January is going to be the cruelest month for Merchant-fulfilled (MF) sellers as they are now responsible for carrier correction charges – during the heaviest returns of the year.
Amazon sellers got the bad news recently that Amazon was no longer absorbing the cost of fraudulent and mismatched packages.
That buyer who returned a box of bricks instead of the product? Your problem. The buyer who used a much bigger box to return an item? Your problem.
Bad actors who keep changing the weights and dimensions of your product to mess with you? Very expensive problem that’s hard to fix on Amazon.
Sellers are also distressed by this news because Amazon has leverage to negotiate much better return fees with carriers.
To be clear, MF sellers already pay for returns, but overages due to boxes of bricks, bigger boxes, etc. were previously paid by Amazon.
We have worked with sellers for years who have bad actors changing their weights and box measurements. It’s a dirty seller trick that can take months to resolve for FBA sellers (Fulfillment-by-Amazon). It’s even harder for MF because they don’t have inventory at an Amazon warehouse for Amazon to inspect.
Many Amazon policies are designed to push sellers to FBA. Amazon makes more money off of FBA, and they believe they provide a better buyer experience. However, this year Amazon has dramatically reduced restock limits (how much you can send in and when) and storage limits for FBA sellers. Many FBA sellers are selling inventory MF this year because Amazon won’t let them send in sufficient inventory to meet the demand.
If you have MF inventory, Amazon has probably already sent you a spreadsheet detailing the listings where there is a “mismatch” and what the extra fees might be for you. Mismatch means you need to correct your weights and measurements. You know, in all your free time before January. What if you disagree with Amazon’s assessment? Then you have to prove it to them that they are wrong. Pray you don’t have too many mismatches.
In the long run, what can you do to manage returns costs?:
- Provide return packaging to buyers. If you are shipping shirts in bags, for example, use the kind of bags that can be resealed and sent back.
- Ask buyers to save their packaging with an insert touting “quick and easy returns and exchanges.”
- Don’t require returns for all items. In some cases the return kills all the profit from a smaller item or sometimes it cannot be resold because it is forbidden by law. You need to build expected losses into your pricing.
- Compare costs with non-Amazon provided carriers. High volume sellers might be able to negotiate a better deal. While it is important to get packages to buyers quickly, getting them back is cheaper if you use a slower method.
- Work with a reverse logistics company to refurbish and resell your returns for you. We wrote about Back-Track last year. (See previous blog for details)
- Review all your listings for correct dimensions and weights and keep an eye on them. Set up an alerts system to notify you if your listings are changed by a potential bad actor.
- Consider Frustration-Free packaging for some items (especially breakables). It usually provides a smaller, less wasteful and stronger box for shipping. Be sure to print “KEEP THIS BOX!” inside the lid for returns. This will reduce the number of bigger boxes you might get as returns. Won’t help with the bricks. Amazon requires sellers get Frustration Free certification to qualify for the program. Click here for certification details.
- Report bad buyers. When a return comes in with a different product, make sure you take a picture and report that person. Back-Track takes pictures for its clients. This helps with insurance claims and encourages Amazon to get rid of online shoplifters. Sometimes it takes multiple complaints before Amazon acts against a buyer. Many sellers skip this step because it is a hassle, but it only increases the shoplifting problem for everyone.
- Don’t issue refunds until you inspect the goods. Amazon encourages sellers to provide swift refunds – often as soon as the package is in the mail – but that leaves you on the hook to pay for fraudulent returns. Additionally, if the return is paid for by the buyer, then waiting means you can charge the extra fees if the box is larger than expected.
- Consider FBA for high return items. You will have to do the math to see if this works for you. For some goods the returns are so steep and the chance of fraud so high, it is actually less expensive to sell FBA even with the extra Amazon fees. If Amazon gives a buyer a refund who actually sent in a brick, you can get reimbursed with FBA.
- Maximize your insurance. I’m often surprised at how few sellers have property & casualty insurance for packages. They instead rely on the carrier’s insurance. This is crazy expensive for high volume sellers and doesn’t protect you from fraud. I had one client who was able to save nearly $500K his first year by insuring his own packages. If you haven’t looked into this, add it to your New Year’s resolutions.
January promises many unhappy returns this year but you can take steps to mitigate the pain.
Some of you may be thinking, “that sounds like a lot of tracking, reporting and sorting, Cynthia.” It could be. If you need affordable, experienced and pre-trained help managing the tedious, repetitive and time consuming aspect of running your Amazon business, give us a call. We specialize in providing quality virtual assistants to e-commerce sellers. From marketing to compliance, our team is ready to support your team.
Let’s talk in January!