep track of why customers are returning your products. Especially if you’re selling a private label product, you need to be aware of any recurring issues or problems your products may have, so you can fix them as soon as possible.

If you receive a lot of “defective” complaints about your product, Amazon may even temporarily shut down your listing until you resolve the issue. For example, if you sell a bicycle helmet and customers frequently complain about improper fit or receiving the wrong size, Amazon could suspend your listing, if not your entire seller account.

Before your product gets flooded with negative reviews, figure out what is going on. If you have unsellable inventory, you can request a removal order to have the product sent back to you so you can inspect each unit.

One way to see why customers are returning their products is by viewing your Policy Compliance section in Seller Central. .

In Seller Central, you will click on the “Performance” tab, then “Account Health.” In that section, you can view “Policy Compliance.” Looks like the Account Health Rating is in the green. But next to “Product Condition Customer Complaints” we can see that there is one complaint.

After investigating further, we can see the reason was for a “Defective” product. We can also see the action Amazon took, the listing was removed.

To have your listing reinstated, you must click “Appeal” and submit a plan of action to Amazon. Essentially, you have to explain to Amazon how you resolved the issue and the steps you’ve laid out to prevent it going forward.

You can view the reason for every return that was requested by doing a little more detective work. In Seller Central, go to the “Reports” tab, then “Fulfillment.” On the left-hand side of the screen, click “Customer Concessions,” then click on “FBA customer returns.”

Here, you will be able to generate a report that shows you all of your FBA customer returns within a specified date range. You’ll be able to see the Order ID, Title, Quantity, Fulfillment Center, Disposition, Customer Return Reason, and the Status of the return.

Pay attention to the Disposition, Customer Return Reason, and Status columns. Sometimes under Customer Return Reason, customers will leave a note that states exactly what was wrong with or missing from their order.

It’s best to stay on top of your returns so you can catch any major issues before your listing is taken down, or before customers start to leave you negative reviews.

In 2017 Amazon’s Returnless Refunds policy was introduced, to this day it still has sellers outraged that customers are able to keep some products and still get a refund.

Amazon decides to do this if the product value is low, if the return cost of shipping is too high, or if the product will be difficult to resell once returned. I am unsure of exactly where Amazon sets its price threshold, but I do know that it takes a lot of time and money for Amazon to process returns. In some cases, it’s just not cost-efficient. 

It often benefits the seller to just refund the customer without dealing with the hassle of returning an item, especially if the product was defective or damaged in transit. The real concern among sellers lies with Amazon automatically refunding the customer without the seller’s approval.

FBM Sellers can set Returnless Refund rules to their seller accounts under “Return Settings” in Seller Central. There, you can set the price range, product category, reason, and return window.

It’s clear that Amazon will do everything they can to please their customers. It’s why they have such a liberal return policy where customers can return anything they purchase for any reason within 30 days.

As with any such policy, you’re going to encounter some customers who abuse it and try to get a refund for nearly every purchase they make. Fortunately, Amazon catches on to behavior like this and will actually ban customers from shopping on the site if they detect return policy abuse.

If you want to sell on Amazon, you have to follow Amazon’s rules—whether you agree with them or not! And as I have mentioned, returns are just a part of running an ecommerce and Amazon business, or any retail business for that matter.

To help limit your return count, focus on creating a high-quality product and fully optimized listing with as much information as possible.

Thanks for watching and please make sure to watch the next videos with more Amazon FBA tips that will show up right about now.

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