E-commerce and product returns go hand in hand. That’s especially true for an Amazon seller who has to abide by Amazon’s generous customer return policies.
While it hurts a lot whenever your customer returns a product, you need to lower your return rate to keep your Amazon business up and running. Every returned product at Amazon comes with a dip in your profitability and reputation as a seller.
In this article, you will learn everything about Amazon return rate, its effects on your business, and how to lower it. At the end of this article, you will be in a better position to deal with your product returns efficiently.
What Is Amazon Return Rate?
Amazon return rate refers to the frequency with which Amazon customers return their ordered products. It is generally calculated in percentage.
For example, if an Amazon seller has a return rate of 10%, it would mean that the seller gets ten products returned from the sale of 100 products.
Amazon return rate can be calculated as per its objectives. The Amazon return rates are usually calculated per seller and/or product.
A seller having a high return rate raises Amazon’s eyebrows over his performance. He has to lower his returns on priority for smooth business on Amazon.
How Can Amazon Return Rate Affect Your Business?
Product returns are not good for any business. It is like getting your sale and profit reversed or canceled.
But it is worse at Amazon. It may not hurt you much if you run an independent store. At Amazon, you suffer a business loss and your reputation and credibility.
Let’s check out how Amazon return rate can affect your business.
You may be selling products beyond your expectations. But returned products will surely disrupt this excitement.
Returned products come with returned profit margins too. You may have some constructive thoughts about using these profit margins initially. It will change after getting product returns.
Diverts Focus and Planning
You may focus on a specific direction and plan to add more products to your portfolio before receiving a product return. Returned products will divert your focus and planning as they will become your priority to sell first.
Lost Chances for Amazon’s Badges
Amazon sellers desire to get Amazon’s badges for their products. Most customers like to order products with badges like “Bestseller” and “Amazon’s choice”.
Your product inches away from these badges with every return case.
Bad Customer Reviews
Amazon always encourages its customers to leave feedback or review after every purchase. If a customer returns the product due to a problem, he will probably reflect negative feedback on your Amazon profile.
Your rating matters a lot at Amazon. It decides whether or not you will keep getting orders in the future. It also determines how often your products will be visible to Amazon customers.
Your seller’s rating is negatively affected by each product return.
Restocking or Unplanned Inventory
The returned items will add to your inventory levels. This will increase your stock and warehousing costs. Plus, you might not be having an action plan for these returned products.
Just like the product can get damaged during transit from your warehouse to your customer’s address, your returned products may also get damaged on their way back. Such damages will also hurt your business profitability.
The returned products with defects or other drawbacks will add to your dead stock. This slow-moving stock will not only keep your investment stuck but will also increase your storage charges.
Lower Competitive Edge
Your product return rate is highly significant in determining your position compared to your competitors.
If your competitor has a lower return rate than you, his business is more likely to outgrow yours in the long run.
More Customer Services
Returning a product is not a single-step process. In most cases, your customer contacts you first, discusses the problems, and then dispatches the product if his issues are unresolved.
The communication may go on until the replacement, or a refund is provided to the customer.
So, more product returns naturally increase your burden towards providing more frequent customer services.
Less Visibility in Buy Box
As the product returns lower your performance scores, your chances of being visible at the Buy Box go dimmer with every product return.
You have to lower your product return rate if you want your business to appear more frequently in the Buy Box.
How to Check Your Amazon Return Rate?
As an Amazon seller, you must have access to the section where you can check your returned products. You can check your Amazon return rate by following these steps.
How to Check Your Overall Amazon Return Rate?
- Log in to your Amazon Seller Central account.
- Click the “Reports” tab.
- Click on “Business Reports.”
- Click on the “Performance” tab. You’ll see the overall return rate of your Amazon shop here.
You can filter the data by selecting a date range.
How to Check Your FBA Returns Rate?
If you run an Amazon FBA business, you can check your return rate by following these steps.
- Log in to your Amazon Seller Central account.
- Click the “Reports” tab.
- Click on the dropdown menu and select “Fulfillment.”
- Click on “Customer Concessions” and then on “FBA Customer Returns.
You can also “Generate Report” by selecting a desired date range.
How to Calculate Your Amazon Return Rate?
You’ll need two things to calculate your Amazon return rate in the percentage.
- Number of orders
- Number of returns
Amazon Return Rate = Number of returns / Number of orders
Let’s assume that 200 pieces were returned from the total sale of 2000 pieces.
Amazon Return Rate = 200 / 2000 = 0.1
To convert the result into a percentage, we need to multiply this by 100.
Amazon Return Rate = 0.1×100 = 10%
So, for this particular example, the Amazon return rate is 10%.
Product return rate may naturally vary every month. Amazon sellers usually calculate their average monthly return rate to keep track of their performance.
Common Reasons for Customer Returns
Let’s discuss why customers return products. If you understand and resolve these issues in the first place, you can reduce your returns significantly.
Incorrect Product Description
Many Amazon sellers only care a little about their product descriptions. The words mentioned in your product description matter a lot and your customers take them seriously.
If a portion of your description doesn’t match your product’s performance, your customer may return it.
Variation in Specification
If you are not careful about your product’s specifications, a slight variation may cause a product return.
For example, if a customer ordered wallpapers of exactly the same size as his walls, a variation in the dimensions of the wallpapers will be useless to him.
Wrong Product Delivered
A customer would return the product if he didn’t order it or got a different one.
Defective or Damaged Product
If a product is defective or gets damaged on its way to the customer’s address, he will most likely return it.
If a product doesn’t comply with the promised functions, a return is imminent. You never know if a customer only ordered the product for a specific feature not working after the delivery.
The Difference in Quality
The pictures are all fancy and attractive. That intrigues the customers to press the “Buy Now” button.
But if the product deviates a lot from the pictures, it may compel them to return the product. So, be careful with over-beautifying your product pictures.
Sizing and fitting issues are critical with some types of products. This is mostly the case with clothing, shoes, wearables, etc.
Every customer has a different body structure. If a customer is not comfortable with what he’s wearing, the product is useless to him. That’s why clothing and other wearables have high return ratios.
Some products are time-sensitive. A customer may have ordered something in an emergency to meet his urgent demand. Another customer might have ordered a birthday gift for his loved one.
If such products don’t reach on time, their objectives fail, so the products are returned to the sellers.
Change of Mind
Sometimes, customers order the product, and by the time it arrives, their minds have already changed. Amazon’s return policies are flexible enough to facilitate such services to its customers.
Bad Customer Support
A good business handles many issues with its customer service. If your support team provides bad customer experience, the customer will return the product.
Many customers realize that the product they just bought is available at many other places at a lower price. This makes them want to return the product.
Ways to Lower Amazon Return Rate
Following are some steps to help you lower your Amazon return rate.
Detailed and Realistic Description
Always provide a detailed page with an extensive product description. Use the power of words in your product description that makes your product superior while still offering realistic features and benefits.
Use high-quality images of your products. This will help your customers perceive the product properly.
Include Actual Pictures or Videos
In addition to the fancy and photoshopped images, you must also show the actual pictures of the products.
The best way is to show a product video, so your customers don’t get deceived by the edited images.
Validate Product Quality
You must confirm if the product you are selling is of the quality you are promising your customers. To ensure this, you should use the products yourself first.
Extended Customer Services
Provide extra support to your customers. It would be great if you could talk to your customers on call.
Many confusions are addressed when two persons directly talk to each other compared to email communications.
Offer Discounts and Vouchers
If your customer is unsatisfied with your product and wants to return the product, you can offer him discounts, gifts, or vouchers on his next purchase. This may convince him not to return the products.
Add More Positive Reviews
If the percentage of positive reviews is higher than the negative ones, your customers will psychologically get convinced not to return the product for minor issues.
Use the Power of Packaging
Packaging plays a vital role in how you treat products and customers. Sometimes, customized packaging and additional efforts like packaging inserts are enough to make a good impression on your customers.
Such initiatives also help lower Amazon return rate.
FAQs about Amazon Return Rate
Let’s read the answers to the following frequently asked questions about Amazon return rate to have more clarity.
What Is the Most Returned Item on Amazon?
The return is generally based on the customer’s dissatisfaction with the product. It mostly happens when the customers don’t get the product of their size, fit, comfort, etc.
Clothing items are the most returned items on Amazon. Other returned items also include shoes and consumer electronics.
What Is the Acceptable Return Rate on Amazon?
Generally, the acceptable return rate is 10%. While your Amazon business might still be running with a 15% return rate, you must reduce it to run a healthy business.
What Happens If Amazon Return Rate Is Too High?
If you have high return rates, you will get intimations from Amazon. Your shop, product listings, and visibility may get affected if you don’t lower your return rate.
Who Pays for Amazon Returns?
Amazon sellers pay for the return shipping in most cases, but it varies from case to case. The customer does not have to pay for the returns if the order was eligible for “free returns.”
Amazon return rate is one of the most unwanted figures for every Amazon seller. While you may run a foolproof business, you may still have to face returns. You can always use the tips shared in this article to help reduce the return rate.
One of the safest ways to keep the return rate low right from the start is to source quality products from a professional sourcing company like NicheSources. Make sure that the sourcing agent knows about requirements to send products directly to Amazon’s fulfillment center.
If you want to source the best available products at affordable costs and shipping fee, ask for a free quote today. One of our sourcing experts will guide you through every step. We thoroughly inspect the products for compliance before dispatching them.