The Art of Managing Returns

Unless you’ve never sold your products on Amazon before, you know that returns are an unavoidable reality of selling on the world’s largest Ecommerce platform. No matter how carefully you manage listings or quality control, customers will send products back. Sometimes it’s because they found a better price, sometimes it’s due to defects or product mismatches. Or, if you’re selling clothing or PPE, it’s often because items simply don’t fit as expected. 

Common Return Rates for B2B Industries

Industry / Sector	Average Return Rate	Notes
Industrial manufacturing	2–5%	Returns often due to part incompatibility, procurement errors, or shipment damage.
Wholesale distribution	3–6%	Driven by order misalignment or excess stock returns from retailers.
Technology / electronics	5–10%	Component defects, warranty returns, and compatibility issues are primary drivers.
Medical / lab supplies	1–3%	Strict regulations keep returns low; often replaced rather than refunded.
Automotive parts (B2B)	4–8%	Returns mostly from incorrect part orders or damaged goods.
Apparel / uniforms (B2B)	8–12%	Size, fit, and branding errors increase return rates.
Office supplies	4–7%	Relatively stable due to standardized products.
Construction materials	1–4%	Low due to bulk orders and high return costs.

Chart Created with Perplexity.AI

Unfortunately, it’s impossible to completely eliminate returns. Instead, sellers need to look at returns as an opportunity to provide an excellent customer experience. When handled strategically, returns can actually protect margins, maintain customer trust, and even allow you to recover value from products that come back. 

To achieve this, it’s essential to understand how Amazon’s two main fulfillment options—Fulfillment by Amazon (FBA) and Fulfilled by Merchant (FBM)—impact the return process and what that means for your business. Let’s take a closer look at these two approaches to fulfillment and how you can leverage them to minimize returns and their impact on revenues. 

FBA vs. FBM

Before diving into the mechanics of returns, it’s important to understand the two fulfillment models Amazon offers. Your chosen fulfillment model directly shapes how returns are processed, who handles them, and what costs you incur.

• Fulfillment by Amazon (FBA)Sellers ship inventory in bulk to Amazon’s warehouses. Amazon then takes responsibility for storage, shipping individual orders out to customers, customer service, and returns. This model reduces the seller’s workload but also means Amazon controls the return process, including approving return and reimbursement requests to evaluate whether items can be resold.

• Fulfilled by Merchant (FBM)Sellers ship products directly to customers and manage returns (along with all other customer service issues) themselves. Although Amazon enforces its 30-day return policy, sellers are responsible for receiving, inspecting, and refunding items. This model gives sellers more control over product quality and customer communication, but it requires more operational effort and resources. 

Choosing between FBA and FBM is a complex matter that has serious implications for your revenues, and that includes how returns are handled. While this post isn’t about choosing between them, it’s important to recognize that this is a strategic decision that affects customer experience, return costs, and the level of control you maintain over your inventory.

Looking for more info on FBA or FBM? Check out this blog post on whether FBA is a good match for B2B selling on Amazon.

How Returns Work in FBA

When you choose Fulfillment by Amazon (FBA), the return process is largely managed by Amazon itself. Customers initiate returns directly through the platform, and Amazon decides whether to approve the request. Once the product arrives back at the warehouse, it’s inspected and classified as either new, used, or unsellable.

From there, several outcomes are possible. Items that can’t be sold as new may be re-listed under graded conditions such as Like New, Very Good, Good, or Acceptable, with discounted pricing. In some cases, sellers can opt for returnless refunds, allowing customers to keep items under $75 in value while still receiving a refund. Amazon also offers refurbishment services, where sellers pay a fee to have products repackaged for resale. If items are deemed unsellable, Amazon will ship the products back to the seller for inspection or reintegration into their own inventory, at a fee, of course. 

While this system reduces the seller’s workload, it comes with challenges. Amazon’s evaluations can be overly strict, sometimes marking items unsellable when they could still be resold. Additionally, if Amazon mistakenly sends back the wrong item (or the customer has sent back the wrong item), sellers will need to file a claim with seller support to rectify the situation. 

In short, FBA simplifies returns by taking them off your plate, but it also limits your control over how they are handled. Sellers using FBA must be prepared to navigate Amazon’s policies and occasionally push back when the platform’s decisions don’t align with your own company policies.

How Returns Work in FBM

With Fulfillment by Merchant (FBM), sellers take on the responsibility of managing returns directly, though they must still comply with Amazon’s return policies. Customers still benefit from Amazon’s 30-day return policy, but instead of sending products back to Amazon, they ship them to the seller or manufacturer. This means the seller must receive, inspect, and process each return, often within 48 hours, to stay compliant with Amazon’s policies.

It’s important to note that, in some cases, Amazon will automatically issue refunds for FBM orders, particularly when items are scanned by the carrier for pick up, which can leave sellers covering costs before they’ve even seen the product. To protect against losses, sellers can file Safe-T claims when customers return the wrong item or send back something damaged. In justified cases, sellers may also apply a restocking fee, though Amazon requires clear documentation to support this.

FBM returns are more labor-intensive than FBA, as sellers must handle customer communication directly, manage shipping costs, and ensure refunds are processed correctly. The upside is greater control. Sellers know exactly what condition the products are in when they leave their facility, and they  can oversee the quality of what comes back. For many, this trade-off is worth the effort, especially when customer service and product integrity are top priorities.

What to Consider when Weighing Return Models

Of course, there are other considerations to make when deciding whether or not your firm uses FBA or FBM. What’s more, you could even opt for a hybrid model, using FBA for some products and FBM for others. Ultimately, when it comes to returns, you need to choose the model that best aligns with your business goals, product types, and operational capacity. 

While FBA does a lot of the heavy lifting in terms of customer service and returns, you have less control over the outcome of each individual return. FBM, on the other hand, puts you directly in control over the entire process, which can be good, but requires a far more significant resource commitment. 

Generally speaking, FBA works best for businesses that prioritize scale and efficiency, and are comfortable with Amazon’s rules governing inventory and returns, while FBM is better for sellers who value control, want to protect product quality, and are prepared to invest in customer service. Either way, though, you will need to commit some resources to managing returns, regardless of which fulfillment model you choose. 

Looking for more help in strategically managing your Amazon program? Enceiba is here to help! Our experts have managed hundreds of B2B Amazon programs, and can put their knowledge and know-how to work for you! Contact our top Amazon specialists to discuss your business and how to optimize your Amazon program for profitability.