Amazon Return Policy – What Amazon Sellers Need to Know

Navigating the maze of the Amazon return policy can feel like a daunting task, but mastering it is essential for your success as a seller. With customer expectations evolving and new regulations constantly being introduced, staying ahead of the curve is more important than ever. Amazon's net sales have sales skyrocketed by 12% to $574.8 Billion year over year, this is the perfect time to learn more about how the Amazon return policy works and how you can use it to your advantage!

Remember that understanding the Amazon return policy is not just about handling returns; it's about leveraging insights to improve your business. Whether it's familiarizing yourself with general return procedures, staying updated on new FBA policies, or utilizing the Return Insights tool to reduce return rates, each aspect plays a crucial role in maintaining customer satisfaction and a healthy seller account.

Sounds complicated? Don't worry!

This article discusses the tools and policies that can help sellers address common return reasons, improve product listings, and ultimately create a better customer experience. It'll also keep you posted on the new FBA settings and steps to help you utilize the Return Insights tool to reduce return rates. So, let's dive deeper into these updates and policies to help you slash return rates and elevate your selling game. 

It's time to conquer the return policy maze and boost your business!

1. General Return Policy Overview

Understanding the Amazon return policy is essential for sellers aiming to provide excellent customer service while protecting their interests. Amazon offers a straightforward return policy, typically giving customers a 30-day window from the delivery date to return most items.

However, this return period can vary based on the product category and specific conditions Amazon or third-party sellers set. Items must be in their original condition, unused, and in their original packaging to qualify for a return. This ensures that returned items can be resold or appropriately disposed of.

This table provides a clear overview of how Amazon handles different return conditions and the actions taken based on the cause and condition of the returned items.

A critical aspect of the Amazon return policy is handling return shipping costs. Amazon covers the return shipping costs if the return is due to an error on Amazon's part, such as a damaged, defective, or incorrect item. However, if the customer is returning the item because they no longer need it or do not like it, they may be responsible for the return shipping costs. This policy encourages sellers to ensure their product listings are accurate and that items are packed and shipped correctly to minimize return shipping expenses.

While the standard 30-day return policy applies to most items, there are notable exceptions:

• Holiday Return Policy: Items shipped by Amazon between November 1 and December 31 of a given year may be returned until January 31 of the following year. This extended period accommodates holiday shopping and gift-giving.
• Product-Specific Rules: Certain product categories have unique return policies. For instance, electronics and computer items must be returned within 30 days, while software and video games must be unopened. Meanwhile, health and personal care products and perishables typically cannot be returned once opened due to safety and hygiene concerns.

2. New FBA Regulation Settings

Amazon has introduced several updates to the Fulfillment by Amazon (FBA) settings that impact how sellers manage their inventory and returns.

Inventory Evaluation Settings

As of May 2024, Amazon allows sellers to adjust their FBA inventory evaluation settings. Previously, Amazon employees inspected returned items to determine if they were sellable, which sometimes resulted in damaged items being incorrectly returned to inventory. Now, sellers can choose to have Amazon handle these evaluations or do it themselves for specific ASINs. This gives sellers greater control over their inventory quality and can prevent negative customer experiences due to receiving damaged goods.

To adjust these settings, sellers need to navigate to Seller Central, go to Fulfillment by Amazon, and then select FBA Inventory Evaluation Settings. This update is particularly beneficial for sellers with products that are prone to damage or have multiple components.

New Returns Processing Fee

Starting June 1, 2024, Amazon will introduce a returns processing fee for products with high return rates, excluding apparel and shoes. This fee aims to offset the operational costs of handling returns and to reduce waste. The fee applies to units returned above a certain threshold specific to each category. Now, sellers can review their return rates and thresholds in the FBA Returns dashboard, which is updated weekly.

Ships in Product Packaging (SIPP) Program

Amazon has reintroduced the Ships in Product Packaging (SIPP) program, previously known as Ships in Own Container (SIOC). This program allows sellers to ship products in their original packaging, potentially saving on fulfillment costs. Discounts range from $0.04 to $1.32, depending on the product size and weight. Hence, sellers should work with their suppliers to ensure their packaging meets Amazon’s requirements to take advantage of these savings.

If you enroll in this program make sure that your items can reach the customer without being damaged in transit.

Inbound Placement Service Fee

Amazon has revised the inbound placement service fee, which affects how inventory is distributed across its warehouses. The new fees are higher than before, increasing the cost for standard-size products by $0.27 per unit and for large bulky-sized products by $1.58 per unit. Additionally, sellers have the option to send shipments to multiple locations to avoid these fees, although some have reported issues with this option.

Low Inventory Fee

Starting April 1, 2024, a low inventory fee will apply to standard-size products with consistently low inventory levels relative to customer demand. This fee aims to ensure that products are always available for customers and applies if inventory levels fall below a 28-day supply based on historical sales data.

Amazon has updated this policy so that it does not apply in certain cases. Those cases are:

That last bullet is incredibly important for arbitrage sellers.

This will likely exempt a large portion of the items you sell on Amazon doing retail or online arbitrage.

Monthly Storage Fee Reductions

Amazon is reducing off-peak monthly storage fees for standard-size products by $0.09 per cubic foot from January to September. This reduction aims to help sellers maintain adequate inventory levels without incurring high storage costs.
These new regulations and fee adjustments are designed to improve inventory management and operational efficiency for sellers using FBA. However, they also require sellers to be more strategic in managing their inventory to avoid additional costs.

3. Amazon FBA Return Insights

Amazon has introduced several tools and features to help sellers gain a better understanding of their return metrics and improve their inventory management. One of the most significant updates is the Amazon FBA Return Insights tool, which provides detailed analytics on returns.

Return Insights Tool

The Return Insights tool, available in Seller Central under the Manage FBA Inventory section, allows sellers to access detailed data about their returns. This tool offers several key features:

1. Return Rate Analysis:
   • Return Rate Percentage: Sellers can view the return rate percentage for their products over different time frames (30, 60, 180 days, or the past year). This helps sellers identify trends and make informed decisions about their inventory and listings.
   • Returned Units: The tool also shows the number of units returned, which can help sellers understand the volume of returns relative to their total sales.
2. Top Return Reasons:
   • The Return Insights tool provides detailed reasons for returns, broken down by ASIN (Amazon Standard Identification Number). This information is crucial for identifying common issues with specific products, such as quality problems, inaccurate descriptions, or packaging issues.
3. Product Category Breakdown:
   • Sellers can filter return data by product category, allowing for a more granular analysis of returns. This is particularly useful for sellers with diverse product lines, helping them pinpoint which categories have higher return rates and why.

4. Benefits of Return Insights

• Improving Product Listings: By understanding the common reasons for returns, sellers can update their product listings to provide clearer descriptions and better images, reducing the likelihood of returns due to unmet customer expectations.
• Enhancing Product Quality: If the return reasons indicate quality issues, sellers can work with their suppliers to improve product quality, thereby reducing return rates and increasing customer satisfaction.
• Optimizing Inventory Management: With detailed return data, sellers can better manage their inventory, ensuring that high-return items are monitored closely and that stock levels are adjusted accordingly.

Practical Application

For example, if a seller notices a high return rate for a particular electronic item due to "not as described" issues, they can revisit the product listing to make the description more accurate and detailed. Additionally, if another product category shows returns due to defects, the seller might consider changing suppliers or enhancing quality control processes.

Strategic Advantages

The Return Insights tool provides a strategic advantage by enabling sellers to:

• Identify and address product issues proactively.
• Enhance customer satisfaction by reducing return rates.
• Optimize inventory and reduce costs associated with handling returns.

5. Amazon Reasons for Returns

Amazon provides a structured list of reasons that customers can select when initiating a return. Understanding these reasons can help sellers address common issues and improve their product offerings. So, besides learning more about various ways to finance your eCommerce Stores in Amazon, it's equally essential to learn the various reasons why some products get sent back. Here are the primary reasons for returns:

1. Product Performance:
   • Defective: The product does not function as intended. This can include items that are broken, have missing parts, or fail to operate properly upon receipt. Sellers should ensure rigorous quality control and offer clear instructions to minimize such returns.
2. Product Condition:
   • Damaged: The item was damaged during shipping or arrived in poor condition. This reason often reflects issues with packaging or mishandling during delivery. Enhanced packaging and working with reliable shipping partners can help reduce these returns.
3. Product Description:
   • Not as Described: The product does not match the description or images provided in the listing. This highlights the importance of accurate, detailed product descriptions and high-quality images to set correct customer expectations.
4. Customer Preference:
   • No Longer Needed: The customer purchased the item but decided they do not need it anymore. While this reason is largely beyond the seller's control, offering thorough product information and reviews can help customers make more informed purchase decisions.
5. Wrong Item:
   • Incorrect Item Sent: The customer received a different item than what they ordered. This can occur due to fulfillment errors. Sellers should verify orders before shipping to ensure the correct items are sent out.
6. Product Quality:
   • Poor Quality: The item did not meet the customer's quality expectations. Consistently providing high-quality products and monitoring supplier performance can help mitigate this issue.
7. Fit and Functionality:
   • Product Does Not Fit: Common for apparel and footwear, where the item does not fit the customer as expected. Providing detailed size charts and customer reviews can assist buyers in selecting the right size.
8. Arrived Too Late:
   • Late Delivery: The product did not arrive within the expected delivery window. This can affect customer satisfaction significantly. Working with reliable logistics partners and providing accurate delivery estimates can help address this issue.
9. Unauthorized Purchase:
   • Unwanted Gift: The item was received as a gift but was not wanted by the recipient. This is another reason that is largely outside the seller's control but can be minimized by offering gift receipts and easy return processes.

6. The Final Verdict

In conclusion, understanding the Amazon return policy is crucial for sellers who aim to provide excellent customer service and maintain a healthy business on the platform. By comprehensively grasping the general return policy, new FBA regulation settings, return insights, and specific reasons for returns, sellers can effectively manage their inventory, improve product quality, and reduce return rates. Staying informed about policy updates and utilizing Amazon's tools can significantly enhance the seller experience and customer satisfaction.