Navigating Customer Returns on Amazon

October 21, 2021

One of the key benefits that shoppers love about Amazon is the painless customer return process. Unfortunately for sellers, Amazon has few customer return policy limitations and a generous return window. The average return rate on Amazon ranges between 5-15%. Some categories, like clothing, can get as high as 40%. In total, nearly $25M worth of items are returned on Amazon each year.

Many customers use Amazon’s lax return policies to their advantage, and sellers lack control on whether a product should or should not be accepted for return. If a particular product receives a high number of returns during a given time period, sellers are at risk for listing removal, oftentimes with limited insight into the actual cause of the issue.

Another difficulty with returns is that Amazon claims responsibility for determining which returned items should be labeled as “used” or “new”. As the seller, you have no control over the initial protocol that makes this determination, and cannot input an opinion about whether or not one of your returned products should or should not be relisted as new. Because of this, customers can actually receive used or defective items because Amazon made an incorrect determination and relisted a used return. This can lead to negative reviews, high return rates, and flagged listings.

With such unbalanced terms, how can sellers minimize return fallout and navigate the process?

Keep Tabs on Your Customer Return Rates + Evaluate High Return Rates Within Your Catalogue

The first rule of thumb for managing customer returns is, of course, being familiar with your return rates and tracking them over time. Many sellers are so focused on increasing sales, they neglect the less attractive components. Returns should be carefully tracked and evaluated on a monthly basis. A good starting place is reviewing the returns numbers provided in ZQUARED’s proprietary cloud-based reporting program, Snapshot.

If return rates for a particular SKU begin to increase or look unusually high, digging deeper becomes a priority. Check your latest reviews or feedback for insight. Perform a quality assurance check and ensure that your systems are up to par. Discover any areas that may benefit from an adjustment or improvement in product quality or function. In some instances, a product listing may need to be updated to ensure accuracy and clarity. Our ZQUARED Content Team can support the content review and update process.

Look at Return Reasons as Valuable Feedback + Take Steps to Reducing Them

One benefit Amazon provides to sellers regarding returns is its requirement for customers to provide a reason for the return upon initiating the process. Amazon lists 72 different official reasons for a customer’s return (cumulatively across all categories). However, Amazon does not require the customer to type out any additional explanation for the reason for return unless they choose to do so. Their selection can be quickly made from a pre-filled drop-down menu. That may or may not provide an accurate reason for their particular return. Regardless, it’s still suggested to take these customer responses into consideration when analyzing returns.

Set a monthly recurring task for yourself to review this data. If a particular reason seems to occur regularly, consider if something about your product or listing should be modified. Can it better adhere to customer needs, or set a more realistic expectation?

For some issues, creating an infographic or callout may help address particular concerns. For example, let’s say you sell umbrellas, and a common customer complaint is that the umbrella is much smaller than expected. A great way to attempt to reduce the number of these types of complaints or related returns is by adding an infographic clearly demonstrating the dimensions and scale of the product.

Get creative in your presentation to create a clear representation of what a buyer can expect from your product. Overpromising or setting unrealistic expectations is bound to backfire in the form of negative feedback and returns.

Know How Much Customer Returns are Costing You

Another challenge that Amazon returns present is calculating the true costs of returns for the seller. Whenever a custom returns an item, Amazon reimburses the seller for the referral fees that were paid upon purchase. However, Amazon retains a percentage of those fees (known as the refund administration fee) based on the item’s category and the order amount.

To understand how much customer returns are costing you, you will need to know your product’s referral fee percentage for its particular category. Take a look at Amazon’s referral fee breakdown here. Next, calculate the referral fee amount you pay per sale. For example, the beauty category has a referral fee of 15% for products over $10. If you sell a makeup brush set for $30, your referral fee will be 15% of $30 or $4.50. For all categories besides media categories (book, music, video, and DVD products), the refund administration fee is the lesser of $5 or 20% of referral fees. So, for a $30 product with a $4.50 referral fee, 20% of $4.50 would equal a $0.90 refund administration fee per return.

It’s important to understand the return rate calculations based on your particular product and category. This allows you to accurately calculate how much returns are costing you.

How ZQUARED Streamlines the Return Process for Our Brands

ZQUARED handles the entire returns process from start to finish for our Brand Partners. That includes return rate evaluation and review, return rate reduction strategies, and return cost analysis. We have implemented carefully crafted processes, developed from our many years of Amazon expertise. This give our Brands the best chance for minimizing returns and their associated issues.

At ZQUARED, we have all returns deemed as “used” by Amazon shipped back to our warehouse and personally inspected. We review each product so we can provide metrics to our partners. We are able to process these orders internally much faster and with more detail than Amazon. This gives you the data you need to make informed decisions about your brand.

With returns making up such a small part of managing your sales on Amazon, it’s easy to see why the platform can appear so daunting to Brands with limited or negative experiences selling on the e-Commerce giant. At ZQUARED, our team acts as your designated Amazon experts. We handle the entire selling process from start to finish. As a top 125 seller, we know how to provide your brand with the best resources for lasting success in a sea of competitors. Schedule a call with us today! Call 234-ZQUARED (978-2733).