Can Amazon's Return Policy Be Improved Any Further?

Returns are a major issue in the world of retail, both from a consumer's perspective as well as a seller's. Many customers are weary of strict return policies, and those same policies can deter them from making purchases. For sellers, it's a combination of providing customer satisfaction while minimizing profit loss.

One of the biggest e-commerce sellers, Amazon, has been adjusting left and right to try and get the formula right. And recently, it's the sellers who might have to rethink their business strategies.

This past June, Amazon initiated a returns policy update, introducing a returns processing fee for products with high return rates — excluding apparel and shoes — in order to address operational costs and reduce waste.

The fee only applies to items exceeding specific return rate thresholds for each category, according to Amazon. Sellers are now charged for units returned above this threshold, with fees visible in their accounts between the 7th and 15th day of the third month following the returns. Additionally, per the retailer, "The fee applied per unit is based on the product’s size tier and shipping weight."

Small sellers who are shipping fewer than 25 units of the product in question a month are exempt from this fee. However, sellers who ship more than that may need to reassess their products' quality and their customer service in order to avoid increasingly high fees.

For apparel and shoes, Amazon states that "a returns processing fee is applied for each customer-returned unit. No thresholds are applied and fees are charged as returns are made."

Starting on May 1, 2024, sellers were able to review their return rates and thresholds in the updated FBA Returns dashboard. In March 2023, Amazon launched a tool called "Return Insights" to help sellers understand their returns better.

Furthermore, JungleScout explains that with Fulfillment by Amazon (FBA), Amazon manages fulfillment and customer service for sellers, including processing customer returns. When assessing whether an item qualifies for a return, Amazon follows its own return policy. This means that "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."

Just last month, on Amazon's website, the e-commerce retailer shared an update about how Fulfillment by Amazon offers sellers various options to manage product returns efficiently. Key services include:

• FBA Donations: Sellers can donate unsellable but usable products through a partnership with Good360, supporting communities in need.
• Grade and Resell: Sellers can resell returned items after a comprehensive inspection, helping to extend their life and provide clearer product conditions for buyers.
• Returnless Resolutions: Sellers can issue refunds without requiring the item to be returned, which is beneficial for low-cost items or international sales.

Amazon launched its Returnless Resolutions program in August, and it aims to enhance customer convenience and provide sellers with a cost-effective way to manage returns.

Retail Dive reported at the time that Amazon is among several companies implementing "keep it" return options that eliminate the often costly reverse logistics process altogether, including Walmart Marketplace, which "gives sellers the ability to allow customers to keep their items and receive a full refund." This approach is especially prevalent for items of lower value.

There are no fees for using this program, allowing businesses to avoid some of Amazon's increasing returns-related charges.