The Pros and Cons of Amazon Returnless Refund to Third-Party Sellers

amazon returnless refund

Last updated on March 19th, 2023

Written by Nicasio Co III

The truth about returns is that they are inevitable, whether you have a brick-and-mortar store or an e-commerce shop. At some point, your customers might not like your products, prompting them to return their purchases to you. Unfortunately, this situation is more prominent in e-commerce businesses because buyers cannot see or touch the items personally. 

So when Amazon introduced the returnless refund system in 2017, not all third-party sellers rejoiced with the news. For, after all, they have to suffer from its drawbacks and recalibrate their operations to accommodate this change. However, some Amazon sellers found this new feature useful as it can solve the problems they had in the past, like additional storage and return shipping fees.

If you are still unsure about using this system, you will learn the pros and cons of using returnless refunds on Amazon by reading this article. Afterward, decide whether this is suitable for your business or not.

What is Amazon Returnless Refund?

From the name itself, a returnless refund happens when a customer asks for a refund for the item they purchased without having to deliver it back to the third-party seller. This means that they get to keep the product in whatever condition it may be and still get their money back.

From this information alone, you might immediately think that sellers like you will be on the losing end in this situation. After all, you want to gain more sales and grow your business instead of having losses.

But because Amazon is known to be the most customer-centric company globally, they want their shoppers to always be content whenever they shop on the online marketplace. Therefore, the more they are satisfied with their online shopping experience on Amazon, the more likely they will make repeated purchases and even rely on Amazon for all their necessities.

And as a seller, you will also benefit from their mission statement because now, Amazon has more than 2 billion monthly site visitors and over 200 million Prime subscribers. So while returnless refunds do not seem to favor third-party sellers entirely, you can still make it work to your advantage.

pros and cons with alarm clock

The Pros

Amazon would not have launched this system if they thought it would not provide sufficient benefits to all parties involved. Even though it seems useful mostly to the customers, it can also help the sellers, their employees, and even our planet. Below are some advantages you can gain from using the Amazon returnless refund system as a third-party seller.

1. It lowers your costs and saves you from additional fees

Receiving an Amazon refund request from your buyer is alarming enough for several reasons. First, it can signify that your customer did not like your product, reflecting your company’s failure to deliver the best products and services. But most importantly, you know that it will cause you to suffer losses.

However, you can also consider the returnless refund system as a way to escape the other additional fees you have to bear as an Amazon seller. For example, once a customer chooses to return the item, you are expected to shoulder the shipping cost unless Amazon covers it. In some cases, the shipping fee might even be more expensive than the item’s price.

Afterward, you have to pay employees to inspect the returned product to assess whether it is in sellable condition or not. Once again, this becomes an additional operational cost you might not need in the first place.

Moreover, if you are an Amazon FBA seller, you will have to pay the storage fees once again after the item is returned. Unfortunately, it would take a while for you to sell that product again, incurring more storage costs.

Lastly, some items cannot be resold anymore due to health and sanitation protocols, like food, undergarments, or beauty products. So the only option you have for these items is to throw them away, which can cost you money again.

2. It allows you to customize your rules and conditions

You can turn the returnless refund system to your favor by customizing your rules and conditions. By doing this, you can maximize the benefits of this system to help you avoid unnecessary expenses and scammers.

Amazon allows sellers to automatically issue returnless refunds through the conditions you set yourself. First, proceed to the Returnless Refund tab, where you can add a new rule to set the criteria that the buyers must meet. Moreover, you can offer returnless refunds for specific SKUs by filling up the Returnless Resolution template.

However, you can also resolve the issue through the Buyer-Seller Messaging platform on Seller Central. Ensure that you can settle with the customers as professionally as possible.

3. It increases your customer satisfaction and visibility in the marketplace

Finally, the most important advantage of offering returnless refunds is ensuring and increasing customer satisfaction. As an entrepreneur, you know that while customers might not always be right, you still want to get to their good side. If your buyers like you, they are more likely to purchase from you repeatedly and recommend you to their family and friends.

Therefore, the returnless refund system is a way to keep your buyers happy. Those buyers who request refunds are usually frustrated over the situation and need immediate resolution. And through this system, they get a refund right away and keep the product at the same time, making them satisfied despite the mishap.

Since you have already resolved the issue that skews into their favor, they will not leave negative feedback anymore, affecting your ranking on the search engine results pages (SERPs). So, the fewer negative ratings you have, the higher your chances to be more visible on the Amazon SERPs.

The Cons

Like any other feature or service, Amazon’s returnless refund system also has disadvantages for the sellers, which is still persistent in the marketplace nowadays. So here are the cons you should watch out for if ever you consider offering a returnless refund option.

1. You might lose profit due to excessive returnless refunds on Amazon

As an Amazon seller, your main objective is to boost your sales and scale your business in the long run. However, product returns might hinder you from achieving these goals, especially if you receive too many refund requests from your buyers. Once you refund many customers multiple times, it can cause damages and losses on your end.

To prevent this, you must modify your returnless refund rules, set criteria, and specify the stock-keeping units (SKUs) you want to include in this policy using your Seller Central account.

If you need help setting up your return conditions and specifying the SKUs, you can look for trusted Amazon full account managers to work on these tasks.

2. You will encounter bad actors or scammers

In a returnless refund, shoppers can get a refund and even keep the item, whether they are slightly or heavily damaged. Unfortunately, many people may abuse this system and take advantage of third-party sellers who only wish to do their business on Amazon.

They might claim to have received a flawed product and seek a refund from you. But in reality, the product works well, and the buyer now has a free item. Unfortunately, they can do this scheme to multiple sellers within Amazon.

Because Amazon sees bad actors and scammers as persistent problems in the marketplace, it provides buyers’ records, showing whether they return items excessively or not. If they do, Amazon will give them warnings and might implement the Amazon returnless refund limit.

A woman thinking and looking up

Should You Use Amazon’s Returnless Refund System?

The returnless refund system has its advantages and disadvantages, like other policies in the Amazon marketplace. It can help lower your costs, allows you to customize your rules, and increase customer satisfaction and visibility. But, on the other hand, it can also be the reason for your loss of profit and encounter with bad actors and scammers.

By now, you probably already know what you should do about returnless refunds. It would also be best to determine whether the benefits outweigh the risks or vice versa. Even though the entire policy seems to be against the third-party sellers, you must find a way to make this system work for you instead. 

If you struggle to manage Amazon’s returnless refunds and reimbursements independently, you can rely on Amazon experts from Seller Interactive. They have experienced personnel who can help you when you feel lost in this aspect of your business.

Call them at 1-800-820-3746, or email them at [email protected].

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