Amazon returns skyrocketing: how to deal with the new commission rates

New Amazon return fees

The holiday season is fast approaching, and with it, the inevitable frenzy of online shopping. However, for Amazon sellers, this period is not only synonymous with record profits. Between Black Friday, Cyber Monday, and Christmas, sales peaks follow one another, bringing new challenges. The recent return policies introduced in 2024, which impose higher fees for returns beyond certain thresholds, can significantly impact profit margins.

But how can sellers navigate this complex scenario, and what strategies should they adopt to optimize return management and protect their profitability? In this article, we will explore the impact of the new policies and provide practical tips for optimizing return management.

Return fees 2024: here's how it works

The new return fees, which came into effect on June 1, 2024, represent a significant change for Amazon sellers.

But how do they work exactly?

In essence, Amazon calculates a return rate for each product, based on the percentage of units sold that are returned within the three months following the sale.

For example, the return rate for shipments made in June 2024 covers returns up to August of the same year, and so on.

Once a certain threshold of returns is exceeded, set for each product category, an additional fee is applied for each unit returned beyond the limit.

To give a concrete example, let's say you sold 1,000 units of a product in July 2024. During the following three months, 120 units are returned. If the threshold for that product category is set at 10%, returns exceeding 100 units (10% of 1,000 sold) will incur a return processing fee. In this case, with 120 returns, 20 will be subject to the return processing fee (120 - 100 = 20).

Below, you will find a detailed table with the updated commission rates for each category:

Source

How to reduce the number of returns on Amazon: practical examples

While the new return policies impose clear rules, there are strategies that can help mitigate their impact. There is no magic formula to eliminate returns entirely, but some best practices can make a difference.

Here are a few examples:

• Detailed and accurate descriptions: Well-presented products with clear and transparent communication help guide the buyer and manage their expectations, thereby reducing the likelihood of misunderstandings.

• High-quality images and videos: With high-definition multimedia elements, customers can get a more precise idea of the product's features without needing to rely on lengthy descriptions.

• Secure packaging: A well-packaged product is more likely to arrive intact, reducing returns caused by transport-related damage.

• Efficient and responsive customer service: Every customer is unique. By offering personalized support and addressing their needs, you build loyalty and significantly reduce return rates, creating a positive shopping experience.

How smart logistics can reduce the number of returns

A well-organised logistics system is the cornerstone of a successful online sales business, especially during the critical period that begins with Black Week and continues through to the Christmas holidays. An inefficient system, on the other hand, can create issues that, in today’s saturated and competitive market, are no longer tolerable.

Let’s explore some of the main challenges:

• Delays or errors in shipments: Such inconveniences undermine the shopping experience, causing customer dissatisfaction and a negative perception of the brand.

• Poor traceability: The partial or total lack of visibility over the location of their goods generates anxiety and frustration for buyers.

• Warehouse overload: Ineffective returns management or excess stock can slow down logistical processes, impairing the ability to fulfil orders promptly.

In the dynamic landscape of online commerce, the only constant is change. Amazon’s new return policies remind us of this once again. To succeed and thrive, businesses must focus on flexibility, innovation, and a proactive approach. Investing in research and development and collaborating with strategic partners enables companies to turn challenges into opportunities, strengthening their market competitiveness.