T-shirts on HangersNot every transaction has a happy ending. Sometimes, customers want to return their purchases or exchange for a different item. Every seller is vigilant to watch their outbound shipments to comply with Amazon standards, but the way you handle refunds and returns also greatly effects your Amazon seller account metrics.

Amazon provides the ability for sellers to specify the reason why an Amazon order is being refunded. The reason for the refund dictates whether or not the seller’s performance measurements are negatively impacted by the refund, improves the customer service experience sellers are providing to buyers, and it allows for accurate reporting of refunds.

Not using the proper refund reasons when refunding customers or canceling orders can decrease the merchant’s Amazon performance measurements, which over time could potentially lead to being suspended from Amazon due to dropping below minimum required standards.

To Amazon, refunds represent excellent customer experiences and they do not typically punish sellers for providing basic level of service. However, refunds due to inventory availability and accuracy problems are taken very seriously by Amazon.

Amazon sets strict seller performance targets, which are defined as:

  • Order defect rate (ORD): < 1%
  • Pre-fulfilment cancel rate: < 2.5%
  • Late shipment rate: < 4%

Notice, Amazon does not have a specific metric for returns or refunds as percent of total orders, however, it is included in the ORD under “percentage of negative feedback and percent of orders without claims.” Amazon wants you to issue refunds and deal with returns directly with the customer, so the customers don’t open claims with Amazon. It does closely track defective items, canceling orders without shipment and not shipping on time. So, in most cases, a seller should prefer to offer a replacement or a refund the money to avoid the customer returning the item and marking it as defective.

Remember, when you fulfill an Amazon.com order, buyers are always given an opportunity to request a refund, and sellers have the option to accept, issue, or close the refund request. If you decide to accept the request, it is important that the buyer returns his product before you issue a refund. As a seller, you also have the option to issue a partial refund, if this affects the condition of your listing, or if there is a restocking fee. And as we just pointed out, when granting the refund, make sure to select the correct reason for it, to make sure it doesn’t impact your performance ratings.

Monsoon Marketplace has been helping increasing sales and profitability on eCommerce marketplaces like Amazon and eBay for over a decade. From dynamic re-pricing to inventory management tools, Monsoon Commerce solutions puts you in control of marketplace selling. In our Spring 2016 update, we’ve improved the handling of returns and refunds on marketplaces to streamline the reverse logistics process, much the same way we help optimize the sales process.