While great for customers, many sellers consider Amazon’s free return policy a bit too generous. However, as an Amazon seller, you need to accept the company’s return policy as part of the deal.
Unfortunately, Amazon’s return policy can cause a severe effect on sellers’ return of investment (ROI). In some extreme cases, dealing with an unexpected wave of Amazon returns can even destroy a business.
So, what can you do?
As a money-involved process, you’ll need to take a rational approach to determine what to do with Amazon product returns. The first step is to be prepared for returns so your business can weather any wave of returns without risking your financial future.
The Adaptive Seller
E-commerce sellers and other businesses involved with the online market require significant adaptive qualities, which means being flexible with the business model while staying profitable in overall net profit.
One way to keep your business running despite facing the obstacles on the road is to acquire adequate capital.
Another fundamental approach to remain profitable in dynamic market sales is to target those independent variables that affect the health of your business.
Some areas that can affect your business’s overall account reputation and performance include customer reviews, sales loss, and returns. This article will focus on Amazon Returns as an impact factor on overall sellers’ ROI.
4 Steps to Deal with Amazon Returns
Follow these four steps to minimize the financial hits your business takes from Amazon returns.
1. Decide if it’s worth the cost to resell
In the end, it all comes down to how much your product costs to you and its sale price. The percentage of returned products that can be brought back to the market is around 20 – 30%. To keep it simple, if your products do not cost more than $12, it might be better to dispose or liquidate than attempt to resell the product.
Here’s a breakdown of the added costs you’ll incur from an Amazon return.
The flow of a returned product from the customer involves a storage fee of Amazon, which is $0.10. Then, it needs to be transported. There are three options here—liquidation, disposal, or being sent back to the seller.
Many sellers work with third-party logistics (3PL). Shipping out the product to 3PL costs another $0.50. Then there’s a fee for receiving the product in 3PL, which costs $1.50 – $2.00. Lastly, there are storage fees, which can vary depending on the facility and product.
Once you’ve decided to give it a go and keep the product on the market, you have a few other ways to earn your profit back, which we’ll discuss below.
2. Don’t let returns build-up
Ignoring returns won’t make them go away. Avoid creating a large pile of returned products in the first place. Don’t make the mistake of waiting until your pile grows larger and more difficult to manage.
Instead, start the Amazon goods process return immediately (as long as you decide it’s financially worthwhile). Keep track of returned products or take the initiative to delegate workers in charge of making sure they get to the next phase. This should be done as soon as possible and checked regularly to ensure your process continues running smoothly.
3. Relist your product
Some products are returned in brand-new condition. In these circumstances, you can sell them as new on Amazon as if the return never happened.
More often, the items being returned have been used or, at least, opened. In these cases, they must be examined and graded, which is time-consuming.
Suppose the returned items are in good condition. You would have received an Amazon product return, most likely due to a change of heart on the customer’s part. In this scenario, relisting the goods on Amazon is the most convenient option.
If you work with a 3PL, then relisting your product as fulfilled by a merchant (FBM) can be another good alternative.
4. Recognize that your marketplace doesn’t have to be Amazon
Even though a return came from Amazon, you’re not limited to only using that platform for resale!
‘Refurbished product’ is a prevalent phrase on product pages on other e-commerce sites like eBay. To clear inventory, returned products with minor faults are repaired and resold as refurbished products at a discount.
Amazon returns can be a pain, but they don’t need to ruin your business. Have a plan in place ahead of time so you can get through the process quickly and efficiently.
Remember that you’re not limited to only selling on Amazon. There are plenty of other e-commerce websites where you can sell your returned products and make money. Some websites, like eBay, can be even more competitive than Amazon for reselling returned products. In addition, many of these websites allow you to deal with buyers directly, so you can manage their orders directly and potentially avoid getting items returned altogether.
At 3PLWINNER, we know dealing with Amazon returns can be stressful. Our services include inventory management, short- and long-term storage, integration with your existing software, and return logistics.
Get in touch with us to learn more about becoming a 3PLWINNER!