Easy returns cause big trouble for Amazon sellers, but return rates show signs of slowing
Returns on Amazon are free and easy for shoppers, but they're risky and expensive for the small businesses that sell a majority of the goods on the world's biggest e-commerce site. Returns have driven some sellers to exit the popular Fulfillment by Amazon program, while others told CNBC they'd like to leave the platform altogether.
At the heart of the problem is a big rise in returns fraud, which has led to customers mistakenly receiving used products when they ordered something new. In two particularly egregious examples involving baby products described to CNBC, Amazon sent customers used diapers and a chiller with someone else's rotten breastmilk inside.
"I really don't think that consumers understand how many small businesses are on Amazon and how their return habits affect small businesses and families like mine," said Rachelle Baron, owner of Beau and Belle Littles, which sells reusable swim diapers on Amazon.
Baron said her business tanked after a return incident with Amazon. The e-commerce platform shipped soiled swim diapers to customers after the used baby products had been returned to Amazon, Baron said.
"There was actually two diapers that were sent out that were poopy," she said.
In 2024, nearly 14% of all U.S. retail returns were fraudulent, up from 5% in 2018, according to a report by the National Retail Federation. In total, the report found that returns cost retailers $890 billion in 2024.
Amazon started charging sellers in its fulfillment program (FBA) a new fee in June 2024 for items that exceed certain return rate thresholds. Sellers who sign up for FBA rely on Amazon for logistics, including shipping, packing and returns.
In September, a couple months after the fee went into effect, e-commerce group Helium 10 saw return rates for U.S. Amazon sellers drop nearly 5%.
"It's forcing the seller to have higher quality listings and higher quality products," said Helium 10 General Manager Zoe Lu.
Amazon has also started adding a warning label to some "frequently returned items," which could be contributing to the dip.
However, the new fee may also be leading to rising prices.
One survey by e-commerce analysis company SmartScout found that 65% of sellers said they raised prices in 2024 directly because of Amazon fee changes. Other sellers told CNBC returns fraud is the reason they've raised prices.
In total, CNBC talked to seven Amazon sellers to find out how they're handling the rising cost of returns.
"We're running at about just over 1% net profit on Amazon, totally due to fraud and return abuse," said Lorie Corlett, who sells Sterling Spectrum protective cases for hot wheels. She said her return rate is 4% on Amazon and only 1% on other marketplaces like Walmart. "It's really Amazon that's accountable at the end of the day. People would stop doing it if Amazon held them accountable."
Amazon told CNBC it has no tolerance for fraudulent returns and that it takes action against some scammers. Those measures include denying refunds and requiring customer identity verification.
Mike Jelliff sells professional music gear through his GeekStands brand on Amazon and eight other marketplaces. He said his return rate on Amazon is three times higher than the average he sees elsewhere.
"On eBay, we're allowed to block specific customers out," Jelliff said. "But on Amazon, that customer is still allowed to repurchase from us."
Jelliff showed CNBC the system of about 40 cameras he's installed in his Tyler, Texas, warehouse to track every outgoing item, incoming return and unboxing. He uses the images when filing appeals with Amazon, including when customers request refunds claiming they never receive an item. He keeps a blacklist of repeat offenders who commit this kind of fraud and those who return used and damaged items, which become a total loss for him.
Amazon has made some improvements to its returns process, said Jelliff, who doesn't rely on FBA. This includes Amazon allowing small businesses to make multiple appeals when fighting a fraudulent return. Amazon has also let Jelliff opt-out of automatic return labels for items above $100 starting in 2023, and his return rate has been dropping since.
Figuring out which returns are fraudulent and which are ready for re-sale is labor-intensive and item specific, experts said. That creates plenty of room for error.
"Because it's such a large operation, things are missed," said Lu of Helium 10. "I think they're probably missed on the margins, but these stories are very impactful because it is such a reckoning for the brand."
Ceres Chill founder Lisa Myers, who once relied on Amazon to handle returns for her business as part of FBA, has one of these stories.
In 2023, Amazon sent one of Ceres Chill's products to a customer with someone else's rotten breastmilk inside, said Myers, adding that the customer wrote a review saying, "she will never forget that smell."
"To have something, and I don't mean to be dramatic, but dangerous, somebody else's bodily fluids in your kitchen rotting in something that you had intended to use for your child is unacceptable," Myers said. "That's the moment I broke down crying and just sat down and thought, I have no idea how this could have happened."
Myers said she left FBA after the incident, leaving behind benefits like having her products labeled with Amazon's Prime badge.
"It hurts our business to not participate in Fulfilled by Amazon," Myers said. "It's just we're not willing to, we will never put profit over the safety and, frankly, mental health of our customers."
Instead, Myers outsources all her returns to baby resell specialist Goodbuy Gear, which is on track to re-sell 200,000 returned baby products this year.
Kristin Langenfeld started GoodBuy Gear when she was a new mom struggling to find a good quality, used jogging stroller.
"We've spent the last nine years building out a database that has all of the products and the variations, the common issues, the recalls," Langenfeld said. "For some of these, there's 40 points that we inspect on the item itself, and it's really complicated."
Langenfeld showed CNBC the process at her warehouse in Malvern, Pennsylvania, where each item is inspected for about 15 minutes and is typically handled by at least four employees. The resource intensive process is paying off. She says 33 new sellers signed up in 2024, three times more than the previous year. And with business growing 50% year-over-year, she's upgrading to a bigger warehouse in Columbus, Ohio.
She was inspired to handle returns after visiting a major retailer's returns warehouse five years ago.
"Taped on the floor were signs that said 'incinerate,' 'destroy,'" she said.
Returns generated an estimated 29 million metric tons of carbon emissions in 2024, and 9.8 billion pounds of returns ended up in landfills, according to reverse logistics software provider Optoro.
Amazon has faced criticism for destroying millions of pounds of unused products. In 2022, Amazon told CNBC it was "working towards a goal of zero product disposal," but wouldn't give a timeline for that ambition. Three years later, that goal is still in the works, with Amazon telling CNBC in a statement, "The vast majority of returns are resold as new or used, returned to selling partners, liquidated, or donated."
In 2020, Amazon added two new options for sellers to re-home returns. "Grade and Resell" allows all U.S. FBA sellers to have Amazon rate the return and mark it as "used" before re-selling it. FBA Liquidation allows sellers to recoup some losses by offloading palettes of goods for re-sale on the secondary market through liquidation partners like Liquidity Services.
There's also an FBA Donations program that's been around since 2019, allowing sellers to automatically offer eligible overstock and returns to charity groups through the non-profit Good360. Amazon told CNBC these seller programs give a second life to more than 300 million items a year.
For shoppers wanting to keep returns from incineration or landfills, Amazon also has options.
Amazon Resale has used and open-box goods, Amazon Renewed sells refurbished items and Amazon Outlet sells overstock. Daily deal site Woot!, bought by Amazon for $110 million in 2010, also sells scratched and dented items. Customers can also trade in certain electronics, like Amazon devices, phones and tablets, for Amazon gift cards or send them to the company's certified recycler.
"I hope the change that we're able to make as a country is that we stop making crap," Langenfeld said. "We should make high quality products that are meant for resale."
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
15 minutes ago
- Yahoo
Amazon data centres to consume ‘as much electricity to power Burnley'
A complex of huge data centres being built by Amazon in Britain will consume as much electricity needed to power a town the size of Burnley, campaigners have claimed. The proposed data centres, near Houghton Regis in Bedfordshire, are projected to consume around 114.8 million kilowatt-hours (kWh) of electricity a year. This equivalent to the power consumed by more than 42,500 UK households, according to researchers at Global Action Plan, which is campaigning against the development. It exceeds the number of homes in Burnley, which stood at 41,955 after the most recent Census in 2021. Planning documents show the two data centres in the development will include 42 back-up diesel generators, each around 25 metres tall, that need to be fired up fortnightly to check they are working. It is estimated this will produce the same emissions as 1,079 homes heated by gas. The plans were lodged with Central Bedfordshire Council by Colliers Properties, a known partner of Amazon Web Services (AWS), the retail giant's cloud computing division. The documents name Amazon Data Services UK as the site's eventual operator. Known as Linmere Island, the project would sit on an empty 22-acre greenfield site. While the plans also include 140 solar panels, it is not clear how much power they will supply to the data centres. It comes amid growing pushback against a slew of 'hyperscale' data centre projects being lined up across Britain – a central part of the Prime Minister's strategy to boost economic growth – with campaigners raising concerns over their environmental impact. One complex near Blyth, Northumberland, is forecast to produce more greenhouse gas emissions than Birmingham Airport, which carries 12m passengers per year. Another in Elsham, Lincolnshire, is predicted to generate five times the carbon dioxide of the same airport. It underscores the challenge faced by Sir Keir Starmer as he battles to restore economic growth while hitting net zero targets. Data centres are vital to artificial intelligence, and were classed as critical national infrastructure last September, with Sir Keir establishing 'AI growth zones' to speed up such building projects. AWS set out plans last September to invest £8bn in the UK to build data centres. At the time, Tanuja Randery of AWS, said its strategy would help meet the 'growing needs' of its customers and 'support the transformation of the UK's digital economy'. The investment was hailed by Rachel Reeves, the Chancellor, as 'the start of the economic revival', and that it showed 'Britain is a place to do business'. But such developments require vast amounts of energy that puts it at odds with the Government's mission to become net zero by 2050. It has prompted Matt Garman, chief executive of AWS, to urge the UK to increase its supply of nuclear energy for data centres in an interview with the BBC last month. There are also mounting concerns over the amount of water that some data centres require to keep their computer banks cool enough to function properly. Oliver Hayes, head of policy and campaigns at Global Action Plan, said: 'It's astonishing that communities are expected to like it or lump it when it comes to this wave of giant data centres. 'Amazon is opaque about how much of Houghton Regis' water it will suck up in order to cool the IT equipment, but given this one data centre will require as much electricity as a town the size of Burnley, we can assume the pressure on local water supplies will be intense – to say nothing of the noise and air pollution caused by fortnightly testing of its 42 backup diesel generators.' Amazon declined to comment. Sign in to access your portfolio
Indianapolis Star
32 minutes ago
- Indianapolis Star
Save up to 48% on early Prime Day TV deals happening right now 📺
Dreaming of catching all those summer blockbusters on a brand new big screen? You're in luck! Amazon has officially announced the dates for their Prime Day 2025 sale, and ahead of the sale's kick-off on Tuesday, July 8, we're already seeing a wave of massive discounts on a variety of items, including smart TVs. We've scoured the current offers and found some of the best early Prime Day TV deals you can grab right now. For instance, you can snag the 75-Inch Toshiba 4K Fire TV for under $400, or even premium options like the LG 42-Inch C4 OLED TV now at a record-low $699.99. Don't wait, as these early bird savings on top brands like Hisense, Toshiba and more are sure to go fast. Shop early Prime Day TV deals Get this top-selling Insignia TV for less than $70 in a smaller 32-inch size, perfect for a dorm room or cozy living space! Save 46% at Amazon Enjoy next-level cinematic picture performance with this TV offering a core OLED panel and HCX Pro AI Processor MKII, which finesses colour accuracy, contrast and clarity. Save 45% at Amazon This TV can turn your screen into a canvas for displaying over a thousand pieces of free artwork, personal photos, helpful Alexa widgets and more. Save 38% at Amazon More: Craft smarter! Shop early Prime Day deals on DIY tools and supplies This thoughtfully designed TV by Roku gives viewers a premium entertainment experience at an incredible value. Save 34% at Amazon This TV will bring movies and shows to life with support of the vivid 4K Ultra HD screen. Save 38% at Amazon This Fire TV seamlessly integrates your favorite live channels and apps on the home screen. Save 22% at Amazon This TV offers four times the resolution of full HD and four times the detail for clarity you can't believe. Save 38% at Amazon More: Apple deals just dropped: Save on AirPods, iPads and MacBooks ahead of Prime Day 🍎 This TV offers an incredible watching experience and stellar picture quality illuminated with over eight million self-lit pixels, plus it's now at an all-time low price. Save 16% at Amazon This TV is truly a piece of art, allowing you to show off your taste in art when you're not watching your TV. Select a picture or create a slideshow of paintings matching your mood. Save 30% at Amazon This TV allows you to enjoy your movies and shows in stunning 4K, regardless of the source resolution. Save 12% at Amazon Shop early Prime Day TV deals Amazon's members-only Prime Day 2025 sale will run from Tuesday, July 8 through Friday, July 11. Yes, you must be an Amazon Prime member to shop the Prime Day deals. New members can try one week of Amazon Prime for just $1.99. After the trial period, Prime costs $14.99 per month or $139 per year. Sign up for an Amazon Prime membership to get exclusive perks and benefits all year. Join Amazon Prime More: Amazon Prime for Young Adults is back! Do you qualify for the discount? Find out here
USA Today
2 hours ago
- USA Today
Save up to 48% on early Prime Day TV deals happening right now 📺
Tune in to blockbuster discounts on LG, Hisense and more. Dreaming of catching all those summer blockbusters on a brand new big screen? You're in luck! Amazon has officially announced the dates for their Prime Day 2025 sale, and ahead of the sale's kick-off on Tuesday, July 8, we're already seeing a wave of massive discounts on a variety of items, including smart TVs. We've scoured the current offers and found some of the best early Prime Day TV deals you can grab right now. For instance, you can snag the 75-Inch Toshiba 4K Fire TV for under $400, or even premium options like the LG 42-Inch C4 OLED TV now at a record-low $699.99. Don't wait, as these early bird savings on top brands like Hisense, Toshiba and more are sure to go fast. Shop early Prime Day TV deals Shop the best early Prime Day TV deals Insignia TV 32-Inch HD 720p Fire TV Get this top-selling Insignia TV for less than $70 in a smaller 32-inch size, perfect for a dorm room or cozy living space! Save 46% at Amazon Panasonic Z85 Series 65-inch OLED TV Enjoy next-level cinematic picture performance with this TV offering a core OLED panel and HCX Pro AI Processor MKII, which finesses colour accuracy, contrast and clarity. Save 45% at Amazon Amazon Fire TV 65-Inch Omni QLED Series This TV can turn your screen into a canvas for displaying over a thousand pieces of free artwork, personal photos, helpful Alexa widgets and more. Save 38% at Amazon More: Craft smarter! Shop early Prime Day deals on DIY tools and supplies Roku Smart TV 65-Inch Plus Series 4K QLED RokuTV This thoughtfully designed TV by Roku gives viewers a premium entertainment experience at an incredible value. Save 34% at Amazon Amazon Fire TV 50-Inch 4-Series This TV will bring movies and shows to life with support of the vivid 4K Ultra HD screen. Save 38% at Amazon Hisense 75-Inch Class QD6 Series QLED 4K UHD Smart Fire TV This Fire TV seamlessly integrates your favorite live channels and apps on the home screen. Save 22% at Amazon Toshiba 75-Inch LED 4K UHD TV This TV offers four times the resolution of full HD and four times the detail for clarity you can't believe. Save 38% at Amazon More: Apple deals just dropped: Save on AirPods, iPads and MacBooks ahead of Prime Day 🍎 LG 42-Inch Class OLED evo C4 Series Smart TV This TV offers an incredible watching experience and stellar picture quality illuminated with over eight million self-lit pixels, plus it's now at an all-time low price. Save 16% at Amazon Hisense 55-Inch QLED 4K TV This TV is truly a piece of art, allowing you to show off your taste in art when you're not watching your TV. Select a picture or create a slideshow of paintings matching your mood. Save 30% at Amazon Samsung QLED TV 65-Inch Q7F Series This TV allows you to enjoy your movies and shows in stunning 4K, regardless of the source resolution. Save 12% at Amazon Shop early Prime Day TV deals When is Amazon Prime Day 2025? Amazon's members-only Prime Day 2025 sale will run from Tuesday, July 8 through Friday, July 11. Do I have to be an Amazon Prime member to shop Prime Day deals? Yes, you must be an Amazon Prime member to shop the Prime Day deals. How much does an Amazon Prime membership cost? New members can try one week of Amazon Prime for just $1.99. After the trial period, Prime costs $14.99 per month or $139 per year. Amazon Prime Membership Sign up for an Amazon Prime membership to get exclusive perks and benefits all year. Join Amazon Prime More: Amazon Prime for Young Adults is back! Do you qualify for the discount? Find out here USA TODAY Shopping will be covering all the savings leading up to Prime Day 2025, during the sale and post-Prime Day deals, so be sure to sign up for text alerts, sign up for our newsletter and follow us on Instagram to stay updated!
