Amazon is setting a new policy into motion on June 1, 2024, to introduce a returns processing fee for products across all categories (except apparel and shoes) that have a high return rate. This move aims to cover the operational costs of returns and curb waste.
Important dates:
- May 1, 2024: This date is crucial as Amazon will start publishing the return rate thresholds for each product category. Additionally, sellers can begin monitoring their product’s return rate on the FBA Returns dashboard, which will be updated weekly.
- June 1, 2024: The returns processing fee policy goes into effect. Products with return rates exceeding the category-specific threshold will start accruing fees for returns processed beyond this threshold.
- Monthly, 7th to 15th: Starting from September 2024, for June’s shipped units, sellers will see the returns processing fees charged to their account in this window for the third subsequent month after shipping. This pattern will repeat monthly, with fees assessed based on returns from three months prior.
Example 1: No Return Fee Charged
A seller specializing in artisan coffee blends shipped 20 units in June 2024. Throughout June to August, only 1 unit was returned, well below this category threshold. Since the seller shipped less than 25 units, and the return rate did not exceed the threshold, no returns processing fee was applied.
Example 2: Moderate Return Fee Charged
A toy manufacturer shipped 500 units of a new action figure in June 2024. By the end of August, 60 units were returned, with the toy category having a return rate threshold of 10%. This results in 10% of 500 units equaling 50 units; therefore 10 units above the threshold were subject to the returns processing fee. Assuming a fee of $2.00 per unit for the toy’s size tier, the manufacturer faced a return cost of $20.00.
Example 3: High Return Fee Charged
A furniture brand shipped 200 units of a luxury office chairs in June 2024, categorized under “Extra-large 70+ to 150 lb.” By August’s end, 50 chairs were returned—a 25% return rate. The furniture category’s threshold is 10%, equating to 20 units for this shipment. Thus, 30 units exceeded the threshold. With a significant returns processing fee of $52.45 for the first exceeded unit and $0.75 for each additional pound over 71 lb (assuming each chair weighs 80 lbs). For simplicity, if we estimate an average fee of $60 per extra-large item above the threshold, the total fee for the 30 units would be a hefty $1,800.
How to Act on It:
- Monitor Your Metrics: Starting May 1, use the FBA Returns dashboard to check your product’s return rate weekly. This will help you identify if your products are at risk of exceeding the category’s return rate threshold.
- Review the Fee Structure: Familiarize yourself with the returns processing fee rates based on your product’s size tier and shipping weight. Adjust your strategy to manage costs effectively.
- Address Product Issues: Analyze products with high return rates to identify and address the root causes. Improving product quality, packaging, or listing accuracy can help reduce returns. Consider reviewing your brand’s negative sentiment in Customer Review Insights in Amazon’s Product Opportunity Explorer for detailed insights.
This policy requires brands and sellers to take a closer look at their return rates and product performance, encouraging strategies to minimize returns and optimize for cost efficiency.
Here’s the direct link to Amazon’s 2024 returns processing fee changes.