Sellers are Charged 20% Admin Fee to Accept Returns on Amazon

Posted on October 14, 2008. Filed under: Amazon, eBay | Tags: , , , |

Recently, I had a customer call me on the phone.  She was annoyed that she had received a package she had not ordered.  I was surprised because this was an order that I had received from Amazon.  The customer stated that she had recently changed her email address and, thus, had not received an email from Amazon notifying her that an order had been placed and shipped.  She was emphatic that she did not go to the Amazon website and order this item.

I explained that I would be more than happy to refund her in full once the item was returned to me.  However, she was insistent that I also pay for her return shipping since she didn’t place an order on Amazon.  Because she had opened the package (that she didn’t order), the package could not be refused which meant that return shipping would have to be paid.  I explained that it was not possible for me to give her a refund through Amazon that was greater than the amount she orginally paid.  I suggested that she call Amazon directly to see what could be done and I would do the same. 

To make a long story very short, the customer taped the package back up and insisted that the post office return it to me as REFUSED which the post office (surprisingly) did.  Once the package was returned, I immediately issued a 100% refund for the customer.

There is something unique about returns on Amazon that is different from returns on eBay paid with PayPal.  Whenever an Amazon seller accepts a return and issues a refund, the seller is charged a 20% administrative fee but the fee is limited to no more than $5 per item, not per order.  If a customer orders and subsequently returns 3 items, for example, the administrative fee would be 20% but not greater than $15 (3 items x $5).  At least with eBay and Paypal, I can get back all my fees except the insertion fee which is only 35 cents for a fixed price item.

So, in this case, with the Amazon customer’s return I was out the original postage plus $5 for a total of about $12 for a customer who “didn’t place the order” at all.  Now, I will say that it was a business decision on my part to issue a full refund.  I could have issued a refund less the postage and/or I could have charged a restocking fee but I chose not to do either of those things.  In any case, I am out an administrative fee of $5 whenever an Amazon order returns an item that is a big ticket item, whether it is due to buyer’s remorse or any other reason.

It is a cost of doing business on Amazon and although I do not like being penalized for a “mistake” made by a buyer or by Amazon, I can live with it.  It is irritating but not a deal breaker.  However, it sure does make me appreciate the eBay & PayPal way of dealing with customer returns where I am not penalized for “doing the right thing”. 

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10 Responses to “Sellers are Charged 20% Admin Fee to Accept Returns on Amazon”

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I don’t have the same issue with returns on Amazon using FBA and that may be because Amazon handles all returns. They have never charged me an Admin fee.

May be another benefit for using FBA.

Randy, I am learning about a few “advantages” Amazon gives to FBA orders other than just the obvious free shipping benefit.

Not me. I did two refunds earlier this year. I just went back to my Amazon Payments account to check this out. I refunded the buyer the full amount in both instances, and I was not charged any fee. Is it a new policy? My refunds were in March and April 2008.

Mary Ann, it may depend on your particular circumstance. I use Seller Central and I do not use FBA.

The URL where you can read more about refunds and the 20% fee is at https://sellercentral.amazon.com/gp/help/help-page.html?ie=UTF8&itemID=21531 (you must be logged in)

The “admin” fee likely to cover the return shipping costs. eBay sellers that think Amazon will be the next big thing need to realize customer service is important. The scenario you describe above is not uncommon and your retail prices need to reflect the overhead of paying for return shipping and refunding original shipping cost. In computers and electronics, the margins are too thin for micro businesses to compete in those categories on Amazon.

This lady needs to learn that when she receives something she didn’t order, legally (in the U.S. anyway) it’s hers to keep without paying for it.

This is nonsense. I’ve processed hundreds of Amazon refunds and never been charged any administrative fees. You are really doing everyone a disservice by posting this type of misinformation.

Jeb, if you do not have a Seller Central account then perhaps you are not charged the fee. According to the URL I previously referenced – https://sellercentral.amazon.com/gp/help/help-page.html?ie=UTF8&itemID=21531 (you must be logged in), Amazon specifically states:

“When reimbursing you for a customer refund, Amazon Services retains 20% of the original order-related-fees, up to a maximum of $5, for each line item in the refund. This amount is held back as an administrative fee.”

If you do not have a Seller Central account and are not being charged this fee then that is great news for you. I do have a Seller Central account and I am charged this fee exactly as the Amazon website states.

AMEN brother- I am noticing the scamming of sellers by Amazon with return fees. Dinging seller metrics for CUSTOMER initiated cancels, etc.
It seems that Amazon is SO buyer friendly, they do not care about sellers at all. I guess that is their call but over time it will probably hurt them as they make a TON of $ off seller commissions and may not be so profitable if all good sellers jump ship.

Obviously, this is a very old thread. I would be interested in knowing where sellers stand now in their relationship with Amazon. I am not a business, I was simply treating Amazon as another e-bay to sell my used professional photography gear and was screwed over by a Buyer. Long story short, Buyer simply wanted to borrow my $1,500 lens and even admitted it, which Amazon acknowledge in their e-maisl to me (posted at the link below).

Some posted a very smart statement for micro sellers. You have to build in the costs of returns, etc into pricing to survive. Micro sellers simply do not do enough volume to compensate for this fact. Plus, Amazon clearly favors Buyers in evey instance. I received hundreds of e-mmails from small sellers and some small business sellers who share my view and experiences in dealing with Amazon as a seller.

Read my post and then consider whether you should sell on Amazon. http://blog.dassaro.com/2011/08/25/amazon-seller-nightmare-part-ii/


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