For any eCommerce business, handling customer returns is an inevitable aspect of the process, and it comes with its costs. These returns are particularly prompted from a negative experience, it can trigger customers to leave a lower rating and a negative feedback..
As an Amazon seller, you not only bear the costs associated with shipping but also face additional expenses when handling returned items. These include costs for picking up returns and potential restocking fees when items are re-entered into inventory. Every return is costly. The fees incurred during the initial sale—such as shipping, referral, and storage fees—remain, even though the customer is refunded. Moreover, returned products frequently arrive in unsellable condition, compounding the financial burden.
However, understanding Amazon’s return policy, recent updates, and strategies to minimize returns can significantly impact your business’s bottom line. In this comprehensive guide, we will explore Amazon’s return policy, the impact of recent changes, and strategies to reduce return rates and associated costs.
Amazon FBA Return Policy
With Fulfillment By Amazon (FBA), Amazon handles fulfillment and customer service on behalf of sellers, including returns processing. Amazon operates by its own customer return policy, allowing customers to request returns within 30 days of receiving their order. Amazon can make case-by-case exceptions and accept returns beyond this 30-day limit. Once a return is initiated, Amazon notifies the seller and deducts the cost of the order from the seller’s account balance upon return receipt.
Amazon’s New Returns Processing Fee
Amazon recently announced a returns processing fee for Fulfilled by Amazon (FBA) products with high return rates, effective June 1, 2024. This fee is charged per unit and is based on the product’s size tier and shipping weight. The return rate threshold varies by category, and the fee is applied to returned units exceeding this threshold.
Here’s what you need to remember about the new return fee:
Effective Date: June 1, 2024
Categories: All categories except for apparel and shoes
Exemption: Products that ship fewer than 25 units in a month are exempt from the fee.
This new fee aims to address the operational costs of returns and reduce waste. Sellers can review their product’s return rate on the FBA Returns page to monitor returns and return rates for a given month’s shipped units.
Useful link: Amazon’s Announcement
How the Fee Is Calculated
Amazon’s return processing fee is determined based on a product’s return rate. The return rate is the percentage of shipped units that are physically returned during a month and the subsequent two calendar months. The fee is charged for each returned unit above the product category’s return rate threshold.
To simplify Amazon’s announcement further, the new fee will only affect products with a high rate of returns. This fee is based on the size and weight of each item.
Values used to calculate fee:
Return Rate Thresholds per Category:
1 Bundles containing both a camera device and accessory products are classified under the Electronics Accessories category. For a detailed, searchable list of products in each category, go to our fee category guidelines.
2The Everything Else category is for products that do not clearly fit within existing categories.
The Rate card:
Products that ship fewer than 25 units in a month are not subject to this fee.
For apparel and shoes, a fee is charged for each item returned by a customer, without any minimum threshold.
Sellers can keep a check of their product’s return rate on the FBA Returns page, which is updated thrice in a week.
Useful Link: Return Fee Calculation and Rate Cards
Exemptions
Your product is exempt from the new return fee structure if:
- You shipped fewer than 25 units in a month.
- You are enrolled in the FBA New Selection program; Amazon will waive the returns processing fee for up to 20 units of each eligible parent ASIN. To qualify, returned products must be received at a fulfillment center within 180 days of the first inventory-received date.
Useful link: How to enroll in FBA New Selection Program
- For Apparel and Shoes products, a returns processing fee is applied for each customer-returned unit. No thresholds are applied, and fees are charged as returns are made.
New Tools for Sellers
Amazon has introduced new tools to help sellers manage returns more efficiently. The Return insights tool under Manage FBA inventory provides sellers with insights into their returns, including trends, top return reasons, and ASIN-specific return data. This valuable data allows sellers to identify recurring issues and make informed decisions to reduce return rates.
A few glimpses into the updated FBA Returns page:
Revamped navigation bar
Returns Insights at ASIN-level
Delve deeper into the reasons for returns
Overcome Challenges of Return Cost: Mitigate the Root Cause
OnSite Support is dedicated to reducing returns and providing innovative support solutions for Amazon sellers. Through features like the “Get product support” button on Amazon order pages, OnSite connects customers directly with the brand, providing real-time support to address concerns without initiating a return.
OnSite’s comprehensive support center offers FAQs, installation guides, video tutorials, and direct communication options like live chat and ticket submissions. By offering efficient refunds and replacements through integration with Amazon’s API, OnSite helps brands manage returns more cost-effectively, ultimately reducing return rates.
How you can minimize overall returns by 15% with OnSite Support
In response to these challenges, OnSite has been instrumental in reducing returns by an average of 15% for partnered brands this year. Key features include:
- “Get Product Support” Button: Redirects customers from proceeding with returns to a fully branded helpdesk, significantly reducing return rates.
- Comprehensive Support Center: Equipped with FAQs, installation guides, video tutorials, and direct communication options to resolve issues without returns.
- Real-time Support: Integrate live chat, chatbots, and smart responses to provide quick assistance and reduce the likelihood of sales resulting in returns.
- Efficient Refunds and Replacements: Integration with Amazon’s API allows for quick management of refunds and replacements directly through OnSite, saving on fees and not affecting return rate metrics.
Strategies for Reducing Returns
Understanding the reasons for returns is essential for implementing effective strategies to reduce return rates. By tracking return reasons, sellers can identify recurring issues and take corrective action. Some common return reasons can be avoided if sellers could take care of the following basic steps:
- Mention correct sizing or dimension.
- Use better lighting for product images.
- Ensure there are no missing parts or accessories.
- Offer better price value.
- Utilize 360° product images.
- Use protective packaging to avoid damage.
In addition to the above, it’s now easy to surpass your competitors’ offerings with our 2024 and beyond AI upgrade:
- Take immediate actions based on customer feedback.
- Resolve customer queries with lightning speed.
- Leverage “Get Support Button”.
- Respond promptly to customers through live chat.
- Provide detailed videos and clear instructions for items that need installation.
Returns are inevitable in eCommerce. If you are an Amazon seller, understanding Amazon’s return policy, leveraging innovative support solutions like OnSite, and implementing effective strategies can significantly reduce return rates and associated costs. By providing exceptional customer support, brands can build trust, reduce returns, and ultimately, drive long-term success on the Amazon platform.
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