Every time there’s some discussion about returns/scams, it always seems like some people have a massive issue with it, so I’m curious to see what the actual refund rates people have. This is overall refund rate, the reason for the refund doesn’t really matter – no matter the reason the bottom line is a refund = loss to the seller.
Mine is around 2%, products that are in no return categories are around 1 - 1.5%, products that do allow returns are around 2.5 - 3%. NCX rate/other problems are higher in the no return categories. Eg. I’ve had multiple instances where I received inauthentic customer complaints in no return categories, in the returns allowed categories that’s never happened. This number includes some FBA faulted refunds which are eventually reimbursed, so actual cost to me is lower than that.
Generally when I’ve had a product have a higher than usual refund rate, it’s almost always seller faulted. A few common issues I’ve had were either something being mislabeled, or a product that is compliant with expiration date requirements, but is relatively short dated which makes people unhappy, and the occasional issue with actual expired products
Hi, FBA we have a 0.41% in Grocery (last 12 months) …
Lower in shorter time frames… As low as 0.19% last 30d
However, at the account level we have a 1.08%
We do quite a lot of FBM, and here the main reasons for these refunds are shipping problems. Meaning the parcel gets lost (courtesy of USPS)
Or customer whims such as “I don’t like the taste” (we tend to please the customers)
This is an interesting observation too
Just in case you haven’t, you can also compare the average RETURN ratio of your category in Category Insights (Growth Opportunities)
I don’t consider this data to be valid until at least 30d have passed as it includes sales where customers haven’t had a chance to raise an issue yet. After 30d there’s generally not a lot of new issues that come up. There’s the occasional out of policy refund but that’s rare.
Groceries also seems like a very low problem rate category, as the items are cheap and people usually know what they’re ordering.
I clicked on Growth Opportunities and don’t see anything for category insights, it’s just a product recommendations page which is currently blank.
That I have to say is crazy. Was FBA destroying your stuff or something? There shouldn’t be that huge of a difference between FBM and FBA unless there was a serious product quality problem being caused by FBA’s handling.
We sell medical supplies, With FBA ignoring the 30 day limit for returns many students were buying supplies for rotations then returning them. Essentially “borrowing” the items.
This applies to Handmade in the jewelry category. With FBA, it’s buy and try or rent and return with free returns no matter the reason. Even in this category with FBM, many handmade sellers do not even provide a prepaid return label for seller faulted return reasons so many returns never happen in this scenario (some end up with A-Zs lost for not providing a prepaid label).
But yeah, with FBA many categories are Free returns no matter what so I can understand much higher return rates.
Its not the percentage that matters, it is the flagrant violations of the terms of the deal to which we are party.
When even ONE customer gets away with treating a transaction as a “free loan” of something, or decides to upgrade by buying a new item, and returning the outdated or heavily-used version of the same item that they were using, this means that Amazon is allowing simple theft from the seller, and doing nothing to stop it.
My problem is not with the Amazon customer, it is with Amazon, as they don’t even allow me to say “no more purchases from HIM”, and at least prevent repeat offenders. Their policies encourage people to claim that something was “not as described”, “defective”, INR, etc etc. They TRAINED people to be dishonest.
I don’t know about that. To me the only thing that I care about is the %. If I could choose between a 1% refund rate, and all of it is blatant fraud, or a 2% refund rate, and all of it is for honest reasons, I would go with 1% simply because that’s costing me less money. At the end of the day refunds/returns is a $ amount cost no different than paying for amazon’s referral fees or PPC. A $ expense is a $ expense regardless of where it comes from.
The reason is only relevant if it’s something the seller has the power to correct. Eg. A high return rate because of a product quality issue. Or as pointed out above, FBA allowing outside of policy returns to the point where that product is not suitable for FBA. If it’s an Amazon issue there’s no point stressing about something outside your control.
I do monitor individual SKU refund rates for problems to make adjustments where needed. I do notice things like higher $ items have a higher refund rate, even when it’s a variation of the same product (eg. a 2 pack). Another thing I’ve noticed is products where the typical consumer are elderly people, the refund rate is SIGNIFICANTLY lower. Items that are popular with the youtuber crowd have a significantly higher problem rate. Those numbers do factor into my decision on whether or not to sell a product. The only action an Amazon seller can take if there’s a return problem is to not sell that product.
Very interesting, I looked at several categories and it actually is fairly insightful.
Clothing has a whopping 25% return rate. Supplements only have a 0.33% (partly because of the no return policy), but what’s really interesting are the reasons for returns on supplements:
All those people sitting on their porch to refuse their FBA deliveries…
Looked around some more, it does seem like my categories have fairly low return rates on average. And many categories do have some very problematic return rates.
Yes it is sad too see people taking advantage of returns and borrow things. I hope to see an inversion of trend in the future, somehow…
Consumables are a blessing in so many ways
Yeah, some categories are just tough, especially on Amazon. They can’t really say no returns on most things because that would make buyers stop buying (and leads to the other issues of increased amounts of lying to get a refund).
While I’m lucky to be in categories with few issues, I would say if I had up to around 5 - 8% total refunds, I would be able to continue business as is, albeit with a smaller profit margin. Once it starts getting into the double digits, I’d have to re-evaluate whether or not products are worthwhile, or the business as a whole.
That’s true, so using badbuyerlist requires some prudence by the reader, as does the use of any crowd-sourced information.
If there is only one complaint, I discount its veracity heavily. If there are obscenities, I discount completely.
But when there are two or more, from different sources, I tend to give it some weight. I’ve never outright canceled an order because of bad reviews, but I have included signature required. ( And still some of those signers tried an INR )
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But then there is the other side: you can post to badbuyerlist, not merely read from it. You can make it more useful.
We all know that there are categories of merchandise which have high return rates and will have high return rates no matter what you do.
A 25% return rate on clothing, particularly women’s clothing" is not very off from the accepted norm. It should be taken as a given and planned for.
@GGX is correct about the generational differences in rates of return even for similar items, yet so many online sellers sell items which appeal to younger buyers and accept short margins on them. Obviously, they are loud. Spending more time on Ebay and its forums, I am seeing the same levels of returns on such items, even with Ebay’s less buyer friendly policies.
Since I no longer need to make millions, I have eliminated all merchandise which appeals solely to women, I have eliminated most merchandise which sells to under 25 year olds. I have eliminated all electronics, new or used because the return might not match the item shipped. I have now eliminated almost everything which costs more than $5 to ship. I have an under 1% return/refund rate and begun to phase over to returnless refunds.
I am not recommending that others follow my lead, but I am recommending everyone work the numbers on the costs of their returns/refunds.
The percentage is irrelevant to us as, only a tiny fraction of our returns are actually used or unsellable. We run about 2-3% return rate but only about 5% of all returns are actually unsellable. Granted we have the ability to repackage as new, but when most of the returns are for simple open/damaged packaging, it’s a no brainer.
When you also subtract out the ability to get FBA refunds for fraudulent returns we only have a few items a year that are actual bad actor losses. We waste more money on warehouse employee birthday cupcakes than we eat in Amazon losses (pun intended), in a multi million dollar/tens of thousands of orders operation.
