Author: Will Abrams
Founder at Axiom Prep
The High Cost of Amazon Returns
Amazon returns are an important topic for any Amazon entrepreneur looking to increase the profitability of their business. High return rates can lead to decreased profitability through loss of sales and returns processing fees. These returns often come back damaged, unsellable, or do not come back at all.
This is not a problem exclusive to Amazon as the National Retail Federation found that “Online retailers lose $816 billion annually due to returns, with 17.6% of all online sales being returned in 2023, compared to 10.02% in brick-and-mortar stores.” This higher-than-average return rate has forced many businesses to rethink their approach to returns.
Another costly aspect of the return problem is return fraud. Return fraud includes scams like empty box scams, bricking, seller sabotage, and switching. The same NRF study found that approximately 13.7% of all returns are fraudulent, costing online retailers $10.40 per $100 of merchandise sold. This theft often comes right out of a seller’s bottom line as Amazon struggles to catch these types of return fraud.
However, all hope is not lost, as sellers do have recourse to get money back from Amazon on these returns! In this article, I am going to go over two types of FBA reimbursements that sellers can file to get money back from Amazon on returns!
FBA Reimbursement #1 Removal Claims
These are claims filed on items damaged during the removal process. The removal process is when Amazon ships either unfulfillable or stranded inventory back to your return address. Sellers can file a reimbursement claim if they did not receive the item or items that Amazon supposedly removed to them. Per Amazon’s policy, “For items lost in transit to your returns shipping address, you must submit your claim no sooner than 14 days from the last confirmed movement of your removal shipment.” (Amazon, G9ZB3H4DP4H72U6R) Removals frequently get lost during shipment or Amazon does not ship removals at all. This is money left on the table if sellers are not filing these FBA reimbursements.
Another type of removal claim is a reimbursement filed on stranded inventory that gets damaged during the removal process. Stranded inventory is inventory in sellable condition that can no longer be sold due to things like compliance issues, incorrect labeling, IP claims, etc. Stranded inventory needs to be removed from Amazon and is frequently damaged in transit. Think about how your UPS driver treats your packages! This is inventory in new condition that is no longer new by the time it shows up to your warehouse. Amazon takes responsibility for this issue and will provide a reimbursement if filed. Simply visit this link and provide a picture of the shipping label, LPN, and packaging slip: https://sellercentral.amazon.com/help/hub/reference/200280650.
FBA Reimbursement #2 Switcheroos
The “switcheroo”, as Amazon calls it, is when a customer purchases an item and swaps it out for something else. Think you sold a brand new pair of Nike shoes and your customer swapped them out for a pair of used flip-flops when making a return. This is fraud, and Amazon is supposed to reimburse you on the front end for this return if you are selling FBA. If you are selling FBM, you need to file what is called a SAFE-T claim. Here is how to file according to Amazon, “Go to Manage SAFE-T Claims from the Orders tab in Seller Central. Click File a new SAFE-T claim, in the top right-hand corner of the page. Enter the order ID for the return, then click Check eligibility. If your order is eligible, proceed to the next step.”
However, this process gets a bit more complicated if you are selling FBA. Amazon is supposed to reimburse you for switcheroos when they receive the return, but they do not always catch it. If an FBA seller receives a removal in “damaged” condition but it is actually “defective” meaning it is not the product that it is supposed to be, Sellers can file for reimbursement from Amazon. Simply visit this link to file: https://sellercentral.amazon.com/help/hub/reference/200280650. Amazon will request pictures of shipping labels, LPN, and packaging slips so make sure to take pictures!
More Ways to Recover Revenue
Another way to recover lost revenue on returns is sending eligible products back into FBA or listing them FBM. Some products may just need to be re-boxed, re-labeled, or shipped right back in. Additionally, listing used returns on alternate marketplaces like eBay can be a great way to recover lost revenue.
However, handling these returns and reimbursements as an FBA or FBM seller can be complex and time-consuming. Axiom Prep handles this for you! We take care of the entire revenue recovery process by sending new items back to Amazon, listing used products on eBay depending on preference, filing FBA reimbursements from Amazon, and much more! Check out why over 200 Amazon brands trust Axiom with their Amazon returns: https://axiomprepcenter.com/contact/.