How Amazon's New FBA Returns Processing Fee Affects You

No one likes returning products: not the customer, not Amazon, and especially not Amazon sellers. But starting this summer, Amazon FBA sellers have more reasons to be wary of returns. Amazon is once again updating its fee structure for FBA users, with extra fees for returns over a certain amount.

So how does the Amazon returns processing fee work? How are they calculated and what can you do to avoid them? Let's take a closer look at what FBA sellers need to know.

What is the Amazon Returns Processing Fee?

Effective June 1, 2024, Amazon's new returns fee charges FBA sellers an extra amount for returns. This fee is calculated based on the product's monthly return rate, plus category, size, and weight (you can read specific details in the next section). The return rate is the percentage of shipped units in a given month returned over that month and the subsequent two calendar months. The return processing fee will be charged between the 7th and 15th of the third subsequent month.

Luckily, there are some exceptions to Amazon's new returns fees. Namely, products in Apparel and Shoes — the two most common for returns due to sizing issues — are exempt. If an individual product ships less than 25 units per month, it too is exempt. Finally, products in the New Selection program are exempt for the first 20 returns after the listed threshold.

Related reading: Amazon FBA Fees Guide

How is Amazon's Returns Processing Fee Calculated?

Amazon's recent returns processing fees are calculated with four different factors:

1. Product Size — the size tier based on product dimensions and dimensional weight
2. Product Weight — the product's shipping weight
3. Return Rate — the percentage of products shipped in a given month that are returned in the next three months
4. Return Rate Threshold — the allowable return rate of a product category before the returns processing fee goes into effect

The returns rate threshold can get confusing, so let's break it down with an example. Let's say you sell 100 watches in June. By the end of August, thirteen of those watches have been returned. The return rate threshold for watches is 12%, which covers the first twelve of the thirteen returns. That means the seller is only charged a returns processing fee for one watch, based on its weight and size.

Different product categories have different threshold percentages. You can view the entire list for American merchants in Seller Central. To give you a heads-up, here are some of the categories with the lowest (most at-risk) threshold percentages:

• Beauty, Health, and Personal Care (5.5%)
• Business, Industrial, and Scientific Supplies (6%)
• Fine Art (5.6%)
• Grocery and Gourmet (2.9%)
• Media: Books, DVD, Music, Software, and Video (5.1%)
• Office Products (4.4%)
• Toys and Games (4.7%)
• Video Games and Gaming Accessories (6.5%)

Check the thresholds of your top product categories to see how you will be affected by the new Amazon returns processing fee. Product categories that are not listed or products that don't fit into the common categories — the "everything else" category — have a threshold of 4.8%.

Changes to the Returns Insights Dashboard

To help FBA sellers keep returns as low as possible and reduce the returns processing fee, Amazon has added a few improvements to the Return Insights dashboard on the FBA Returns page in Seller Central (under the Inventory tab).

Specifically, new additions include:

• the number of total returned units
• the return rate percentages applicable to your products
• the standard return rate thresholds for a category
• the number of returned units over the threshold (to which the new fee applies)

The FBA Returns page is updated three times a week and accounts for the entire month's returns, with an option to view past returns.

How Amazon Sellers Can Reduce Returns

Naturally, the new Amazon returns processing fee should motivate you to reduce your return rates. Although some returns are unavoidable, others are not. The best defense against Amazon's return fees is understanding what makes customers return products and taking preventative action against future returns.

First, you want to address technical issues. For example, if you have returns caused by quality defects, you might want to remove those products from your lineup altogether. If customers complain that the product is not how it appeared online, you can update your product photos and videos.

If returns are caused by people who don't understand how to use or misuse the product, you could add more detailed instructions to the product page. An instructional video demonstrating how to access certain features can also do wonders, as it's easier to show how something works rather than explain it in text.

Last, customer service can go a long way in reducing returns. If you communicate promptly and sympathetically with customers, you can address their problems and sometimes remove the need for a return altogether. Misunderstandings cause some returns, so a little extra communication can effectively clear things up.

You can use FeedbackFive to automatically exclude refunded orders from receiving review requests. See how it works with a free trial!