A Guide to Amazon Seller FBA Refund Policies

Returns are an inevitable part of selling online. In fact, it’s estimated that one-fifth of all eCommerce purchases are returned—and Amazon sellers aren’t exempt from this figure.

When you’re a Fulfillment by Amazon (FBA) seller, returns and refunds can affect your bottom line and Amazon stock limits. And because the Amazon FBA return policy is fairly lenient, you may find yourself dealing with more Amazon FBA refunds than you’d like.

Navigating the world of Amazon FBA returns isn’t always easy, but this short guide on the “four Rs” of Amazon refund policies will help you fill in the blanks and help to prepare you down the line, to potentially sell your Amazon FBA business.

Returns

A “return” is an item that a customer sends back to the fulfillment center for any reason. When Amazon FBA returns reach the fulfillment center, they’re added to your FBA customer returns report. After being processed by an Amazon employee, each item is assigned a condition code that places it into one of two categories: sellable or unsellable.

Sellable Stock

If an item comes back to the Amazon warehouse in good condition, it receives the SELLABLE designation. This condition code indicates that the product and its packaging have complied with the Amazon packaging requirements for resale, and the item is returned to your active inventory.

However, your standards for a “sellable” product may differ from Amazon gated or ungated categories. With that in mind, you can use the FBA customer returns report to understand why the item was returned. There are numerous reasons for a customer to send back a functioning, undamaged product, including:

• ORDERED_WRONG_ITEM
• FOUND_BETTER_PRICE
• MISSED_ESTIMATED_DELIVERY
• SWITCHEROO
• UNWANTED_ITEM
• APPAREL_TOO_SMALL

Should you wish to inspect a returned item personally before relisting it, you can fill out a removal order from the Manage Inventory page to have the product shipped back to you (for a weight-based fee that ranges from $0.52 to $7.25 per item). You can also create a removal order to have the item disposed of.

Unsellable Stock

An item returned to Amazon will sometimes be classified as unsellable. The condition codes that denote unsellable stock are:

• DEFECTIVE – The item is either visibly damaged or was claimed as defective by the customer. The customer is refunded, and the product remains in your inventory as “unsellable.”

• DAMAGED/CARRIER DAMAGED – These codes mean that Amazon takes responsibility for damaging the unit. Amazon will reimburse you for the product.

• CUSTOMER DAMAGED – The product is damaged or the packaging has been opened. The customer is refunded, and the product remains in your inventory as “unsellable.”

• EXPIRED – Foods and other products with expiry dates may be set aside as “unsellable” within 50 days of expiry and will ultimately be disposed of. 

When inventory is marked as unsellable, you can request to have it shipped back to you or destroyed (for a small fee). If you see a lot of returns, you can save time by having unsellable inventory automatically removed.

Timelines for Returns

The standard return timeframe for all Amazon products—including FBA—is 30 days after receiving the item.

However, like-new baby items are returnable within 90 days of receipt. Additionally, due to Amazon’s goal of complete customer satisfaction, returns are sometimes accepted past the 30-day timeline on a case-by-case basis.

Refunds

Amazon uses the word “refund” to refer to a full or partial customer credit. Anytime a customer requests a refund, you’ll receive an email notification, and the revenue from the sale will be put on hold until a decision is reached.

In most cases, a product needs to be returned to a fulfillment center for an Amazon seller FBA refund.

However, Amazon will occasionally offer a “returnless refund,” whereby they tell the customer not to send the item back. This option is usually reserved for products that aren’t eligible for return, including grocery products and live insects.

As an FBA seller, you can leverage returnless Amazon FBA refunds as a way to:

• Save money on return shipping fees
• Improve customer satisfaction
• Reduce time and effort spent dealing with return claims

Reimbursements

Anytime Amazon refunds a customer or sends a replacement item, they’ll charge your FBA seller account for some or all of the refund value. You may also be debited for a restocking fee if the item was opened, and a returns processing fee of $2.12 to $75.08 per item (depending on product size).

However, you can receive an Amazon FBA reimbursement for the item and the processing costs if:

• The product is returned in unsellable condition and Amazon determines they are at fault
• The customer did not return the product to Amazon

As you can imagine, Amazon tries not to accept responsibility for product issues. As such, you may need to submit an Amazon reimbursement claim to receive your credit. With the customer’s order ID, you can file a customer return claim within 60 days and 18 months of the customer’s refund or replacement.

Replacements

In some cases, Amazon will offer customers a replacement FBA item instead of a refund. When this occurs, Amazon ships a new product from your inventory to the customer at no charge.

While you won’t be charged any FBA fees for this replacement order, you also won’t receive payment for the second shipment. Keep in mind that a customer can only request a replacement if they meet the following conditions:

• They have returned the original item
• The same item is still available in your inventory

Simplify Your Return Process and Your Exit Strategy

Product returns are a necessary part of selling on Amazon—but that doesn’t make them a particularly exciting piece of the puzzle.

If you’ve built a successful Amazon FBA empire and are looking to remove yourself from the return process, consider selling your brand to a buyer like Forum Brands. We’ll work to grow your FBA brand even more while handling all the details for you.

Contact us today to discover your exit opportunities, and enjoy your return to a time before Amazon product returns.

Sources: 

CNBC. A more than $761 billion dilemma: Retailers’ returns jump as online sales grow. https://www.cnbc.com/2022/01/25/retailers-average-return-rate-jumps-to-16point6percent-as-online-sales-grow-.html

Amazon Seller Central. FBA removal order fees. https://sellercentral.amazon.com/gp/help/external/G9W7FVTLY343ZBKN

Amazon Seller Central. Returns processing fee. https://sellercentral.amazon.com/gp/help/external/G64LS955WNFT6EDP