It’s that time of the year again: January. It’s when sellers face a double-whammy of slow sales and rampant Amazon returns. But why let it put a damper on your Q1 plans, when you can tweak your Amazon return policy and adjust your prices in a flash?
The 2020 holiday shopping event lasted nearly a month and hit record sales.However, with people waiting until the first working day of the year to sort out their Amazon returns, sellers are now facing the “returns season”.
Thanks to a generous Amazon return policy, buyers have until the end of January to return items received since October. Items shipped on Takeback Monday will have made their way back by now. And within weeks, Amazon returns should slow to a trickle. But until then…
5 Tips on Handling Your Amazon Returns
1. Know What You’re Up Against
Apex Insight expects online shoppers in the UK – who return one item per month, on average – to ramp up Royal Mail returns by 63% this week.
In the USA, UPS is banking on a 23% rise over last year, when it processed a record 1.9 million returns in a day.
But let’s look at the bigger picture. Customer expectations are changing.
Five years ago, when UPS released the Pulse of the Online Shopper, roughly half of people expected hassle-free, on-the-house returns, fast refunds, and easy-to-print or pre-printed labels.
Today, nearly everyone who shops online wants these perks.
Amazon’s return policy may have been ahead of its time a few years ago, but these days, it’s the bare minimum. Here’s a list of more recent stats:
- Poor return policies drive up to 82% of online shoppers away, ReadyCloud claims.
- About a third of all internet purchases result in a return, says The Wall Street Journal.
- 4 in 5 people expect free, streamlined returns, according to UPS.
- 92% of shoppers are more loyal to companies that offer free, no-hassle returns, ReadyCloud reckons.
- A poor return service will drive 3 out of 10 online shoppers away for good, Apex Insight says.
2. Off-set the Cost of Free Returns
Restocking isn’t cheap. But that’s not something a buyer wants to hear. Your automatic reaction might be to withhold money from the buyer. But unless it’s damaged by the buyer, used, or returned out of policy, that’s not allowed.
So, how much can you charge a buyer for returning an item?
Luckily, Amazon has changed its guidelines for restocking fees in recent days and gave us a bit more clarity. Here’s what sellers are allowed to charge Amazon buyers:
Sellers are expected to at least match this year’s Amazon return policy. And since the return window has been extended to the end of the month, restocking fees should only be charged if the item has been used, damaged, or shipped before Oct. 1.
But you need to absorb more than the cost of handling your returns, storing, listing, mending, and offsetting their wear and tear.
Amazon will take back 20% of the original fees as refund administration, up to a maximum of $5 (or £5, €5, etc.) per title.
But don’t charge for the return. Charge more for the item.
When you price your item, factor in Amazon’s 20% refund fee, your average holiday restocking fee, and the estimated rise in return rate (e.g. UPS’s 23%).
Our repricer, Sellery, can take the hassle out of this chore.
3. Work on Your Return Policy
You can’t deny a buyer the right to return an item. But you can change your Amazon return policy to appeal to their better nature.
This way, you’ll do your best to avoid going over the 10% threshold for Return Dissatisfaction Rate.
And you won’t step on Amazon’s toes.
Make sure that you mention these 6 simple refund rules:
4. Inspect Every Item
Whether the item being returned to you was fulfilled by FBA or MFN, you should make sure to check it before you issue the refund. Here are some of the reasons you may want to keep a record of every item and give your returns a once-over before you part with your money:
- It’s not unusual for Amazon’s staff to mark an item as “Customer Damaged” and relist it, when it should have been classed as “Defective” and marked for removal as unfulfillable inventory.
- There have been reports of fake items being returned to Amazon FBA, and later relisted. When Amazon catches up, an investigation may ensue, but refunds would still be issued at the seller’s expense.
- If you signed up for FBA virtual tracking (a.k.a. commingling or stickerless inventory), you may be held accountable for another seller’s faulty products.
- FBA items that are brand new may be returned to you as “Defective”, just because buyers want a free pass. Resolving the issue is as easy as opening a ticket in Seller Central and sending a photo of the item and the packing slip.
- You may be able to charge the customer a restocking fee if they aren’t entirely honest about the condition of the item, or if they return the item too late.
- Dishonest buyers may think twice about returning an item if they know you keep a detailed record of what moves through your warehouse.
5. Have a System in Place
Don’t expect Amazon to watch over your returns and refunds. To minimize the cost of processing returns, you must enforce an accountability system within your own company. Make sure you task your most experienced staff with these tasks:
- Keep track of every return authorization, claim, and outstanding refund, so that you don’t miss your deadline for resolving the issue or agreeing to and issuing the refund.
- Keep a record of pending refunds and cross-checking it with your refund notification emails from Amazon.
- Check that every Prime order is returned to Amazon FBA within 45 days. If not, they must let Amazon know and request a reimbursement.
- Personally inspect every item that comes back to the warehouse and determine if and how they should be restocked and relisted.
- Maintain a database with unfulfillable inventory, relisted FBA items, removal orders, and MFN returns, so that no order slips through the cracks.
- Liaise with customer support staff so that troublesome buyers and products are flagged up.
- Determine the kind of manpower needed at peak time, so that you can extend working hours or hire seasonal staff in advance, if needed.
That’s a wrap for now, but you can be sure that the topic of Amazon returns will pop up again on our blog in the coming months. Follow our blog and make sure your Amazon return policy keeps up with the latest guidelines and trends.
Melanie takes an active interest in all things Amazon. She keeps an eye on the latest developments and keeps Amazon sellers up to speed.