The Neglected Profit Black Hole - An Inside Look at Amazon's Return Policy

The Amazon FBA return policy is one of the many factors that makes it so popular with consumers, and a transparent return policy makes things easier for buyers and sellers. However, a simple FBA return policy presents a huge potential for misuse of returns, which not only creates frustration in business development, but more importantly, cannibalizes profits.

When a return occurs, not only the FBA shipping cost of the original order is lost, but also a return handling fee (even some categories need to bear part of the returned shipping cost). In addition, there will also be unsaleable goods in the returned goods (sometimes unsaleable goods account for more than half of all returned goods for some categories). These unsellable goods not only can no longer create sales and profits for you, but also Lose the original value of these products + shipping + promotion fees, etc., and even you need to pay again for handling these unsellable products.

In general, the loss caused by the return is very huge, that is, when the return occurs, you do not get a penny of profit from the order, and you also lose a lot of money from each module in vain. This will undoubtedly be very heartbreaking. What's worse is that many sellers are unaware of this, and even know little about Amazon's return policy, so even if they want to recover the loss, they don't know where to start. Below we will do an in-depth analysis of the Amazon FBA return policy.

1. Amazon FBA Return Policy

Amazon FBA policy provides fulfillment and service for consumer orders, it also processes consumer returns and determines whether purchased FBA products are eligible for return. The Amazon FBA return policy process can go one of two ways. when

When a product is returned, Amazon classifies it as sellable (in its original packaging) or unsellable (damaged or defective). If a product is deemed marketable, it is returned to inventory for resale. However, if the product is unsellable, Amazon will evaluate it to determine how it was damaged and thus determine whether you are eligible for compensation.

From the return time policy, consumers have 30 days to return the product after receiving it. However, in some cases, Amazon may accept return requests after the 30-day cut-off point (Amazon is a platform where the interests of consumers come first).

2. Amazon FBM Return Policy

The return policy for sellers with self-fulfilled orders is slightly different from Amazon's FBA return policy. For example, when a consumer orders from a seller who fulfills and ships their own inventory, returns are sent back to the seller instead of Amazon. Amazon requires that FBM sellers' return policies comply with Amazon's FBA return policy and are obligated to refund consumers within two days of receiving a return order. The core difference between Amazon's FBA return policy and FBM return policy is damage assessment and compensation. For example, FBM sellers do not have the opportunity to resolve issues related to returning products like FBA sellers.

3. What happens when a product is returned to an Amazon warehouse?

Several things can happen after a product is returned to an Amazon warehouse and determined to be unsellable:

a. the product is on hold;

b. Product is disposed of;

c. Products are graded for resale;

d. Products are liquidated for sale;

Typically, Amazon sells returned items through Amazon warehouses or some e-commerce clearing platforms.

4. extend the return period

In some cases, the return time will be extended. For example, Amazon's FBA return policy allows consumers to return unopened products in categories like "Baby" within 90 days. In these cases, Amazon is responsible for paying return shipping.

5. What if the consumer returns the damaged product?

If the returned product is damaged, you should find out why the consumer returned the product damaged. If a customer requests a return outside of Amazon's warehouse return policy, you don't have to honor the return. As an FBM seller, you are under no obligation to refund if the returned product is damaged due to consumer negligence. If there is a disagreement, you can file a dispute with Amazon. In some cases, Amazon's return policy allows you to charge consumers a restocking fee. Of course, those products that are returned in their original condition within Amazon's 30-day period cannot be charged a restocking fee.

6. Why do consumers return goods?

Consumers return for a variety of reasons. However, here are the seven most common:

a. The product does not meet consumer expectations;

b. The consumer has changed his mind and no longer wants the product;

c. The product arrives too late;

d. The product is defective;

e. The product does not match the description or photos;

f. Consumers present it to someone who does not want or need the product;

g. Consumers no longer need the product;

h. Your consumers are confused about certain features of the product;

It is critical to first determine the reason for the return to prevent the possibility of frequent returns of the same product. Conducting research on returned products can help you determine what your product is missing and how it compares to your competitors. Also, the only way to find out why a consumer returned a product is to ask. By figuring out what's causing consumers to ask for refunds, you can not only reduce your return rate, but also your business and get better word of mouth.

7. What is non-refundable refund?

A no-return refund is when a consumer's request for a refund is automatically approved. After this time, consumers are advised not to return the item. In some cases, a no-return refund is economical. The return cost of a product is higher than the value of the product. This usually happens more with low-cost items, and the associated fees for product returns can be very expensive, so this part of Amazon’s FBA returns policy can help sellers save money in the long run.

8. Are consumers abusing the Amazon FBA return policy?

Consumers should not be assumed to take advantage of return policies. If it falls under Amazon's FBA return policy, it's best not to argue about accepting a return. Abuse can be a significant issue with regards to no-return refunds and other aspects of Amazon's warehouse return policy. No matter what business you are in, there will always be people trying to take advantage of you. In some cases, consumers threatened sellers that they would leave bad reviews if they didn't get their money back. For larger sellers, this isn't a huge problem. However, small sellers can feel the pressure. However, if you fall into the latter category, if you encounter threats again, you have the right to contact Amazon to deal with the consumer in violation.

Amazon warehouse

9. How are you affected by Amazon’s return policy?

Amazon is very consumer-centric. Therefore, the Amazon FBA return policy may benefit consumers more than sellers. And a higher return rate can hurt your seller rating. Amazon's system is very consumer-oriented, with a lot of leeway in handling return shipping and processing refunds in favor of consumers. So you have to focus on the quality of your product and define clearly and concisely what your product is and what it does. This way, you can reduce the return rate.

Proving consumer fraud is difficult. As a seller, you want to maintain the quality of your products, and you don't want to suffer any fraudulent losses. Fraud can be difficult to prove for a product that has been used once or twice but is returned as non-compliant, since there are so many places the product could be damaged, you must prove beyond a doubt that the returned product is in a better condition than it was when you shipped it worse.

10. What can sellers do to protect themselves from Amazon’s FBA return policy?

Return policies are extremely important to consumers. Sellers, on the other hand, often struggle with them and are always looking to reduce returns. For returns, sellers need to consider other factors, such as cost control that affects final pricing — but they also need to ensure consumers can return items they don’t want. Here are some things you can do to address returns and unsellable inventory issues for some demanding consumers:

(1). Create high-quality listings: Creating high-quality listings is an effective way to discourage the possibility of returns. For example, if the listing is clear, direct and honest, consumers will know exactly what to expect. Fewer surprises increase the chances of consumers keeping the product.

(2). Consider insurance: For an unsellable damaged item, it cannot be resold unless repaired. This situation can become a problem when small sellers cannot repair high-per-order items. If you sell items with high customer unit price, you can consider purchasing related insurance, so that you can get a certain amount of compensation to reduce losses in the event of such problems.

(3). Proactively handle refunds: Whether it’s an unwanted product from Amazon’s return policy or other issues, you need to avoid disputes with consumers. The best thing you can do to improve the consumer experience is to agree to a refund. For FBA sellers, Amazon will make the decision on your behalf as appropriate. FBM sellers do make their own decisions and it will be up to the seller to decide whether to grant a refund to a consumer's request for a refund. But in fact, considering the risk of bad reviews, sellers want to see their BSR ranking rise, so actively processing refunds is a must. Although Amazon does have a blanking process, for products that are not very valuable, it is better to spend time on blanking than in other places where it is more needed. Long-term vision is always a decision that can help your business develop. factor.

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