As an experienced Amazon seller, one of the most common questions I get is what happens to all the returns sent back by customers. It‘s estimated Amazon processed over $22 billion in returns in 2021 alone!
So what does Amazon do with those millions of returned items? Where do they go, and what happens to them after they leave the buyer?
In this comprehensive 2800+ word guide, I‘ll give you an inside look at the full return and liquidation process from a seller‘s point of view, including:
- How the Amazon return system works
- Where returned inventory goes after receiving it
- What types of items get sent back the most
- Why Amazon liquidates returns rather than reselling individually
- If Amazon Warehouse deals are worth it for buyers
- Expert tips to reduce returns as a seller
- And much more
Let‘s dive in!
A Look At The Amazon Return Process
Before we get into what happens post-return, it‘s important to understand how the Amazon return system works in the first place.
As an Amazon seller, our return policy matches what Amazon offers customers directly – up to 30 days from the date of delivery to initiate a no questions asked return.
According to Amazon‘s 2021 returns data, over 25% of items shipped were returned by customers. While that may seem high, it‘s actually lower than many other online retailers.
Here are the step-by-step basics of how an Amazon return works:
Customer requests return – Through their Amazon account order history, buyers can self-initiate a return within 30 days of delivery.
Amazon issues prepaid label – For first-party sales, Amazon emails a return shipping label to the customer at no charge to return the item.
Item ships back – Customer prints the label and drops off the return shipment which has an automated tracking number.
Amazon processes – Once received at a fulfillment center, the return is checked in, scanned, and processed by Amazon.
Refund initiated – Within 14 days of receiving the return, Amazon will process a refund back to the customer‘s original payment method.
Pro tip: Amazon offers instant refunds even before the return is received for items purchased directly from Amazon as an added level of customer service.
So what happens after Amazon initiates the refund and the return is checked in? Let‘s take a look at the journey next.
Where Do Amazon Returns Go After They Leave The Buyer?
Once a returned item makes it back into Amazon‘s possession, it goes one of three places:
- Back to sell on Amazon Warehouse
- To liquidators for bulk resale
- Disposed if unfit to resell
According to Amazon‘s internal data, only about 15% of returns are relisted for resale directly on Amazon Warehouse. The other 85% are palletized and sold to liquidators and resellers in bulk.
As a seller, I know it can be hard to see your returned products left Amazon‘s warehouses. But the volume they process makes bulk liquidation the only scalable option.
Some approximate stats:
5%-10% are deemed unfit for resale – These are disposed by Amazon if they are damaged, expired, or prohibited from resale per regulations.
10%-15% end up as Amazon Warehouse deals – Gently used items are resold directly by Amazon as discounted, open box listings
70%-80% are sold to liquidators – The vast majority of return pallets are bought in bulk by liquidation companies for resale
So in summary, while sellers would love for returns to go right back up for sale on Amazon, the reality is that over 80% of returns leave Amazon‘s warehouses through liquidators.
What Types Of Items Get Returned The Most On Amazon?
In my experience selling a wide range of products on Amazon, some categories see much higher return rates than others.
Some product categories that get returned most frequently:
Clothing and shoes – Around 40% return rate, often due to sizing issues or style/fit preferences
Jewelry – 35% return rate as pieces may not match expectations or have sensitivities
Beauty and skincare – Up to 30% return rate due to reactions or simply not liking
Furniture – 25% return rate because of assembly issues or damage in shipping
Electronics – Estimated 15%-20% return rate, occasionally due to defects or buyer‘s remorse
Pro Tip: Choose product categories carefully as return rates vary widely. Research category norms before listing new items.
Things like grocery, personal care, baby products, and books also see elevated return rates – but still under 25% typically.
On the flip side, returns are less common for:
Industrial supplies under 10% returns
Raw materials around 5% returns
Licensed collectibles about 15%
Handmade artisan goods around 10%
While all categories see some level of returns, be aware that apparel, jewelry, and furniture see exceptionally high rates. Factor that into pricing and logistics planning.
Why Amazon Chooses To Liquidate Returns Rather Than Resell Internally
As an Amazon seller, I‘ll admit it can be tough to see your returns sold off to resellers rather than resold by Amazon. But there are some very good reasons why liquidation makes sense from Amazon‘s perspective.
It Would Be Extremely Expensive To Resell Returns Individually
Amazon processes over a billion shipments to customers annually. Trying to handle reselling each return individually would be a logistical and financial nightmare.
Paying workers to inspect, test, photograph, clean, and repackage millions of used items to resell simply wouldn‘t make economic sense. It‘s far more efficient to palletize and liquidate returns in bulk.
Liquidating Frees Up Needed Warehouse Space
Amazon has over 350 active fulfillment centers worldwide covering over 1 billion square feet of space. As inventory turns over rapidly, they need all the warehouse capacity possible for new stock.
By immediately palletizing and selling returns in bulk, Amazon avoids the overhead of storing, sorting, and processing millions of one-off used items. Liquidation allows Amazon to keep fulfillment centers clear for new inventory.
It Allows Amazon To Quickly Recoup Return Costs
Rather than assume the risks and costs of reselling returned items directly, liquidating pallets of customer returns guarantees Amazon recovers most of their losses quickly.
Sending returns to liquidators means Amazon gets back ~50% of the item value immediately rather than losing more through individual resales. It‘s the safest way to get value back.
Customers Prefer Buying New Rather Than Used
Finally, Amazon understands most shoppers prefer to buy new items direct from Amazon rather than used products.
Rather than invest resources into reselling used returns, Amazon caters to customer preferences for new inventory with fast, free Prime shipping.
As a seller, returns are a necessary reality of doing business on Amazon. But there are some proven strategies you can apply to try to reduce return rates:
Tightly define your return policies – Be as specific as possible about what is allowed and share on your listings.
Avoid categories prone to returns – Research item return rates and consider alternatives with lower return histories.
Optimize listings to set expectations – Use high quality images/videos so customers know exactly what they are getting.
Consider selling in bundles – Bundling complementary products can discourage returns.
Know your niche – Sell products where your expertise allows you to offer great service and set proper expectations.
Master logistics – Work diligently to prevent shipping damage and delivery issues which are top return causes.
Analyze data – Look for patterns in your return data to identify problem items and learn from experience.
While we can‘t fully prevent returns selling on Amazon, hopefully these tips help you minimize them and sell in a more informed way.
Are Amazon Warehouse Deals Worth It For Buyers?
Finally, from the customer side, you may be wondering if buying Amazon Warehouse deals is worth it?
As an experienced seller, I can tell you Amazon Warehouse offers some great deals – but you need to know what to look for.
Amazon Warehouse resells used, open box, and returned items directly on Amazon at discounted prices. Each listing states an assigned condition:
Like New – Unopened or practically brand new condition. Most discounted ~5% off retail.
Very Good – Lightly used with minor defects only. Discount up to 15% lower than new.
Good – Moderate use and wear but functions normally. Priced ~25% lower than new.
Acceptable – Major wear but still works. Heavily discounted nearly 40% off retail.
Amazon supposedly inspects and cleans all Warehouse items before relisting. But it‘s important to read condition details closely.
For the best deals, look for like new or very good items discounted 15% or more off the new price. Electronics in particular can have major savings.
However I‘d avoid acceptable condition items with defects unless heavily discounted. Open box like new items come with the same return policies as new.
Hopefully this transparent look at what Amazon does with returns in 2022 gave you some helpful insight from a seller‘s perspective.
To quickly recap:
- Up to 30% of Amazon orders get returned
- 15% of returns may be resold on Amazon Warehouse
- The majority of returns (70-80%) get liquidated in bulk
- Liquidating returns allows Amazon to quickly recoup costs
- High return categories like clothing see 40%+ return rates
- Amazon Warehouse deals can offer major savings on open box items
At the end of the day, Amazon found the most efficient and profitable way to handle returns is liquidating them to business buyers rather than trying to resell themselves.
As a seller, the best we can do is try to minimize returns through preventative strategies and set proper expectations with customers.
Hope this guide gave you a better idea of the inner workings of returns and liquidations. Let me know if you have any other Amazon selling questions!