One of the most popular features of Amazon is its free and easy returns. Buy something you don’t love? Simply print out a label and take it to your nearest UPS drop-off or Whole Foods, and you’re done. In many cases, you don’t even have to package it up yourself.
But what’s great for the customer is not always ideal for the brand, as anyone who has dealt with returns knows. If you are unfamiliar with the process, you might think that returns head back to an Amazon facility, where they are restocked into the warehouse. That would be nice, but it’s not even close to the truth. In fact, if you are a Fulfilled by Amazon seller, Amazon simply takes all return packages and redirects them back to you.
How do they arrive? In the exact state that the customer sent them. If they were packed in wads of newspaper, that’s how the brand receives them. If they are missing a cord or the original box, too bad. And, even if you have the best products in the world, if you sell a lot on Amazon, you can expect to get hundreds of such packages dropped off at your doorstep every year.
As we often say at Recom, Amazon brings a lot of complexity, much of it unexpected by brands that are accustomed to traditional e-commerce or retail. In the case of returns, they often have little choice but to send them to a landfill, which is not ideal for any number of obvious reasons. As a result, brands that sell on Amazon should have processes for salvaging whatever they can from these unwanted products. They need a way to do quality assurance, sort into sellable and non-sellable returns, and hopefully get them back into an Amazon warehouse.
This is not easy, but it’s the sort of tricky detail that you need to get right if you want to maximize your returns on your Amazon investment. It’s a much less sexy and interesting task than making sure you have A+ pages or a good brand store, and one that’s probably well outside the core competency of most brands. Nonetheless, you don’t want to be losing money around the margins because your customers are sending back a significant percentage of what they buy, and you have no good process for getting them back on the digital shelf.
What surprising to me is that even though many brands I talk to are fully aware of the problem, it’s something that they rarely bring up in discussions with us. This is a big miss. Returns are a major consideration that can have a substantial impact on your margins and ultimately your success on Amazon.
All retail channels have complexity, but Amazon is always a special case. The sheer volume and requirements — not to mention quirks — that you need to navigate can be daunting. But among all of them, it’s a good idea not to forget returns and ensure that your organization or your Amazon partner has a solid return team in place.