In this post I highlight the ugly side of selling on Amazon, Returns! I go through what to expect, how to account for it and what action to take
The Ugly Side
So far I’ve covered a fair bit on how to go about selling on Amazon from abroad. Recall that I mentioned on the “Why This Blog? Here’s Why…” page that selling on Amazon from abroad is not easy. While there is a lot of potential and this is a relatively low risk way of ‘starting a business’, it does take hard work, patience and persistence. In this post I will cover what I will refer to as the ‘Ugly’ side of selling on Amazon so that you are well informed. I hope it does not scare you away but helps you set realistic expectations when you begin your journey.
There are a few things that you might not expect when wetting your feet as an Amazon seller. The one that hurts the most are product returns, especially when you don’t live in the USA.
Something you may not be very familiar with when entering the game is Amazon’s FBA returns policy. One of the reasons Amazon has grown into such a beast of an online market is because it offers its buyers one of the best returns policy out there. Keep in mind that one of the best returns policy for buyers means it is not so great for sellers. However, given this is one of the reason buyers are happy to buy private brand products and products without a lot of reviews, it is a necessary evil for people like us that wish to crack into the e-commerce world.
Now what is ugly about a great return policy for buyers? There are a few sticking points that hurt when I came across them. One is that although the standard return period is 30 days, Amazon can accept returns up to 30 days after the return period has expired. In simple terms, buyers can return an item up to 60 days after it arrived at their door if Amazon accepts it. What makes things worse is that buyers can return an item for any reason, even if it is due to them not reading dimensions correctly or because they ordered the item on a whim and did not want it anymore. There is a simple cop out option that customers can choose by selecting their reason for the return as item “not as described”. The problem is that Amazon will accept this return even if the item was exactly as described. Now this wouldn’t be so bad if the customer was refunded the total amount minus your selling fees and the product could be re-sold. That however would be too seller friendly. Instead, Amazon refund the customer the full amount and you are still left covering the selling fees from the initial sale. Unfortunately this is not where the ugly ends…
Depending on what condition the item is returned in, you may or may not be able to re-sell it. The returned product will be assessed by Amazon and be classified as either “sellable”, “customer damaged” or “carrier damaged”. “Sellable” generally means the box was unopened and the item can be sold again. This is the ideal result. Keep in mind that you still don’t get reimbursed for your initial selling fee. That said, at least you can get a new sale with this product. “Carrier damaged” means the product had been damaged by the freight company, either when getting to your customer or when the customer was returning it using an Amazon partnered carrier. In this case, Amazon will reimburse you the average amount you get when you sell the product minus the selling fees. This result is not too bad either. The worst result is “customer damaged” returns. In this case, Amazon will not reimburse you and the product is not returned in sellable condition. Typically this means the box had been opened and taped up again in unsatisfactory condition such that the product cannot be classified as a sellable new item. When this happens, you lose in every way, especially when you live abroad. You lose the selling fee and you get the proceeds from your sale taken away. The customer receives a full refund and you are stuck with a product that cannot be sold. If you lived in the US, you could get these “customer damaged” products sent to you for repackaging before sending it back to the FBA warehouse. Unfortunately this is obviously not an option when you live abroad.
I am yet to find a way to deal with “customer damaged” returns. I have tried contacting liquidators without too much success. Happy to hear any solutions others have come across as I am sure it will help all sellers from abroad.
So how do you deal with this ugly side? You need to account for it in your profitability calculations. Track your return rate for your first test batch of product and extrapolate it across all other batches you intend to order. To be on the conservative side, I account for all returns that are not “carrier damaged” to be “customer damaged”. I consider any returns that come back in “sellable” condition a bonus. This gives me a worst case scenario. After accounting for this, if your profit calculations show a good return on your investment going forward, then proceed. Hopefully you did a thorough job making sure you had a good product to start with so that your returns rate is reasonable.
Turn the Negative into Positive
Despite this ugly side of selling using FBA, you definitely should not ignore returns. While a few returns may be due to things out of your control and due to the buyer abusing their returning power, I strongly recommend you try find out the exact reason for the return. The feedback can greatly influence your future and long term sales. Message the buyer asking the reason for their return and you will often get a response. I have done this to great benefit. It helps make product improvements and adjust your product description to ensure the right buyers (those that won’t return the product) are buying your product. This can lead to reduced return rates in the long run. After all, customer feedback is vital to keep your product in the top echelon of your niche, even if the feedback happens in painful ways!
Post Highlights for Returns – the ugly side of selling on Amazon
- Returns will happen, so expect it
- Ensure you include your return rate from your test batch in your profitability calculations
- Follow up returns to gain valuable customer feedback
- Make adjustments in accordance with customer feedback – Adjust product descriptions or make improvements to the next batch of product ordered