How to Handle Amazon FBA Returns & Minimize Loss

Returns. They’re one of the worst parts of running a business, but they’re bound to happen. In fact, with increased Q4 sales, you’ll undoubtedly get more returns. Don’t let the increase in returns worry you. It’s only natural that with more sales come more returns.

When customers request to return a product they bought via FBA, Amazon gives them an immediate refund and a shipping label to return the item to the proper warehouse. Customers are on the honor system to indeed return the item they no longer want, so it’s up to you to check on the item after the customer is given a refund. To find out more about your returned items, log in to Seller Central and then click on Reports > Fulfillment > FBA Customer Returns.

Here are the main “dispositions” (Amazon term) in which a customer will return an item and how to best respond to each:

1. SELLABLE – Items that are returned as “sellable” will be automatically returned to your active inventory. Unless you’re worried that the item is actually not in sellable condition, there is nothing more you need to do once the item is indeed returned to Amazon. If you are worried that the item isn’t really in sellable condition, then open up a removal order to inspect the item yourself. Keep reading below to see what to do when a customer has been refunded but the item is not actually returned.

Amazon.com-worker-David-B-0012. DAMAGED – There are multiple reasons why an item would be returned as damaged. It’s possible that the item was damaged in a FBA warehouse prior to the shipping process to the customer. If the item was damaged in transit, then it’s the fault of Amazon (if the FBA worker did not pack the item well) or it’s deemed as your fault for not bubble wrapping or protecting the item before shipping the item to Amazon. It could also be your fault if you sent an already damaged item to Amazon. If it’s your fault, then there is no reimbursement, but if Amazon is to blame, then you are eligible for reimbursement.

3. CUSTOMER DAMAGED – Items that are returned as “customer damaged” will not be returned to your sellable inventory. “Customer damaged” does not mean that the customer bought the item, broke it, and then is attempting to return it. “Customer damaged” means that the customer opened the item, and it is no longer in new condition. Sometimes the customer says they opened the item, but they never really did and it’s still in new condition. The best plan of action for these items is to open up a removal order and get them sent back to you. From there you can see if the item is worth being resold as new, like new, or very good condition.

damaged-box4. CARRIER DAMAGED – If the item was damaged in transit, then it’s the fault of the shipping company (like UPS, FedEx, USPS, etc) for not taking good care of the package during the shipping process. These returns are ones you should be reimbursed for as it was not your fault the item was damaged.

5. DEFECTIVE – The item was returned to Amazon as “defective” and is either obviously damaged or the customer stated that it is faulty. When this happens, the FBA customer is refunded, but the item stays in your inventory as “unsellable.” The best plan of action here is to create a removal order and have the item returned to you for inspection. Some buyers return an item to Amazon and say it’s defective in order to get free return shipping, but the item is not actually defective. I’ve had many “defective” items returned to me only to find that it’s still in brand new condition, some never even opened. If the item can still be sold, then I send it in to FBA again.

Important: If a customer claims an item is defective but in reality it’s not, then it’s up to you to protect your account and fix this false claim. Too many claims of “defective” can hurt your seller metrics and put your account in danger of suspension. Follow these steps if a customer falsely claims an item is defective in order to get a free return.

return-refund-imageThe majority of customer returns are requested within 30 days of the original purchase. After a refund is granted, the customer has 45 days to return the item to Amazon. But what happens when a refund has been issued, but the item is never returned after 45 days? This is something that Amazon is supposed to monitor. Amazon should automatically reimburse you when an item is not returned, but this is not done 100% of the time. For some reason, some incomplete returns are missed. When this happens, you’ll need to be proactive and request a reimbursement. Just open up a new case with Seller Support and let them know that a refunded item was never returned. Amazon will investigate and eventually reimburse you. It’s your money, so be sure you get it.

Remember, the occasional return is just part of business and is nothing to worry about. Don’t ignore your unsellable returned items as they will just sit in an FBA warehouse and continue to rack up monthly storage fees. Take action and do what you can to get those items to become sellable or, at least, to make sure you get reimbursed for items that were never actually returned.

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A few years ago, I sold a brand new teal colored Gameboy for about $350. A few weeks later I was notified that the item was refunded. I set up a reminder on my smart phone for 45 days later to check on the status of the return. When I found out that the item was never returned, I opened up a case with Amazon and was quickly reimbursed the full sales price. Double checking your returned items is worth your time.

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So what about you? Are you experiencing more returns than normal? Do you have a story about a returned item that you were able to recoup your losses on? I’d love to hear from you in the comments below.

 

39 responses to “How to Handle Amazon FBA Returns & Minimize Loss

  1. Interesting!

    This prompted me to go look at a very expensive item I sold that was refunded – over $400, much to my chagrin. Turns out that it is showing as “sellable,” but the customer said it was “defective.” I guess she just wanted free shipping back. It’s unlikely I’ll be able to sell it again, though, until Christmas, since it’s a specialty item.

  2. another great tip to use phone’s remind. Many thanks

  3. Georgene, I’m glad that it was returned as sellable and not defective or damaged. At least you have that going for you… and with the small storage fees, it’s worth it to let it sit all year and pray for an “out of season” sale. I have those all the time!

  4. You’re welcome DNTMb!

  5. Is there a link to go to where we can review all the items that were refunded, to see if they have or have not been returned to Amazon?

  6. Andrew Cassinelli

    In addition to monitoring for returned items, another important task is to verify you are given the proper reimbursement.

    I sold four grocery items in three transactions to a customer. A month later the requested a refund, and 45 days later they still hadn’t returned the product. I was issued a reimbursement, but it was a fraction of the return amount, so I was still losing money and the customer had kept my products. I owned a case with Amazon and was issued an additional reimbursement.

    It seems Amazon may keep commission on the refund reimbursement because the reimbursment never matches the refund given to the customer.

    • Usually, the refund we get is the amount that is refunded to the buyer minus the Amazon fees… so If the seller is refunded $20, but then never returns the item, then we’d be reimbursed around $15 ($20 minus the $5 amazon fees). If there is ever any big discrepancy, I always open up a case and ask amazon to explain why the reimbursement was so low, and they usually give me a little more. It never hurts to ask.

  7. I find your information very helpfull.
    Thanks Charlie Nave

  8. Hi Stephen- Thanks for the article. One question: when I visit the returns report, it is only showing me the returns that have actually physically come back to the warehouse. It isn’t showing my items that were credited for return but haven’t come back. (i.e.- I received notification this week that a plush dog was credited to a customer as a return, but that dog isn’t showing up in the report.) There are several items like that missing from the report.
    Do you know where I can see those items?

  9. Great article, Stephen. Thank you for all the information that you are sharing. Q4 seems to bring not only big profits, but also unexpected losses: lost inventory; bad customer feedback for merchandise that arrived broken; customer damaged goods that cannot ever be sold again… I understand that this is part of the business and I wish I were better insured and better prepared for this. We started our FBA business in September and it seems like tho honeymoon is over. We are still full of hope and good marketing strategies, but the risks appear greater than we thought. It is a small consolation to know that other are experiencing this as well.

    • Overall, the risks are still shadowed by the amazing opportunity that selling on Amazon FBA provides. And most of what you mentioned above (if you sold it via FBA) is Amazon’s fault and they should fix things for you:
      Lost inventory – Amazon should reimburse you.
      Bad customer feedback for merchandise that arrived broken – This would be the fault of the FBA warehouse, so you could get that feedback removed.

  10. Thanks for the information! I think a spreadsheet would be helpful here to track return notifications and then regularly/quickly compare to returns report.

  11. Do you ever contact buyers to see what was wrong with the product? For instance, I sold a laptop back in December and the user even recently left positive feedback stating how much they loved it. About a week later got a notice for a return. This person had previously emailed asking some questions, so was thinking about reaching out to see what happened. Thoughts?

    • If I ever get a return, and I inspect the item that was returned, but can’t figure out what was wrong with it, I may ask the buyer, but most of the time I’ll just let it go.

  12. Stephen, what do you recommend when the 30 days to return an item has passed and Amazon has initiated a refund? Do you open a case right away? Or wait to have the item returned?

    • It’s Amazon’s general rule not to accept returns if 30 days have passed (unless it’s after Q4, then the return windows is open until Jan 31), but if they do, then you just have to be ok with that. It’s not really the best use of your time to try and fight that. But do keep track if the item actually gets returned or not, and if it is not returned after 45 days then open up a ticket to get reimbursed.

  13. Hi Stephen
    Is the returns cause close your account

    • Are you asking “do returns cause Amazon to close your account?” My answer is only if they are because too many people said your item did not match the product description or because too many were defective. But you’ll get warnings before they just close your account.

  14. Thanks for posting this Stephen, I recently started FBA and it’s been going well, but I’m already drowning in returns. I’m also concerned that some customers are actually returning products they bought years ago from other sellers, but in my new packaging, whilst keeping the new product for themselves. I doubt there’s anything I can do about this, almost impossible to prove. I am thinking of somehow marking my FBA stock so this can’t happen in the future.

    • If you suspect this is happening, take pictures and open up a ticket with seller support and let them see what’s going on. At least try to let them know what you suspect.

  15. Pingback: How to Keep Up with Higher Amazon FBA Returns in January

  16. To anyone on the fence about whether to buy the Year in FBA book, it’s worth it! It’s one of the few e-books I’ve purchased that gets opened back up frequently to review info; and I did read through the whole thing when I first purchased it.

    Excellent month-by-month information in this text, Stephen has done a great job putting together very relevant info for sellers, and he updates it consistently (at no extra charge) too. 🙂

  17. Hi Stephen, I’m curious about reconciling the returns report. Does this sound right to you:

    – Downloaded all refunds given for a date range (say, 10/15/16 through 11/30/16 – Reports > Payments > Transaction View)
    – Downloaded all returns received for the same date range (Reports > Fulfillment > FBA customer returns)
    – Cross-checked Order ID to see if returns were received for orders given a refund.

    Using this method, I confirmed that I did receive a return for all orders except one on the tail end. Did I do that right? And for the one on the tail end (11/30), they have until January 31 to return, correct? Thanks for your help!

  18. Accounting wise, how are returns, expired, damaged goods tracked?

  19. what if a customer asked to return a product after the 30 day window and amazon granted their return. should the seller be responsible for the refund or we can ask amazon for reimbursement?

  20. Hi! Thank you for all of your information. It has been a great help to me!
    Could you help me understand a few things?

    If I am understanding correctly… a buyer really has up to 75 days to return items? 30 days to open the return and another 45 to ship it back?

    Also, if Amazon initiates a refund and the buyer returns the item but misses the “deadline,” is the seller entitled to receive that money back or is the seller still out the cost of the item? Thank you!

    • It really depends on the category and when they buy it. Different categories have different return windows… and if an item is bought between October and December (holiday sales), then they can return it up until January 31st. You can see more details here: http://amzn.to/2mfYi0N

  21. Pingback: Are Amazon FBA Sellers Responsible for Refunds? Not Always!

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