Maintaining your seller rating and healthy profit margins, all while providing an excellent customer experience and adhering to Amazon's guidelines, can be challenging! It is no surprise that, as a result, most sellers will encounter errors that end with their buyers receiving a refund.
In order to avoid this, you must have a full understanding of Amazon's fees, specifically Amazon restocking fees.
Knowing when and how to charge Amazon restocking fees can save you a considerable amount of money. If this is something you are uncertain about, don't worry - we have the answers!
Within our informative guide, we shall cover the following:
- What a restocking fee is and its purpose.
- How to calculate a restocking fee.
- Types of return requests that you may encounter.
- How to charge a restocking fee.
- How to reduce return requests.
- How to handle restocking fee disputes.
What is The Amazon Restocking Fee?
The Amazon restocking fee is charged to the buyer, which is then applied to returned inventory that the buyer will send back to you in exchange for a refund. A seller will charge a restocking fee for qualifying request returns.
Put simply, an Amazon restocking fee is an alternative means of describing a partial refund that, for whatever reason, doesn't warrant a full refund request.
The restocking fee charged is dependent on the product's condition upon return.
Source: amazon seller forums
Admittedly, a lot of Amazon's policies are customer-oriented, so it makes sense that the customer receives a service that favors their overall experience and satisfaction with Amazon, meaning that, more often than not, the buyer will receive a full refund.
However, Amazon is also conscious of times when sellers shouldn't be held accountable for the cost of buyer returns.
Restocking fees are designed to protect sellers when those circumstances arise, allowing you to keep more of the item's price.
What Purpose Does an Amazon Restocking Fee Serve?
The purpose of an Amazon Restocking Fee is to cover the costs of inspecting and repackaging the returned item.
This restocking fee will also cover the costs of any loss in value to the items returned, which may occur during the return process. Loss in value can cover visible damage incurred to your item or if it hasn't returned in its original condition (if part of the item that was originally shipped is missing, etc).
There are a few things you should know about Amazon's Restocking Fees:
- Amazon's Restocking Fees on items returned do not include the return shipping costs, and you can't charge your customers for that.
- Amazon automatically processes the restocking fee for all FBA (Fulfillment by Amazon) sellers. FBM (Fulfillment by Merchant) sellers, on the other hand, are responsible for handling their return requests manually from their Seller Central account.
How Much is the Amazon Restocking Fee?
The Amazon Restocking Fee is charged based on the item's original cost.
Your item's price, and therefore your restocking fee, varies depending on the type of item, how it was returned, and the condition in which it was returned.
Source: which.co.uk/news/
Ultimately, this means that Amazon Restocking Fees have no definitively set price.
If you are in compliance with Amazon's return policy guidelines, the restocking fee will vary between 20% to 100%. It is worth noting that most cases don't qualify for the full percentage.
However, most Amazon sellers qualify for a restocking fee of up to 50%.
How are Amazon Restocking Fees Calculated?
Here is what you can do to calculate your restocking fees.
- Determine the original price of the item.
- Find the restocking percentage.
- Then use the following formula:
Restocking Fees = (Purchasing Price x Restocking Percentage) ÷ 100
For example, this would then look like:
(120 x 30) ÷ 100 = 36
Restocking Fee = $36
Types of Return Requests
We shall now explore the different types of customer returns and their accompanying restocking fees, all of which must have a valid reason behind their return request.
Non-Media Items
When non-media items are returned in their original condition within the return window, it is most likely that the buyer has changed their mind about their order. In this case, the buyer will often offer reasons for their change of heart, such as the item is no longer needed, or the order placement was accidental.
In this circumstance, you can charge up to 20% of the item's price.
Source: expertreviews.co.uk
Similarly to the first instance, the buyer has changed their mind and has returned the item within the return window. So, what's the difference?
The difference in this scenario is that the returned item has obvious signs of damage or is different.
With a case like that, you can charge up to 50% of the item's cost.
Books
In order to charge restocking fees for books, the buyer must return the book within the return window, but there are clear signs that the book has been used (the book has a creased spine, for instance).
If this is applicable, you can charge up to 50% of the book's cost.
Media Items
With media items such as DVDs or video games, you are eligible to charge restocking fees if said media item is returned within the return window but has been opened.
Source: https://www.telegraph.co.uk/tv/0/death-of-dvds-disney-australia/
For media items that fit those criteria, you can charge up to 50% of the item's price.
Software
If a buyer requests a refund for software that they purchased from you and has returned it within the given time, but it has been used or activated, their refund amount will likely be $0.
That's right, you will be entitled to up to 100% of your software's price.
Other Requests
There are a few instances where a restocking fee can't be charged.
Some of these instances include when what a buyer receives isn't the same item that they ordered.
Another instance could be when the buyer refuses delivery due to damage incurred to the item during the shipping process. However, in this case, you may be able to claim a refund from your carrier or insurance company.
When Can You Charge an Amazon Restocking Fee?
To summarize, these are some of the scenarios when you can charge restocking fees.
- When the customer has changed their mind about their order.
- When your product is available somewhere else and at a better price.
- When the items were bought by mistake.
When Can't You Charge an Amazon Restocking Fee?
To summarize, there are some of the scenarios when you can't charge a restocking fee.
- When an order has been cancelled but hasn't yet been shipped.
- When the refund has been verified as the fault of the seller.
- When the item received doesn't match its listing description.
- When your customer receives a damaged, partially missing or defective item.
- When the wrong item was shipped.
How to Charge an Amazon Restocking Fee
- Go to the Manage Orders menu in the Orders tab on Seller Central.
- Navigate to the order you wish to refund.
- Click on the Refund Order button. This can be found in the Action column.
- In the Refund Order window, you must specify the reason for the return request and the amount you wish to refund.
- Deduct any restocking fee you wish to charge before entering the total refund amount.
- Click the Submit Refund button.
How to Reduce Return Requests
When restocking fees are charged, both the seller and the buyer are likely to be dissatisfied. When customers return items, their customer experience could be jeopardized, which can be devastating for your seller rating over time.
Fortunately, there are ways that you can prevent the need for a return request and ensure customer satisfaction.
Offer High-Quality Images and Videos of Your Products
Including high-quality images and videos allows buyers to see clearly what they are purchasing.
Not only do they provide benefits for your customers, but clear images and videos also allow you to stand out amongst your competitors!
Here are some tips to ensure your images are suitable enough to prevent returns.
- Avoid using flash.
- Ensure your media isn't blurry or pixelated.
- Capture images/videos that showcase the top, bottom and sides of your products with detailed close-ups.
- Don't include Amazon logos, trademarks or badges.
- Utilize a white backdrop.
- All images must be between 500 px and 10,000 px on their longest side.
Above all, the best way to decrease the chance of returns is to provide your customer with a 360° view of your product.
Source: https://1worldsync.com/resource-center/blog/the-guide-to-amazon-360-product-photography/
Click here to see the full list of Amazon's image requirements.
Provide Detailed Product Descriptions
Some features can't be portrayed through videos and images alone. This is why clear, detailed product descriptions are so important.
An effective product description limits the number of ill-made purchases because a customer who knows exactly what they are getting is less likely to send their order back to you.
In order to create a good product description, you should provide clear information about the key features of your product. Don't hesitate to go into detail about the product's dimensions, colour options, materials, brands, etc.
Check the example below to familiarize yourself with an effective product description:
Source:amazon.co.uk/Lefity-Electric-Handheld-Massager-Charging
As you can see above, the seller has utilized bullet points to organize their product features neatly and goes into great detail about crucial aspects of the product like battery type and size, charging ports and additional attachments.
If your product descriptions are thorough, clear and concise, you decrease the probability of receiving customer returns.
Utilize Appropriate Packaging
Packaging your products securely and using the appropriate packing materials can reduce the chance of product damage.
Whether you use slightly larger boxes to accommodate cushioning materials or secure your product with things such as plastic wrap or packaging foam, the more protection you have for your product, the more likely your item will be received in perfect condition.
Click here to become an expert on suitable packaging materials!
Ensure On-Time Shipping and Delivery
Every time you receive an order, you must make sure the product is dispatched on time.
When it comes to shipping, there will always be elements of the shipping process that are beyond your control, but what you can control is when you dispatch your product.
If an order arrives late, there is always a chance that the customer will return your product.
We recommend that you use tracked services to protect you against claims that a customer's item hasn't been received.
Note: for FBA sellers, Amazon manages your order fulfilment for you, so all you need to do is keep track of your inventory consistently.
Use Feedback
A customer's feedback is essential to improving your service and products.
Use their reviews and feedback to identify the problem that led to your product being returned. By working towards a resolution, you will minimize your return rates.
Additionally, getting in touch with your customers directly shows that you care about making improvements and ensuring they still have a positive experience with you.
How Amazon Handles Restocking Fee Disputes
Sometimes, return requests are inevitable, regardless of the methods you use to prevent them. The result is that you may enter into a restocking fee dispute with your customers.
Don't worry; this sounds scarier than it actually is and is relatively easy to navigate when you know what you're doing.
Disputes are simple to resolve as long as you involve Amazon's customer service team and have all of the relevant documents and evidence organized to support your case.
After you contact Amazon customer service and explain your situation, their team will help you resolve your dispute professionally.
Note: the review team may take a few days or weeks to conclude their investigation, but they aim to make the customer and the seller happy by the time the dispute has been resolved.
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