Refunds and Returns for Amazon FBA Sellers

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Glenn is one of Tamebay’s regular commenters and has been contributing to the site for many years. Here he reflects on some of the refund and returns issues that exist for Amazon FBA sellers.

Christmas has come and gone and now all the wrong size, wrong colour or unwanted presents are being returned and refunds being issued.

It would not be unnatural to expect that a refund for a returned product is only made once the product has actually been returned and examined. Not so for Amazon FBA sellers, where a different set of rules apply. Having sent numerous emails to Amazon customer support questioning why refunds have been made prior to products being returned and having received contradictory answers, I’m really not sure what the rules are.

So there can be no confusion over the issue I reiterate that I have numerous examples of refunds being made prior to a product being returned. I even have one example of a refund being made the same day that an order was shipped and the reason for the refund was apparently because the customer paid for expedited delivery and telephoned to complain that he hadn’t received his order within the expected time (the next day) and then cancelled his order.

When I questioned what was going to happen to my in transit stock I was advised that it would be returned to my inventory once the carrier returned the product back to Amazon, and that if for any reason the order went missing or wasn’t returned within 45 days I would be reimbursed for it. As it transpires this stock was never returned to inventory and 45 days later I received full payment.

This case is not in isolation and I have numerous orders in flux. I have no doubt that in the fullness of time my products will be returned to a fulfilment centre or I will be reimbursed. Amazon really is very efficient at managing orders and payments. However, this policy creates cashflow and stock management problems. If the returned product was returned to stock it would be available for a sale to a different buyer, but until such time that it is physically returned to stock there is a gap in my inventory and that gap could be as long as 45 days at which point an automatic reimbursement is made.

Waiting 45 days before replenishing missing stock means missing potential sales. Restocking and then discovering that the returned stock has been returned to my inventory results in overstocking with consequential storage fees.

As a clothing seller my returns rate is approximately 3% of all sales and I fully accept that refunds will be made for returned goods, but it would be so much easier to manage if refunds were only made once the returned product has physically been returned to inventory.

Unfortunately the problem doesn’t stop with full refunds, because partial refunds create a whole new set of problems.

Amazon customer support occasionally make concession part refunds to customers. The most common being a refund of the postage cost if a customer paid for expedited postage and their order was delayed. As an FBA seller the postage charged or reimbursed to a customer makes very little difference to me and if Amazon wants to refund all or part of the postage charge I really have no issues.

However when a concession part refund is made from the product charge I do have issues and because there is never going to be a returned product there is no returned entry to cross check refunds against and this type of partial refund slips through.

Following every two week payment cycle we print off and cross check refunds against returns and so far we have captured several refunds which we have questioned Amazon about and have been reimbursed the customer refunds.

If only Amazon would show the reason for a refund on the appropriate page. Many of the emails to customer support questioning the validity of a refund could be avoided.

5 Responses

  1. I suspect the answer lies in the consumer laws.

    The law says if a customer rejects an item or cancels an order as is their right then a refund must be issued. This refund is not dependent on the item being returned to the seller. Under the strict terms of the law the refund must be issued independently of the return, even if the item has not been received back. The buyer should return the item, but if they do not then the seller’s only recourse is to sue them in the Small Claims Court for the cost of the item.

    What Amazon are doing here is following the strict requirements of the law.

    It is the one part of the law which is crazy and is a charter for fraud by dishonest buyers. The rest of it makes sense even if it does not favour the seller, but this part completely unbalances the trading relationship. Fortunately the vast majority of buyers remain honest people, but even the honest will be much less motivated to make a return in a timely fashion if the refund has already been made.

  2. “If only Amazon would show the reason for a refund on the appropriate page”

    This feature is available in the report section of seller central. Hover mouse on ‘Reports’ choose ‘Fulfillment by Amazon’ on the left side of the resulting page, look for ‘Customer Concessions’ you’ll find ‘Returns’ under that, click it, on the main page, specify the dates you want in the ‘Event Date’ field and click ‘Generate Report’, and ‘bob’s your uncle’ 🙂

    You’ll be amazed by some of the reasons for the return

  3. Thanks Jamie
    The screen showing ‘Customer Concessions’ shows ‘Customer Returns’. It is the issuing of refunds without any product being returned that I was trying to explain. If a product is returned then provided it’s not damaged it goes back into stock. My concerns were that refunds are being made before a product is physically returned and that sometime products are never returned even though a refund has been made, and that sometimes you need to wait 45 days before being reimbursed for missing products.


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