Analyze your Amazon FBA Returns to Optimize Performance

As a business owner you already know that returns are a pain, especially on Amazon.

First of all, they cost you. Not only do you have to refund the original purchase price, but the returned inventory might be damaged and unsellable or even the wrong product altogether, leading to a complete loss.

This would be the case in any retail business. But if you sell through Amazon FBA, you’ll encounter unique challenges. Amazon FBA return fees can add to the financial burden with returns processing fees, restocking fees, and other hidden costs.

If you choose the setting to have your returns go back to FBA to grade and resell, you run a risk: the FBA staff might make a mistake and end up sending another customer a damaged or used product. This could lead to a negative review and/or seller feedback that tanks your business’s reputation. (Have you heard about the small business that got wrecked because someone received a dirty used diaper?)

But if you have all returns sent back to you instead of trusting FBA, you have a major time loss on your hands: you and your staff now have to take the time to assess each item yourselves and either resell as new, resell as used, or dispose of it in some other way. Time is money in your business.

Plus, if you’re outside the US, you have to either set up a US-based return address for your US customers, provide a pre-paid international shipping label, or simply refund the item without requiring a return, all of which are expensive and potentially a hassle. (Failing to do one of the three makes the buyer eligible for an A-to-Z claim, which harms your order defect rate.)

Last but not least: if an item gets returned a lot compared to other items in its category, Amazon might add the frequently returned item warning to the listing, which could easily scare off buyers from purchasing the product, reducing your sales.

Amazon’s customer-centric mindset has led it to require third-party sellers to be very generous with their return policies all the time…and extra generous during the holiday peak season. While returns are usually allowed within 30 days, orders placed between November 1 and December 31 are usually eligible for return until the end of January.

Understanding FBA Customer Returns

Navigating the world of Amazon FBA customer returns can feel like a maze, but understanding the process is crucial for managing your inventory and minimizing losses. When a customer decides to return an item, Amazon promptly sends you an email notification, and the cost of the order is deducted from your seller account balance. The customer then ships the item back to an Amazon fulfillment center, where it undergoes a thorough inspection to determine its condition. This step is vital as it decides whether the item can be resold, needs refurbishment, or is unsellable. By grasping this process, you can better manage your FBA inventory and make informed decisions about handling returns.

How to Analyze Your FBA Returns

First, you’ll need to understand why returns are happening. The best way to do that is to go straight to the buyers themselves. Buyers have to choose a reason when they request to return something, and they have a space to leave a comment with more details as well. Notice any patterns in the return reasons, and read the comments to try to understand where buyers are coming from.

It may seem daunting to read through all returns for every item, especially if your catalog is large. So, prioritize. Your process might look something like this:

• Identify the SKU that has the highest return rate, while also having enough sales to be worth your focus. For example, look at your ten top-selling parent ASINs, then choose the SKU among those that have the most returns in the last 90 days.
• Next, look at the top two or three return reasons customers choose for this item.
• Read through a substantial sample of the return comments for each of those reasons.
• Repeat with another high-selling and frequently returned SKU.

SellerPulse by eComEngine is a software tool that provides these details fast. It includes a robust FBA returns report with easy-to-read graphs showing which items are most often returned in which condition or for which reason, plus a word cloud of common themes in the comments. All the individual remarks are imported too, so you can notice a theme and dig in to get more details about the buyers’ experiences.

The report also shows returns over time, item disposition (the condition the item was returned in), and more, to save time and improve returns analysis.

Identifying Reasons for FBA Returns

Understanding why customers return products is key to improving your offerings and reducing return rates. Amazon provides a comprehensive list of 72 official reasons for customer returns, which can be broadly categorized into three groups: customer-related, seller-related, and Amazon-related.

Customer-related reasons might include issues like the product not meeting expectations or a change of mind. Seller-related reasons often involve inaccuracies in the product listing or quality issues. Amazon-related reasons could be due to shipping errors or fulfillment center mishandling. By analyzing these reasons, you can identify patterns and take corrective actions, such as improving product descriptions, enhancing quality control, or addressing fulfillment issues, to minimize future returns.

Of course, one benefit of doing this research is that it allows you to collect evidence of any fraudulent returns to make your case to Amazon.

But there are plenty of non-fraudulent returns and plenty of ways to reduce those going forward. Over time, you can improve your product, listing, packaging, or service to prevent the issues you’re seeing in the reasons and comments.

For example, if many buyers are saying that a certain item arrived damaged, you may need to improve the packaging it comes in for extra durability, rather than relying on FBA to pack it with the proper amount of cushion.

Or, if many buyers are complaining that the size, color, or other features of the item are not what they expected, you may need to update the listing to be more accurate to the real product.

Minimizing Losses from FBA Returns

Reducing losses from FBA returns requires a proactive and strategic approach. Here are some effective strategies to help you minimize these losses:

• Improve product quality: Ensure your products meet high-quality standards and customer expectations to reduce returns due to defects or damage.
• Optimize product listings: Make sure your product listings are accurate and comprehensive to prevent returns caused by misleading or incorrect information.
• Use removal orders: Utilize removal orders to inspect returned items and assess their condition. This can help you decide whether to resell, refurbish, or dispose of the items, thereby minimizing losses.
• Leverage Amazon’s return policies: Familiarize yourself with Amazon’s return policies and use options like the “Returnless Refund” to handle returns more efficiently and reduce costs.

By implementing these strategies, you can better manage FBA returns and protect your bottom line.

Conclusion

Effectively managing FBA customer returns is a critical component of success on Amazon. By understanding the return process, identifying the reasons behind returns, and taking steps to minimize losses, you can enhance your overall performance and profitability. Following the strategies outlined in this article will help you reduce returns, improve customer satisfaction, and stay competitive in the Amazon marketplace. Start analyzing your FBA returns today to set yourself up for a successful year ahead.

Frequently Asked Questions

What are the most common reasons for FBA returns?

The most common reasons listed for FBA returns are inaccurate product descriptions, damage in transit, poor product quality, and buyer’s remorse, most commonly deriving from some unmet expectation about the product.

What is the FBA policy for reimbursing unsellable items?

For items deemed unsellable, Amazon assesses responsibility for the damage. If it is determined to be Amazon’s responsibility, they will reimburse you. If the damage is attributed to the customer or falls under specific categories—such as customer-damaged items, recalled products, defective items, or violations of Amazon policies—Amazon does not accept responsibility and will not reimburse you. These items remain in your inventory as unsellable, and you may choose to have them returned to you or disposed of. Additionally, if a customer is refunded but does not return the item to an Amazon fulfillment center within 60 days, Amazon typically charges the customer and reimburses you.

How do I contest returns I believe are fraudulent?

If you believe a return is fraudulent, you should contact Amazon customer service to report a suspicious return immediately. You can also file an “Abusive Buyer Report” through Seller Central with any evidence of fraud you have compiled. Additionally, Amazon policies can be used to dispute returns you believe are fraudulent, including requesting an item inspection.

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