Handling Amazon FBM Returns: A Step-by-Step Guide to Minimize Losses

The FBM Returns Challenge

As an FBM seller, you're responsible for returns. Unlike FBA where Amazon handles everything, you need a system that:

• Minimizes costs
• Maintains customer satisfaction
• Protects your seller metrics
• Recovers value from returned items

Amazon Return Policy Requirements

What Amazon Mandates:

• 30-day return window (minimum)
• Prepaid return labels for many categories
• Customer-friendly process
• Quick refunds

Your Flexibility:

• Return label cost handling
• Restocking fees (category dependent)
• Return address location
• Processing timeline

Return Types and Handling

Setting Up FBM Returns in Seller Central

Step 1: Configure Return Settings

Settings → Fulfillment by Merchant

Set return address

Configure automated authorization

Step 2: Return Label Strategy

Option A: Prepaid Labels (Amazon Default)

• You pay for return shipping
• Best customer experience
• Required for many categories

Option B: Buyer Pays (When Allowed)

• Customer pays return shipping
• Lower costs for you
• May hurt reviews

With Atoship Return Labels:

• Generate labels at discounted rates
• Pay-on-use (only charged when scanned)
• Track return shipments

The Return Process Flow

Customer requests return (Amazon)
      ↓
You authorize return (auto or manual)
      ↓
Generate return label (Atoship)
      ↓
Customer ships item
      ↓
You receive and inspect
      ↓
Process refund
      ↓
Restock or dispose

Minimizing Return Shipping Costs

Use Atoship for Return Labels:

Pay-on-Use Strategy: Generate labels but only pay when used. 40% of return labels are never used (customer keeps item, forgets, etc.).

Inspection and Grading

Create a grading system:

Refund Strategies

Full Refund (Required When):

• Item not as described
• Your error
• Defective product
• Damaged in shipping

Partial Refund (When Allowed):

• Changed mind + restocking fee
• Missing components
• Used beyond reasonable

Refund Without Return: For low-value items, consider refunding without requiring return:

• Saves return shipping cost
• Saves processing time
• Often cheaper than handling return

Calculator:

Item value: $15
Return shipping: $5
Processing time: 15 min @ $18/hr = $4.50
Resale value: $8
Total cost to process return: $9.50 + lost margin
Refund without return: $15
If item value < $25, often better to refund and not request return

Reducing Return Rates

Prevention is cheaper than processing.

Track your return reasons:

• Export return data monthly
• Identify patterns
• Fix root causes

Handling Return Abuse

Warning Signs:

• Multiple returns from same customer
• Returns right before window closes
• "Not as described" but item is fine
• Wardrobing (use and return)

What You Can Do:

• Document with photos
• Report to Amazon if fraudulent
• Block repeat abusers (limited)
• Accept some abuse as cost of business

Return Metrics That Matter

Track These:

Automation with Atoship

Automated Return Workflow:

Return request triggers webhook

Atoship generates return label

Label emailed to customer

You're notified when shipped

Tracking updates automatically

Setup: Settings → Amazon Integration → Enable Return Labels

Real Cost Analysis

Monthly Return Scenario:

Orders: 500
Return rate: 6% = 30 returns
Average item value: $40
Return shipping (at $5 each): $150
Processing labor (15 min each): $135
Lost margin on returns: $180
Non-resellable items (20%): $240
Total return cost: $705/month = $1.41/order
With optimization:
Atoship labels save 25%: $37.50
Faster processing: $20
Better QC reduces returns 20%: $141

Optimized cost: $506.50/month
Monthly savings: $198.50

Returns for Different Categories

Clothing/Apparel:

• Highest return rates (15-30%)
• Size issues dominate
• Must accept returns
• Consider offering exchanges

Electronics:

• 8-15% return rate
• Open-box resale viable
• Check functionality before reselling

Home/Kitchen:

• 5-10% return rate
• Damage in shipping common
• Improve packaging first

Creating a Return SOP

Standard Operating Procedure:

Day 1: Receive Package

• Log arrival
• Open and inspect
• Photo document condition
• Grade item

Day 2: Process Refund

• Issue appropriate refund
• Update inventory
• Note for quality tracking

Day 3-5: Relist or Dispose

• Relist resellable items
• Process unsellable items
• Update reports

Tools and Supplies

Returns Station Setup:

• Dedicated workspace
• Good lighting (for photos)
• Scale for reweighing
• Computer with Seller Central
• Grading criteria posted
• Supplies for repackaging

Action Plan

Week 1:

• Audit current return process
• Calculate true return costs
• Set up Atoship return labels

Week 2:

• Create grading system
• Train team on SOP
• Start tracking reasons

Week 3:

• Analyze return patterns
• Implement prevention strategies
• Optimize listings

Ongoing:

• Review metrics monthly
• Adjust processes
• Reduce return rate

Start Saving on Returns

Returns don't have to destroy your FBM margins. With efficient processes and discounted return labels through Atoship, you can:

• Cut return shipping costs 25%+
• Process returns faster
• Recover more value from returned items

Set up Atoship returns today and start minimizing your return losses.