Amazon Sellers pay from 30% to 50% for customer returns from their own pockets. And here’s why.

Customer returns are an essential part of every business. It doesn’t matter what you do; there will always be returns and replacement requests.
Amazon FBA is not the exception. Have you ever thought about how much money amazon sellers spend out of their own pocket on returns?

Let’s take a look at the primary example of an average product sold on Amazon, which is priced at $20.

How much does it cost to sell on Amazon FBA

This product sold for $20, but after Amazon fees such as delivery fees (-$7.07) + Referral Fees (-3$), you get $9.93

When a customer clicks a refund button, amazon instantly charges $20 from your amazon account. The only charge you get back is the referral fee.

However, many fail to account for the additional refund administration fee, which accounts for 20% of the referral fee.

Amazon FBA Refunds explained for sellers. What is refund administration fee

This means any returns results in a money loss of:
FBA fee + 20% of Referral Fee (Refund Processing Fee)

Ok, anything else? Some additional details should be considered.

1. Cost of Goods. If the returned item is in unsellable condition, you lose cogs.
2. Every Amazon Seller uses PPC advertising. Let’s say you sold 1000 units and spent $2000 on advertising in a single month (10% TACoS) = another $2 for each refund.

Enough examples, let’s summarize all of the expenses:
FBA fee ($7.07) + Referral Fee Сommission on Refund($0.6)+ СOGS ($3) + Ad spend ($2) = $12.7

It’s more than 50% of the price. To cover one refund, you’d have to sell three products.

Huh, that’s a lot… How can we deal with that?

You can track your refund rates by downloading Amazon reports or using My Real Profit’s automated analytics. This tool tracks refunds by SKU, ASIN, and even Parent ASIN using units and financial basis methods (and that’s only 1 of 100 features).

Use this link to start your free 14-day trial (no card required):
FREE TRIAL LINK

My Real Profit refund analytics on a profit dashboard for Amazon FBA sellers

Do not underestimate the cost of a return on marketplaces because it’s more than just a refund!

Best of luck to you in your e-commerce venture!

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store