Reselling on Amazon FBA can be a lucrative side business or a way to meet spending requirements on credit cards. Selling on Amazon is all fun and games until you get a return. Returns are an inevitable pitfall of selling on Amazon, but not something that should deter you from pursing a business through Amazon FBA. While returns, for lack of a better word, suck, they’re something you’ve got to accept and move on from. Here’s what you need to know about returns when selling on Amazon FBA.
Why Returns Suck
Amazon FBA handles all storage, customer service, and shipping. For this service, you pay a pretty hefty fee. The worst part about returns is that Amazon only refunds you a part of what you’ve paid. For example, I paid $7.81 in FBA fees when I sold an item, but was only reimbursed $2.79 when the item was returned. Even if you can resell the item, you will be losing a bit of your profit from FBA fees. If you can’t resell the item, then you’re also out the cost of the item. Sounds like a lose-lose, right? It can be frustrating because sometimes the reason for the return is beyond your control like Amazon delivered it late and the buyer no longer needed the item.
The Return Process on Amazon
If you’ve ever shopped on Amazon, you know how easy it is to complete the return process online. Sometimes Amazon doesn’t even make you send back the item! What you don’t think about when buying (and returning) on Amazon is that a majority of those products come from third party sellers. Depending on the size of the business, one return can really eat up a share of the profits.
When a buyer starts the return process within 30 days, they are immediately refunded and you will receive an email about the return. The buyer then has 45 days to return the item or their refund will be reversed. It’s important to keep track of your inventory to make sure that items are actually being returned.
What Happens With Returned Items?
Once the item is returned to Amazon, the following scenarios can happen.
1. The item is sellable
If the item is returned undamaged, it will be returned to your inventory, ready to be sold again. This is the best case scenario, though you will still lose some money on FBA fees.
2. The item is damaged (unsellable) but you’ll be reimbursed
In the event that the item is damaged and Amazon is at fault (e.g., they didn’t package the item carefully), you will be reimbursed for the item. This doesn’t happen too often and you may not get back the full amount you paid for an item.
3. The item is deemed unsellable and you won’t be reimbursed
When an item is returned to your inventory but is unsellable, you will either have to create a removal order ($0.50 per item or $0.60 for oversized items) or have the items disposed of by Amazon ($0.15 per item or $0.30 for oversized items). Items may fall into this category for several reasons, so it’s always best to inspect the items yourself to determine if they are resellable, and in what condition (e.g., new or used). The item may be “customer damaged”, which could mean the item has been opened, but is otherwise fine. Sometimes, the item may not have even been opened and can be resold as new. Unsellable items may also be marked as defective. Again, it’s best to make the determination on the items’ condition yourself since a buyer may have marked it defective as a means to get free return shipping.
4. The item is not returned by the customer
If the item is not returned by the buyer in 45 days, you will be reimbursed by Amazon. Sometimes this can slip through the cracks so make sure to monitor your returns and reimbursements.
My Experience with Returns
I’ve had one bad experience with an FBA return. The buyer returned the item and Amazon reimbursed me since they said it was damaged. A few days later, Amazon decided my item was actually sellable. They took back my reimbursement and allowed the item to go active in my inventory. The item then sold again which was exciting until and the new buyer returned the item. This time, the item came back as defective. I placed a removal order and am waiting to examine the item myself to see exactly what’s going on here. I’ve lost money on both returns and may be left with something that’s unsellable. It comes with the reselling territory, but returns can be so frustrating! One thing I learned from this is that it’s generally best to place a removal order on all returned items to make sure they’re in tip top condition before selling them again. What Amazon considers sellable is not always sellable and it’s your shop who’s reputation is at stake.
While FBA makes it easy to sell on Amazon, returns are just another part of the reselling game. While you’ll likely lose money at some point due to returns, it shouldn’t deter you from selling on Amazon. You’re first return can be a bit confusing and surprising, but you’ll come to realize it’s just part of the business.
Have you had any bad Amazon FBA return experiences?
Check out these articles for more information:
- Adventures in Reselling: Amazon FBA and Retail Arbitrage
- Adventures in Reselling: My Amazon FBA Results