What is going on Amazon sellers?
Or hopefully soon-to-be Amazon sellers
My name is Beau Crabill
leading expert for selling products on Amazon
And in this video, I wanna talk about
everything you should understand about customer returns
for selling on Amazon FBA
Now, if you're a complete newbie watching this video
you should really understand this because this could eat into
your entire profits
It could be a make or break for your business
Or if you are already selling on Amazon
this is gonna be especially important for you because
if you don't even know what's going on with your returns
you don't know how to liquidate them
you don't know how to make them into a profit
that could be destroying your business for growth
So, I'm gonna cover about what is the customer return process
what types of deals or what types of
returns can actually happen within a customer
what can customers not do
A lot of people think, you know
Beau, you know, I've heard that
there's a bunch of scary stories
that customers can just return my products
'cause a competitor's doing it
There's a lot of rules protecting sellers
I'm then gonna cover about, like okay, you know
reading all the reports
Seeing what is a return, what's not a return
and then how you can, you know, help yourself out when doing FBA
So that's what I'm gonna cover, let's get right into it
Let me start off by giving you an example
and why this could be so important for you
Let's say you're selling a product for $50
Let's say you're selling a little miniature table for $50 on Amazon
and your cost is $30
So your cost is $30
Now let's say, after all expenses, fees, shipping, Amazon's cut
you're making $5
You know, 5 divided by 30, that's a 16.6% return on investment
You know, that's not bad
And this could be, you know, a good example
Now I'm not gonna cover over fees and all that stuff
in regards to selling on Amazon
If you want to understand how, like fees get broken down
Because again, that's important for your success
I actually just made a video about it
so you can click above here
Where I'm going up in here
and check out how fees get broken down on Amazon
So you can pause it, check it out, and go from there
But now, let's say you're making $5, so 16% ROI
Now if you sell 100 of these, that would be $500 profit
But let's say out of the 500, you get 5
Or out of the 100 sales, you get 5 returns
Now, and it cost you $30 per unit
so let's say you just lose out on that one
if the customer keeps the product
What if it gets damaged?
All these things that people think can happen
So that would be a loss of $150, right?
So it'll be $500 minus $150, that'll be only $350 of profit
Which really then cuts into your ROI
which, you're only making $3.50 a unit
which is definitely a lower ROI
So, now if, what if you get 10 returns?
Now that's, you know, that's 30
Yeah, so anyway, you can see how it can slowly eat into your profits
So now what I wanna do is kinda explain to you about
the return process
And specifically, what I'll be talking about in this video is for FBA
There's two ways of selling on Amazon
Most people think you can only do FBA, where Amazon handles it
But actually, you can also do FBM
Now there are some benefits of doing FBM
There are more downsides than upsides compared to FBA
But the return process for doing FBM is gonna be totally different
So if you want to learn about FBM returns
I've actually also made a video about that as well
You can feel free to check it up above here again
But now, let me get into the process
So before I get into this, let me explain to you that
a customer cannot return your product
and you're not gonna lose out onto it just because
you know, they don't want it or they make a chargeback
So the cool thing about doing FBA is
if the customer like, you know, says oh, I don't
verify this transaction
They just make a chargeback for whatever reason
Amazon handles that
So, as you are an FBA seller
Amazon handles all the communications with the returns
So a customer cannot just, in any way
give a malicious intent for returning a product
They can return it because, you know
it was the wrong thing they ordered
They can return it because, you know, they didn't like it
You know, that's a valid reason
They can return it because it was the wrong size
They can return it because it did not fit them
But they can't return from malicious intent
saying that you go buy like 20 of 'em
and then go return it because they wanna hurt your account
They're gonna track it down to a credit card
They're gonna track it down to an IP address
They're tracking down this, this, and that
And you will be protected on that
Also, let's say a product does become a return because it is damaged
or there's something missing about it
If Amazon damaged your product
Or if your distributor
You know, I sell name brand products on Amazon, so
You may be a private label seller or a dropshipper, whoever it may be
I don't do any of that, I only sell name brand products on Amazon
And when I'm buying products from, you know, a name brand supplier
I'm shipping it directly from my supplier to Amazon
So when that happens, you know, humans are humans
And if I, you know, I'm sending in thousands and thousands of units
every single month
Eventually, you know, suppliers will lose some stuff
Things get lost, things get damaged, whatever it may be
If Amazon loses or damages your products
they will reimburse you at the selling price minus the fees
So exactly what you would get before
So on that exact example, you're selling a miniature table for $50
Amazon loses 5 units, they'll reimburse you at $35
'Cause your cost was $30 and you have a $5 profit
So that's what they do for you
Same thing for your distributor
If your supplier loses products or damages it
Amazon will reimburse you
Now one little small tip is if you are, you know
getting reimbursements in Amazon
you can actually, you know, upload invoices
That's for another video
But usually, sometimes Amazon can actually sometimes say, hey
we actually lost some of these inventory
where we actually gave you extra
That can happen
So anyway, if a supplier or Amazon loses or damages
you will get reimbursed
So now, let me get into the return process
A customer makes a return for whatever reason
As long as it's a valid reason, then what happens is
it's going to either go back into your inventory
So meaning, if it's in sellable condition
Let's say a customer bought the product
and it was an undeliverable address
I also sell on my own e-commerce site
and we actually had a customer who bought a product from us on Amazon
and then they contacted us on our video game site
I still don't know how they found it
And they said, hey, you know, I didn't get my product
And we checked it out, and we saw that their address was undeliverable
They, like shipped it to, like an apartment building
They forgot to put the, like, Unit 503
So if it's undeliverable, what will happen
Or if the product is in totally fine condition
That they just said, hey, I don't need this anymore
I'm actually gonna go into my Amazon reports
and show you how you can get your reports
and I'll literally show you some customer comments
Some people are returning things because, oh
my son already got it, or he didn't like it anymore
If it comes back and it's in a condition that is sellable
Or Amazon will, if they deem it as sellable
they will put it back into your inventory
You're not even gonna know about it
because again, you're not handling communications
And they're gonna sell it again
So you're protected in many ways
If a return happens, you may get reimbursed
because it was lost or damaged, whatever it may be
If a customer returned it and it's in fine, sellable condition
Amazon will sell it again
So the only times where you could lose out on returns
is in these small cases where a customer buys the product
it's a valid reason, and Amazon did not damage it
your supplier did not damage it
and the product is defective for whatever reason, right?
And in that case, maybe
Or also maybe the customer damaged it
Maybe like, oh man, it was a, I don't know
Or it could just be a bad product
That is where you can get returns
So long story short, I actually made a video about
Like how to handle, like returns, and lower your return rate
But if you're selling products that have, like a really high return rate
Meaning, like there's a bunch of really bad reviews you're gonna get
You know, lost sales, that would be a return
But now, what I wanna do is actually show you those, like returns
and how that process works, and your kinda options for that
So the rest of this video, I'm actually gonna share my screen
and go into the computer
showing you, actually a report from mine, and how you can get those
Okay, so I'm back with my computer
and I have this report right here that
It's breaking down, like okay, are things in sellable condition?
All the returns that happened off my units
Now, as you are selling on Amazon, if you wanna check out your returns
what you should do is, you should go to your Seller Central, you log in
Then if you wanna look at your FBA returns
you're gonna go to returns
Or not returns, you're gonna go to Reports
on the top little bar, I'll have a screenshot here
Then you hit Manage Returns
It's then gonna show up a picture that looks like this
where it's got, like okay, you plug in the date
So then, you could plug in, saying okay, I wanna
review a report from yesterday
I wanna review a report from a week from now or 30 days from now
I did this for a 30-day report
Now, if you're looking to see FBM returns
that's gonna be different
Again, for another video you can check out
Or that's when you can go to Orders, and then Manage Returns
So if you go to Orders, Manage Returns, that's not gonna be for FBA
Now if you click on that, you can then
it may give you to the option of, you know, looking that
But anyway, you want to be looking at the Manage FBA Returns
If you go to Reports, go to Return Reports
and it shows you FBM ones
make sure to click on, say View FBA
So that's where I'm at
Now what I wanna do is kinda explain to you
what this report looks like
I made some things minimized just because for, like privacy
You know, I have people who will try to, like, you know
buy a product and, like leave a negative review in my account
It has no effect at all
We get literally tens of thousands of units sold every single month
It's no issue for us
Anyway
So, we can see here, these are the reports from the customers
So actually, you can scroll down
I'll get the amount in numbers, this is 243 returns
'cause this top line counts as 1
So 242 returns in my Amazon store
We had over, like 3,500 units off this one account right here
So what I'm actually gonna break down to you
So there's 242 returns
You may say, okay, that's a lot
But if you actually look here where it says Detailed Description
So this will show you, it's gonna break down by the return date
So when people return them, the order ID
you know, the SKU, the ASIN, the FNSKU
The product, what it's actually titled, the quantity, how many the returns
The fulfillment center, so where it got fulfilled into
That doesn't really matter to you
And then the only thing that really matters
what I would say, for you, is the detailed
like description saying is it sellable or what happened to it
the reason, and the status of it
So pretty much the status is always gonna be Unit returned to inventory
So, it's actually kinda funny, you can see these customer comments here
So actually, I'll read a couple of these to you right now
Let me actually space this out, this looks a little weird
Alright, so I just deleted this little column here
It was probably a safety thing
But anyway, customer-comments
So this one says not compatible with, to play with Nintendo Switch
So maybe they bought like an Xbox thing
Toy is extremely small for the price
We can actually see here, you know
this came back to be a sellable thing
Okay, just 'cause you're complaining about the price
doesn't mean I'm gonna lose on this
Someone says, Too narrow
Alright, so they tried it on some stuff
and it was too narrow for them
It was, like shoes
So they return 'em, it's back in sellable condition
This one was actually, like, seemed like an issue
That they bought the wrong thing
You know, Item is broken
Okay, so this one, I actually got it defective in this
Meaning, like okay, we actually gotta do something about this
Whatever happened to it, I'll communicate with my vendor
The item is fine, but the box is damaged
So I'll probably be getting reimbursed from whatever supplier
Amazon from that
I just gotta, you know, put it in my invoices
Someone wanted the wrong one, they need the Xbox One version
Accidentally bought the DS one
Sound stopped working, so it was defective
A bunch of interesting, someone says bad quality, whatever
Was purchased in duplicate, okay
I purchased the item twice, great
Shipment undeliverable
Grandson already has this item, why'd you order it?
But anyway, you're gonna get returns, it's kinda funny
Looks cheap, okay
Doesn't work
Wrong version of the game
And you know, on this account, you know, I'm selling
Okay, someone said the hand is broken, really
Okay, maybe it's a toy
Maybe it's an action figure, and they're like, their hand's broken
so that's why
I won't be surprised, you get some interesting things
Yeah, interesting
My grandson already has this game
Yeah, multiple people saying their grandson already has this game
Seems like an excuse
That's what I'm saying, grandma
Is you're making an excuse right there
Anyway, but you're gonna get returns
and it's funny looking at the comments
But the thing I wanna show you here is
Okay, so I have 242 returns
But if I actually do a little computer, a little trick right here and do
What I'm doing, I'm doing Command+F and then typing in sellable
You can see, 163 of those 242 returns are sellable
So what that means is that they go back into Amazon
and they just re-sell 'em again
So that's practically, I'm not losing out at all on that
it just goes right back in my inventory
And then you'll actually see on some of them, if I look down
We'll say like, Amazon damaged
So let me actually go and see
I don't, sometimes it's not called damaged
Sometimes it's called like FC
Yup, so DAMAGED_BY_FC
So this means it's damaged by Amazon FC
So damaged by fulfillment center
And you can see, there's 10 of those
So those 10, I'm gonna get reimbursed for
So now, I have 173 that I don't lose out on at all
Now, the only other thing that I'm not gonna be able to
go over exactly here is off of defective products
where it was damaged
I'm going to have to go into my Amazon account
go into the reimbursements and plug those in
Okay, so I'm gonna be doing the calculations on this
So let's say we got 163 + 10
So that's 173 that are
were definitely not going to be getting, you know
that are actually returns at all
Now, some of the ones that are defective
I'm actually gonna be able to get reimbursed from
So this number I'm about to pull up
242 - 173
On the worst case, there's about 69 returns that I could lose out on
Now I know the number's actually gonna be way less than that
because I'm able to get reimbursed from my suppliers
But let's say it's worst case, 69
We've had over, about, is in the 3,500
So it's in between 3,500 to 3,600 units sold in these past 30 days
So looking at that, if I do, let's say divided by 3,500
That's about 1.9% return rate
Now, the reason I'm actually filming this video
is because, the reason that in the holiday season
or right after the holiday season in January
is typically when a lot of returns happen
So this report is actually from the bulk part of where
the biggest returns happen
So now, let's kinda take that number with 1.9%
which, typically, about my return rate
is around, you know, a third of a percent
So it being 1.9% is actually really high
Now again, it's probably from this, actually report
is actually gonna be way less due to the fact
that I'm able to get reimbursed also from my vendors as well
But let's say we take that number
So 1.9%
Let's go back to another example
Let's say you're selling, you know, a product for, let's say $100
and your cost is $60
And after, you know, all fees and everything, you make $10
So that would, again, be a 16% ROI
So let's say you sell 1,000 products
19 of them would be a return
So if your cost is $60, let's go 19 x 60
You would, that would be $1,140
If you're making $10 per unit
Let's make sure the math is right
So 60 x 19
Yeah, so $1,140
If you're profiting $10 per unit
And let's say, again, you sold 1,000 units
That's $10,000
So if you're looking about that, you're gonna lose out on $1,140
if your return rate is 1.9%
So that's the worst case that could happen for the
biggest part of return season, I would say
So, but now, from that $1,140
they're not gonna be a complete loss
Now, that's how the return process works
This video is definitely getting lengthy
so what I've actually done is create another video
about what to do
and how to actually profit or get those returns liquidated
'Cause now, what I wanna do is, okay, I have 19 returns
you know, per thousand where I wanna get reimbursed for
Or I want to sell them elsewhere
That I could sell 'em on other marketplaces
Or maybe you can sell them at a profit
Understood?
So, that's that for this video
To recap it, I went over on why returns are important
Understanding, okay, if, how it could hurt into your business
How you get the reports, or how you can analyze reports
Looking at it, like okay, you know, what were the customers saying?
Where were their products off, looking at it if they're sellable or not
And now, if you want to understand on how to actually liquidate those
even make a profit from them
or get just cash back from those potential losses
check out this next video that I'm gonna be showing how to
And I'll see you in the next video