Coming Soon: High Return Fee... What Can We Expect?
It's no secret that Amazon has the highest return rate out of it's competitors.. not only does each return cost the seller the original FBA fee plus part of the referral fee, but if it's return unfulfillable, we pay a disposal fee and lose the cost of the product itself. Often times it's fulfillable, but Amazon employees are scared to question it and are safer simply marking it as unfulfillable.
Pretty bad huh? Well Amazon claims it isn't making enough money from these fees. so now we are about to see yet another fee for items with a return rate above a certain threshold. We don't have much information on how low this threshold will be, but we do have the fees that are expected.
Let's take a current product I sell:
I have a heavy product I sell for $90. I make $24 profit on each sale that isn't returned. If one is returned and fulfillable, I still profit $5. If one is returned unfulfillable, I lose $60.
Now assuming this has a return rate over the threshold:
From what I understand, as long as an item isn't returned, it won't have the fee applied.. it's only applied to returned items.. so I still make $24 profit on each unreturned sale. If one is returned and fulfillable, I now lose $6. If one is returned unfulfillable, I lose a whopping $71. This is 3x my original profit!
Okay, so they are moving forward with the new fee and we have to accept it. But what will this threshold be, and how will Amazon categorize these threshold groups? Will it be applied to products in the highest 10% of returns? More? Less? What about the countless times Amazon miscategorizes products? Will the return rate threshold of my garden product be categorized against automotive products, which Amazon keeps auto-categorizing it as?
Aside from this new fee not being logical, it seems the criteria is all going to be based on a broken product categorization algorithm. I'm really hoping the fee is only applied to a super small percentage of products, but we don't any insight on this yet.
Coming Soon: High Return Fee... What Can We Expect?
It's no secret that Amazon has the highest return rate out of it's competitors.. not only does each return cost the seller the original FBA fee plus part of the referral fee, but if it's return unfulfillable, we pay a disposal fee and lose the cost of the product itself. Often times it's fulfillable, but Amazon employees are scared to question it and are safer simply marking it as unfulfillable.
Pretty bad huh? Well Amazon claims it isn't making enough money from these fees. so now we are about to see yet another fee for items with a return rate above a certain threshold. We don't have much information on how low this threshold will be, but we do have the fees that are expected.
Let's take a current product I sell:
I have a heavy product I sell for $90. I make $24 profit on each sale that isn't returned. If one is returned and fulfillable, I still profit $5. If one is returned unfulfillable, I lose $60.
Now assuming this has a return rate over the threshold:
From what I understand, as long as an item isn't returned, it won't have the fee applied.. it's only applied to returned items.. so I still make $24 profit on each unreturned sale. If one is returned and fulfillable, I now lose $6. If one is returned unfulfillable, I lose a whopping $71. This is 3x my original profit!
Okay, so they are moving forward with the new fee and we have to accept it. But what will this threshold be, and how will Amazon categorize these threshold groups? Will it be applied to products in the highest 10% of returns? More? Less? What about the countless times Amazon miscategorizes products? Will the return rate threshold of my garden product be categorized against automotive products, which Amazon keeps auto-categorizing it as?
Aside from this new fee not being logical, it seems the criteria is all going to be based on a broken product categorization algorithm. I'm really hoping the fee is only applied to a super small percentage of products, but we don't any insight on this yet.
3 replies
Seller_aNsixtdBpnLRG
So glad we are small FBM and have yet to see the fees FBA folks are dealing with every day.
It seems to me they are trying to recoup their ever growing landfill fees
Bryce_Amazon
Good morning @Seller_DPetgMN6a9UZU,
Happy to provide some additional details from the Seller Central help page for the upcoming fee change:
Starting on June 1, 2024, we’ll introduce a returns processing fee for high return rate products in all categories, excluding apparel and shoes, to address the operational costs of returns and reduce waste. The fee will only apply to products that have return rates above a threshold specific to each category.
Your product’s return rate will be the percent of your product’s shipped units in a given month that’s returned by customers over that month and the subsequent two calendar months. For example, for units shipped in June 2024, the return rate is the percent of those units returned over June, July, and August 2024. For a given month’s shipped units, the returns processing fee will be charged for each returned unit above the product category’s return rate threshold. You will see return fees charged to your account between the 7th to 15th day of the third subsequent month. For example, for June 2024’s shipped units that are returned and are charged the fee, the charge will be made between the 7 to 15th of September, 2024.
Starting May 1, 2024, you can review your product’s return rate on the FBA Returns dashboard, updated weekly, allowing you to monitor your returns and return rates for a given month’s shipped units. The return rate thresholds for each category will also be published on May 1, 2024.
If your product ships less than 25 units in a month, any returns of units shipped during that month are exempt. The fee applies only to physically returned units.
Regarding incorrect categories, that would be something I recommend raising here on the Forums as our Community Management team will be able to quickly review and escalate as needed.
Let me know if you have additional questions and I will do my best to source an answer for you.
- Bryce
