Do you sell on Amazon? Follow this guide to 2022 Amazon returns.
January 3rd 2022 is fast approaching, which means that the dreaded ‘Takeback Monday’ is imminent. According to Statista, almost 50% of all people returned something in 2021. Therefore, in 2022, it is anticipated that there will be a significant amount of returns once again.
Here is everything that you need to know…
How Amazon Holiday returns affect the performance of your business
Amazon returns are not only costly to your business, but they could potentially be problematic. We are not just talking about justifying restocking fees or having to cope with serial returners. As the returns pile up, they could result in an account suspension, particularly when there is doubt cast over the authenticity of the product.
There is also overage. The Q4 stock limits which were enforced on October 1st will continue until the end of the year. However, in the meantime, the second stock review is due. As a result, FBA sellers should keep track of their IPI score, and ensure that it goes above the current IPI threshold of 500 by December 27th.
Amazon’s 2021 Extended Return Policy
Luckily for sellers, this year’s extended return policy is stricter. The return window is still open until January 31 2022, but only for items bought between November 1st and December 31st. This is different to last year, as buyers were able to return items they had purchased as early as October.
Amazon Extended Return Policy
- Amazon returns must be sent back within 30 days. For people who bought their holiday gifts on Prime Day (e.g. 42% of US Prime Day purchases), this may come as a surprise.
- There are discrepancies across marketplaces. The US policy states that baby items have a 90-day return window, and Baby Registry gifts can be returned within a year of delivery.
- Amazon will cover shipping costs for defective and cancelled items, as well as return costs for items that are defective, damaged, incorrect, or cancelled.
- Amazon will also cover return costs for items in the Shoes, Clothing, Jewellery and Watches, and Handbags categories.
The change in Amazon policy gives all the more reason why sellers should clarify their return policy on their storefronts. It is also worth informing buyers that not all products are eligible for free returns. In fact, some products such as those that deteriorate, expire or mix can’t be returned at all. This also applies to items that lose their hygienic strip (swimwear), decrease in value if unsealed (software), or have volatile prices (alcohol).
In fact, some items can’t be returned at all. This applies mainly to products that deteriorate, expire, or mix. But it also applies to items that lose their hygienic seal (swimwear), drop in value if unsealed (software), or have volatile prices (alcoholic beverages).
Handling Amazon Holiday returns: Budget, Rules, Research, Strategy
- Budget for Amazon Returns and Refunds
Returns are pricey. Separately from regular Amazon fees, sellers cover the refund cost for the item, the shipping cost, referral fees proportional to the refund and the refund commission. They also cover the Cost of Goods sold, the loss in value, and removal costs for unsellable products.
Estimating the cost of refunds to your business can be difficult, because these costs can reduce your profits. If your Q1 profits are steady year after year, you can use Q1 figures from 2021 as a benchmark. For example, if last year’s refunds only cut into a third of your profits because the resale value was high, a realistic budget for Q1 2022 returns might be about 35-40% of Q1 2021 profits.
- Learn Amazon’s Return and Refund Rules
There are a few rules when it comes to refunds and returns on Amazon. Some are universal. Others are specific to Amazon gift returns. Others apply to sellers only. For instance, charging restocking fees is allowed, but they are treated as ‘refund reductions’ so they are partial refunds. Sellers can also issue refunds on top of what buyers paid. These are referred to as concessions, and are billed to their seller accounts. In addition, sellers can offer free replacements. However, as of April 15th 2021, replacements must be sent out as soon as the buyer returns the original items.
Amazon Refund Rules
- Return costs are deducted for voluntary returns.
- Shipping fees are not reimbursed for voluntary returns with requests made after 14 days.
- Returns are free for shoes, clothing, jewellery, and watches.
- The buyer’s return costs are reimbursed if the item is damaged, defective, or incorrect.
- Some items are eligible for instant refunds, with or without a return.
- Gift givers receive refunds, while gift recipients get gift cards.
- Gift recipients can’t ask for exchanges or instant refunds.
Seller Refund Rules
- 2-day deadline for return request authorisation.
- 2-day deadline for issuing refunds after the item is received back.
- Not at fault if untracked items worth over £50/€50 are not received.
- Not at fault if uninsured items worth over £100/€100 are not received.
- No refund for gift wrapping.
- Refund cheapest shipping only.
- Deduct shipping for personalised pre-paid label.
Amazon Free Replacement Rule
- Only for MFN and SFP items with sufficient units in stock and in the same condition.
- Buyers have 7 days to return an item from the moment they asked for a replacement.
- The first return scan must take place up to 10 days from the replacement request.
- Sellers can cancel the replacement, but it counts against them. If sellers enable the
- Returnless Refund option, Amazon offers the buyer the option to choose between a refund and a free replacement.
- When buyers choose a replacement, sellers are spared the cost of refund administration fees and they can also file SAFE-T claims.
Amazon Restocking Fee Guidelines
- Refund up to 100% of the price of a video game or open software, if the buyer simply changed their mind.
- Up to 50% restocking fee if sent back within the return window, as long as it’s a:
- Book that has been used by the buyer.
- Media item that’s been taken out of its wrapper.
◦Non-media item that is damaged or different from what was sent.
◦Up to 20% of item price, if the buyer changed their mind and returned too late.
- Nothing, if the buyer returned the product on time, unused, and undamaged.
3. See returns as an opportunity
Sellers should take returns as a way to grow and improve their business. Returns can point to problematic listings, high-risk items or a defect in your returns policy. In the long run the goal is to convert customers that return into customers that buy. To do this, you need a customer service team with a lenient approach. If you find yourself in need of reinforcements in January, call on SellerEngine’s Account Monitoring team for help with metrics and compliance.
4. Build you own Amazon Return Strategy
When thinking about returns, it is important to remember that Amazon’s return rules are the bottom line, but there are things you can implement yourself. You can decide what products you are happy to receive back and for how long, within Amazon’s guidelines. But crucially, make sure your storefront shows your return policy.