Name: How Amazon’s Broken Returns Process Is Driving Sellers To Leave Amazon
Uploaded: 2025-06-24T12:20:22.000Z
Duration: 16 min 34 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

Inside Goodbye Gear's sprawling Pennsylvania warehouse.

These are accessories for strollers, humidifiers.

These 60,000 boxes aren't filled with your typical new baby products.

Nine years ago, all of this was going into the landfill.

They're rigorously inspected before being resold or tossed.

Kristen Langenfeld has spent nine years building a business out of helping others figure out the messy, expensive chaos of returns.

She plans to get 200,000 items to a second home this year.

So when we're quality checking the items, it walks through 50 different checks in some cases.

It's a problem the world's biggest online retailer can't seem to figure out.

Amazon handles returns for the vast majority of its sellers.

But when Amazon gets it wrong, the seller suffers the consequences.

So there was actually two diapers that were sent out that were poopy.

Rochelle Barron sells reusable swim diapers.

When Amazon failed to catch dried poop in a returned diaper, Amazon sent it as new to one of Barron's customers.

The bad review nearly took out her business.

And then after the review happened, we tanked.

Returns fraud, like returning a soiled diaper, is on the rise amidst the ease and anonymity of online shopping.

Retailers say nearly 14 percent of returns were fraudulent in 2024, up from just 5 percent in 2018.

I really don't think that consumers understand how their return habits affect small businesses and families like mine.

Between new return fees on Amazon, multi-step reverse shipping and the labor for proper inspections, it's often easier for sellers to just tell customers to keep it or for it to end up in a landfill.

Returns generated an estimated 29 million metric tons of carbon emissions and 9.8 billion pounds of returns ended up in landfills in 2024, according to reverse logistics software provider Optoro.

But now some small changes on Amazon may be bringing gradual relief.

About 16 months ago, return rates on Amazon has been getting a lot better for us.

Three years after our last look into the mess of returns, we sat down with seven Amazon sellers to find out what's changed as they face new fees, rising fraud and shrinking margins amidst ever-changing tariffs.

Returns have always been a part of the shopping experience, and they've always come at great expense to retailers.

But as online shopping took off, so too has the cost of returns.

A lot of the times the return shipping, it costs more than the product itself.

Mike Jelliffe and his wife Joy Lynn have been selling professional music gear and stands for more than 20 years out of their warehouse in Tyler, Texas.

Returns have always had a chance for abuse in the past.

But I think now when we go online, it's much easier to do it anonymously.

Nearly 17 percent of sales resulted in returns in 2024, more than double the rate of five years ago, costing retailers some $890 billion.

And it costs 30 percent of the price of an item to process it as a return.

We're going to end up selling at least two to three more products just to break even on that one return.

Nearly 70 percent of the Jelliffe's $2.8 million of annual sales happen on Amazon, where their return rate is more than three times the average from the other eight marketplaces where they sell, like eBay and Walmart.

So what Amazon does is just processes a return label.

Oh, you can't figure out here's a return label.

After Amazon initiates a return, the Jelliffe's have it sent to their warehouse and they process it internally.

But most sellers, some 86 percent, use Amazon for this through a program called Fulfilled by Amazon.

Like Lori Corlett, who sees 1 percent returns of her Hot Wheels collector cases on Walmart and nearly 4 percent on Amazon.

If I could leave Amazon, I would, but we need to be there for the customer base that wants to shop on Amazon.

About 40 percent of our business is on Amazon, but I would like to shrink that business to as small a margin as possible.

Five years ago, Lisa Myers invented a special chiller to help breastfeeding moms on the go.

It takes some practice to use right, so customers who buy directly on her website often reach out with questions.

But direct communication between sellers and buyers on Amazon isn't so easy.

So we have less than 1 percent returns when we are interacting with the customer.

And yet we have between 6 and 8 percent returns with Amazon.

Catherine Lavery sells $3 million a year worth of her best self journals and conversation game decks.

Our returns on the last year is about 4.5 percent on Amazon.

But compared to our like Shopify store, it's like, you know, less than 1 percent.

If I could choose, I would definitely be off of Amazon.

But unfortunately, that's where customers are.

To help cover the high cost of returns on Amazon, many sellers are raising prices.

We did increase our prices 10 percent solely based on the fraud.

Some 66 percent of retailers also started charging customers for some categories of returns last year.

Amazon started charging customers a $1 fee in 2023 for some returns handled by UPS.

Amazon also added a steep new returns fee for FBA sellers last year, a sort of penalty for some categories over certain return rate thresholds.

In addition to reverse shipping and processing fees, products with higher return rates will get slapped with an additional fee based on weight, ranging from $1.65 to $160 plus.

Increasing fees in general hurts the sellers tremendously, and it eventually just passes off the cost to the consumer.

One survey by e-commerce analysis company SmartScout found that 65 percent of sellers said they raised prices in 2024 directly because of Amazon fee changes.

In September, a couple months after Amazon added the new returns threshold fee, one e-commerce group saw return rates for U.S.

It's forcing the seller to have higher quality listings and higher quality products.

So Amazon probably had pretty good intent in doing this.

But of course, they're also looking to make more money.

Amazon's also added some new ways sellers can customize returns in recent years, which may contribute to the dip.

Jelif says his return rate spiked in 2021 because Amazon began auto-generating return shipping labels instead of sending refund requests to him for manual approval.

Then in 2023, for items above $100, Amazon let him opt out of auto-generated return labels again.

Now they're down to at least a much better marginal level, about 3 to 3.5 percent.

Also around the time his return rate started dropping, Jelif says Amazon added some tools for fighting returns fraud cases, allowing multiple appeals and requiring photos.

This was a win for Jelif, who installed a system of 40 cameras to track every outgoing item, incoming return and unboxing.

It is helping just keeping people honest and keeping our business afloat, you know, not losing inventory to falsehoods.

Last year, Amazon added extra options for FBA sellers, too, such as choosing not to have any returns resold or to automatically tell customers to keep the item.

And to help cut back on returns happening in the first place, Amazon started adding a warning label to frequently returned items.

But should Amazon do more to warn sellers about fraudulent customers, too?

We're running at just over 1 percent net profit on Amazon, totally due to fraud and return abuse.

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 us it has no tolerance for fraudulent returns.

It takes action against some scammers, from denying refunds to requiring customer identity verification.

Both Jelif and Langenfeld set aside a hall of shame to show us the most ridiculous returns, like catfishing.

So people try to fraud the system by putting some weight in a box.

This is one that was returned yesterday, and we think it's a car part.

You can see the label here shows 10 pounds.