What' s the Cost of Returns?

I’m trying to figure this out…

I sell a product for $22.80

Amazon takes $10.16 for referral and fulfillment (FBA), leaving me with about $12.

When a customer returns the item for refund, how much do I lose when the product gets sent back to me?

I’m embarrassed that I’ve never paid attention to this possible charge.

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Copy a returned and refunded order ID, go to Payments - Transaction View tab and search the order ID. You’ll see all debits and credits related to that order.

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perfect, thanks

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On every returned item, Amazon keeps a Refund Administration Fee, which in most categories amounts to 20% of the referral fee, capped at $5.
Someone’s got to pay for those sleek yachts, right?

Of course, they don’t refund the fulfillment fee, so that’s another loss to consider.
Ideally, you should factor in a % within your profit margins to accommodate the “double” fulfillment fee you incur on some units (the returned-sellable ones).

Looks like sellers are the preferred choice to finance those trips to outer space.
So, starting on June 1, 2024, they will risk an extra “return processing fee for high return rate products”.
Therefore, if you’re not in the apparel/shoes category, make sure that your products fall below the threshold set for your category.

Lastly, don’t forget to account for removal/disposal fees when necessary.

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Many ways to answer the question.

If there was no return, then you lost $22.80 in Sales
(But you do have your product back in stock, assuming it is perfectly re-sellable)

But in fact that $22.80 is really a loss of $20.06, because you would get your $3.42 (15% of $22.80) in referral fees back less 68¢ in fees mentioned above.

But ACTUAL COSTS. That is $7.42

which are non-refundable FBA fee of $6.74 plus the 68¢ in RAF fees

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“Refund Administration Fees.”

Amazon is taking it cues from the airline, hotel, and cruise ship industries.

Baggage fees. Resort Fees.

Charging 15 bucks to drop a copy of USA Today in front of your hotel room door.

15 pounds a day for wifi in a hotel we wanted to stay at in Edinburgh. We stayed elsewhere, with included wifi and breakfast.

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(Super off topic, but we always stay in a B&B (with en suites) in EDI for exactly those reasons. If I’m gonna be nickel-and-dimed, I’d rather it go to actual people and get fresh full Scottie breakfast out of it.)

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Thanks,

I ask because after years of doing this, we finally had a defective manufacturing run of a product that wasn’t caught by QC (and majority of units affected).

Our 2nd most reviewed product quickly dropped for 4.7 to 4.5 in as little as 40 reviews and we’ve seen a spike in returns. So trying to weigh the damages.

The cost to brand is clearly going to cost us more than cost of returns – our sales have dropped significantly – but trying to figure out damage as a whole.

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Wouldn’t it be easier to recall and dump the defective items elsewhere rather than deal with Amazon’s kid-glove treatment of buyers at your expense?

I sell used books. If a customer is unhappy with a cheap book, I would rather they keep it, with a full refund, than cost me a lot of money to get it back. I ship books via USPS Bound Printed Matter or Media Mail rates using Amazon shipping.

Amazon uses only UPS for return shipping, which costs a fortune compared to USPS rates. I would like to head this off, but there seems no way to do it unless the customer contacts us in advance of a return.

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For brand owners, this is one of the risks of using FBA. Since they handle customer service, you don’t have the opportunity to see first hand that your products are defective until it starts hitting NCX rates or the flow of negative reviews starts coming in. By that time there’s weeks worth of sales that already went out. And because you don’t have access to addresses and are limited in the way you can contact customers, it prevents you from making it right. If you had their addresses, you could refund them + ship them a good replacement product along with a letter apologizing for the issue, and the tune quickly changes from “defective product seller” to “good company that stands by their products.”

The only thing you can do for damage control at this point is to maybe proactively refund customers before they need to open a return request. I’m not sure if issuing that many refunds would cause you some problem with your refund metrics though.

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