In just the last several years, the cost of return deliveries has grown by 75%, reaching an estimated $550 billion in 2020. Let that sink in for a minute.
To put things into greater perspective: that number only accounts for return shipping fees. As a seller, you’re likely paying for much more than that, including fees to process, restock and resell items once they’re received. If you’re an FBA seller, you also face inventory removal and disposable fees whenever Amazon deems your product unsellable.
If left unchecked, returns can severely erode your profits. Fortunately, there are steps you can take to lower your Amazon return rate. We’ll walk through those strategies in this blog, and cover what to look out for when you’re trying to predict the number of returns you’ll be receiving throughout the year.
Varying Characteristics of Amazon Returns
There are several factors that can impact your return rates. Here are the most common ones to keep an eye on—evaluate each of these and pinpoint which ones have the greatest effect on your returns and/or are the most volatile.
Roughly 65% of Amazon shoppers are Prime members who are, essentially, incentivized to purchase and return items frequently. Many expect to be able to return most items for any reason for up to 30 days (and for a full refund), as per Amazon’s FBA return policy. And on special occasions, like the holidays, they may be expecting longer return windows.
Sellers themselves report double or triple the number of returns on products fulfilled through FBA. This is often balanced out by a lift in total sales but is nonetheless something to be aware of as you’re setting expectations and adjusting for returns.
The average return rate on Amazon ranges between 5% to 15%. But the return rate for some categories, such as consumer electronics, clothing and fine jewelry, can shoot as high as 40%. It goes without saying that the products that are most frequently returned are usually ones you’d trial or try on at the store. But aside from this, you’ll want to do some more sleuthing and try to find any patterns the ‘reason for return’—this is valuable feedback that can help guide your team in the right direction.
The perceived value of your product plays a big role in customer expectation and the level of disappointment they feel if products aren’t exactly how they imagined. For instance, imagine you bought a $15 shirt from H&M and a $70 shirt from Nordstrom. When you bought the shirt from H&M, you weren’t expecting a highest quality shirt. Even if the fit and cut are a little bit off, or the shirt only lasts you a month, you’re not too bothered by it. However, you probably can’t say the same about the shirt from Nordstrom; if it starts to wear and tear within 30 days, there’s a high chance you’ll be returning it and leaving a complaint.
The same applies to the products you sell on Amazon. Buyers are looking for products that are reasonably priced for the value they receive. If your price is high and your product doesn't last, you’re more likely to see a high return rate.
Time of Year & Pandemic Effects
During normal times, annual online events like Prime Day, Black Friday, Cyber Monday and Christmas consistently lead to a spike in sales in addition to returns and exchanges. But with COVID-19 shaking things up and some retailers already backing out of Black Friday, you can bet that Q4 2020 will be unique.
"We were in the middle of COVID and I was going down this large shopping street in Chicago and I was looking around thinking, 'You know what? Nobody is going to want to do the crazy holiday rush [or] Thanksgiving rush this year. No one is gonna want to stand in the department store line for 40 minutes to check out, be around people or touch a bunch of stuff that everyone else is touching.'" - George Wojciechowski, Co-founder of ShipBob
Amazon has already postponed Prime Day to October, and the holiday season is predicted to begin earlier with an emphasis on deals. As some buyers face constrained budgets and others are planning to spend more liberally towards the end of the year, the pendulum could swing in either direction.
8 Ways to Reduce Your Amazon Return Rate
With the above in mind, you can now start to improve how you handle returns. While there’s no one-size-fits-all strategy, here are some tactics that have worked well for sellers in the past, across all sizes and industries.
1. Implement a Generous Return Policy
Fifty-eight percent of shoppers prefer a hassle-free, no-questions-asked return policy. On top of that, approximately half of all shoppers avoid retailers with stingy return policies. Both of these stats underscore why Amazon enforces easy returns on FBA orders and makes them a part of its culture.
A generous return policy sets the tone for a positive customer experience and helps to build trust when buyers can’t see or touch your products before purchasing. While the unit economics of offering free returns may vary by business, you’ll want to keep in mind that Amazon heavily promotes (and rewards) free returns. Your chances of winning the Buy Box or ranking above competitors could be affected by the type of return policy you offer.
In either case, if you’re an FBM seller, you’ll want to write an original return policy that clearly states expectations on both sides to avoid confusion or misaligned expectations. You’ll also want to consider how a lenient return policy can help your customer relax and avoid rushing to a decision when it comes to keeping or returning their item. Some may even forget to return their items in time and are still less likely to fault you for that, since they were given plenty of time to make the return.
2. Include a Detailed Product Description
If a product is returned more frequently than expected, there’s a good chance that your listing has something to do with it. It’s possible that your product listing lacks enough detail for setting right expectations with your customer. You’ll want to make sure that your product descriptions include details like:
- Exact product dimensions
- Weight of product, if relevant
- Size and color choices
- Materials description
- Manufacturing location
- Warranty information
- Satisfaction guarantee and return policy
- Answers to FAQs
- Product instructions for use, if applicable
Like a good return policy, providing in-depth product descriptions demonstrate transparency, ultimately leading to more sales and fewer returns. As an added bonus, a detailed listing can help with your Amazon SEO.
3. Include High-Quality Images, Videos and EBC
High-resolution, professional product photos are a must for success on Amazon. At minimum, you need to provide multiple photos showing your product at different angles. If you offer your items in various colors and styles, you’ll need to have photos per variant as well.
Nowadays, you’ll want to take things a step further and leverage enhanced brand content or Amazon Live to showcase your product at depth. Modern technology additionally allows for 360-degree product photos to mimic in-store experiences. Remember that your customers aren’t looking to be surprised by any detail of your product. If anything, they’d prefer and appreciate close-up views of the stitching, material, logos and more on your product.
This will give them confidence when hitting ‘buy now’ and help them to better understand what sets your product apart from others.
4. Include a Sizing Guide
If you sell clothing, shoes, accessories or any other product that varies in size and measurements, provide your customers with a sizing guide to all combinations of your product. Include exact values so buyers can take measurements at home to choose the best fit for their needs and/or describe how your sizes compare with that of a popular brand.
Keep in mind that Amazon has its own specific requirements for sizing, and those requirements may change at any point. Think: Amazon’s latest update to shoe sizes or its upcoming changes to apparel sizes. While tedious, the more exact and detailed you can be in your size description, the better off both you and your customers will be.
5. Inspect FBA Products
If you fulfill through FBA, make sure to only send items that are in mint condition to FBA.
“Stop sourcing borderline items,” says Stephen Smotherman of Full Time FBA. Even if you think that a small scratch or defect on the box isn’t a big deal, avoid sending that product to FBA because there’s a good chance that your customer will care.
Ripped or cheap packaging, especially on luxury items and other high-ticket items, do not send a good message to your buyers. You’ll therefore want to inspect your FBA products thoroughly. You might also consider creating a replacement agreement with your supplier if you find defective products during your inspection or find a new source altogether.
At the end of the day, your return rate isn’t the only thing on the line. Your brand reputation and feedback score are also at risk if your products are continuously in questionable condition.
6. Employ Best Practices for Shipping
One way to guarantee a return is by sending the wrong item or failing to fulfill the order in time. And the only way to prevent either of these as an FBM seller is by addressing gaps in your operations.
Most (if not all) large Amazon businesses will need software like SkuVault and/or Zentail to ensure quality control and to keep inventory levels in check between their Amazon listings, warehouses and any external sales channels.
These functions are crucial for detecting warehouse inefficiencies and preventing oversold items, respectively. Advanced WMS features, like barcoding, can further help your employees pick, pack and ship the right items faster. Meanwhile, if you’ve got an item on backorder, a system like Zentail will automatically communicate that to Amazon in order to set the right shipping expectations with your customers.
7. Test Prices & Promotions
As covered earlier, one reason behind a high return rate could be the price of your item. It’s possible that your price communicates a certain quality of product that just isn’t being met on a regular basis.
So, if you have the flexibility to, you may want to try different price points or run temporary promotions to see if that helps with expectation setting.
Kits and bundles are another way to increase the perceived value of your product without necessarily changing the base price of your item. You can list these as separate ASINs and highlight the discount that your customers are getting when they buy your products in bulk. Try to find the “sweet spot” when it comes to your price as indicated by your sales volume, return rate and profit at the end of the day.
8. Ask for Customer Feedback
If you’re having trouble identifying why your return rates aren’t improving even after employing some of the steps above, the best thing you can do is collect data to learn more about where you should focus your energy.
Customer feedback is a valuable tool that can help you learn exactly what changes you need to make. That being said, when you receive an FBA Customer Returns Report, you don’t always get the feedback you need because of unknown responses, nor do you have the option of contacting your customers unless it's about an active order.
You can get around this by checking your product reviews and seller feedback on a regular basis. When you ship out an order, you can additionally ask your buyers to leave a review via product inserts (though remember, you can’t ask for a certain type of review or incentivize it in any way). Or, try asking the seller community for candid feedback through channels like Amazon seller forums or Facebook groups. If push comes to shove, you can always re-launch products that started off badly and strive to offer a better customer experience.
Amazon returns are unavoidable, but they can be helped. Between that condition of your listings to the speed of delivery, there are many factors that can drive your return rates up or down. Do what you can to keep expectations aligned and remember to always think like an Amazon customer when you’re looking for ways to improve.