The Amazon Refunds/Returns/Reimbursements Cycle

Customer Refunds, Customer Returns, and Seller Reimbursements

 

  • The Stages Of A Refund Cyle
    • When a customer is not satisfied with his purchase, the following will happen
      • Amazon will refund the customer
      • The customer will be required to return the unsatisfactory item to an Amazon Fulfilment Centre
      • Once the unsatisfactory item is received at the FC, Amazon will determine whether the item returned is in a sellable condition
        • If it is in a sellable condition, Amazon will return the item to your inventory as fulfillable and you are not entitled to any compensation
        • If it is not in a sellable condition, Amazon will decide whether they will take responsibility for the damage
          • If Amazon do not take responsibility, the item is returned to your inventory as unfulfillable and you are not entitled to any compensation
          • If Amazon do take responsibility, the item is disposed of by Amazon and you are entitled to a reimbursement

 

  • Summary Of The Cycle Milestones
    • The Customer obtains a refund from Amazon
    • The Customer returns the unsatisfactory item
    • The item is returned to your inventory (either in a fulfillable or an unfulfillable condition) and no compensation is due, OR
    • The item is disposed of and you are due a reimbursement

 

  • What Are My Reimbursement Options
    • When your inventory is either lost or damaged when it is under Amazon’s control (damaged by an Amazon partnered carrier, in the fulfillment center, or during delivery to a customer), Amazon will either:
      • Replace the item(s) with one with the same FNSKU, or
      • Pay you the evaluated replacement value of your lost inventory, less any applicable FBA and Selling on Amazon fee
    • As a seller, you have no say as to which option is chosen to reimburse you, it is purely at Amazon’s discretion

 

  • How Is A Refund Condition Settled?
    • A refund is settled (i.e. considered reimbursed) by either:
      • Returning the returned item to your inventory, in a sellable or unfulfillable condition, OR
      • Reimbursing you by returning a fulfillable, identical item as the returned item.
        • Amazon are able to do this even when your items are private label! Read on later …
      • Reimbursing you by compensating you in cash

 

  • When Reimbursement Is Due, How Soon Can I expect To Receive It?
    • A customer is required to return an unsatisfactory item within 30 days after he has requested a refund
    • Upon receipt of the item, Amazon will require another 15 days to process the reimbursement
    • Therefore, there is no point in looking for reimbursements any time before 45 days has passed since the customer refund date

 

  • Are there Statutes Of Limitation For Reimbursements?
    • Yes! You cannot claim reimbursements for refunds which happened over 18 months ago

 

  • How Can Amazon Reimburse Me In Kind When My Product is PL?
    • Imagine the following situation:
      • Amazon lose some of your inventory during inbound or transfer processing
      • After a while, they reimburse you in cash for the loss
      • Later, they find the lost inventory
      • Amazon could put the found items back in your inventory and claw back the reimbursement they paid you, OR
      • They could keep the found items separately and keep these units for the purposes of reimbursing you in kind instead of in cash in the future

 

  • How Much Will Amazon Reimburse Me?
    • If they reimburse you in kind, it is a simple equation
      • The unit returned to your inventory accounts for full compensation, but you still need to sell the unit again
    • If they reimburse you in cash
      • They will apply all sorts of rules to come to a ‘fair’ compensation cash amount (replacement value)
      • See this article for some details
      • They will typically reimburse a percentage of the order amount – never the full order amount.
        • This may impact your margin for that returned order
        • It is important to know whether you are still making a profit and whether the profit covers at least your COGS
        • Remember that Amazon will have refunded (in most cases – depending on product category) your referral fees some FBA fees

 

 

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