Returns are an unavoidable reality of selling on Amazon. No matter how good your products are some customers will return them — wrong size changed their mind product not as expected or simply buyer remorse. As an Amazon FBA wholesale seller understanding exactly how the returns process works how to manage returned inventory and how to minimise the financial impact of returns is essential knowledge.

We are Brandhunterz Ltd — a UK registered wholesale sourcing company (Company No: 15342697) — and managing returns efficiently is something every serious wholesale seller must master. In this guide we explain the complete FBA returns process what happens to your returned stock and the strategies that minimise return rates and maximise recovery value.

How Amazon FBA Returns Work

When a customer returns an FBA order Amazon handles the entire process automatically. Here is exactly what happens step by step:

Stage	What Happens	Your Role
1 — Return Requested	Customer submits return request with reason	Amazon approves automatically
2 — Return Label Sent	Amazon sends prepaid return label to customer	No action required
3 — Item Returned	Customer sends product back to Amazon warehouse	No action required
4 — Item Inspected	Amazon inspects and grades the returned item	No action required
5 — Graded Sellable	Item returned to your sellable inventory automatically	Monitor inventory levels
6 — Graded Unsellable	Item placed in unfulfillable inventory — cannot be sold	Decide — remove or liquidate
7 — Refund Processed	Customer receives refund automatically	Refund deducted from your account

Understanding Return Grades

When Amazon receives a returned item they inspect it and assign a grade that determines what happens to it next. Understanding these grades helps you manage your returned inventory effectively:

Grade	Condition	What Happens	Your Action
Sellable	Unopened and in original condition	Returns to sellable inventory automatically	No action needed
Customer Damaged	Damaged by customer during use	Placed in unfulfillable inventory	Remove or liquidate
Defective	Product not working or faulty	Placed in unfulfillable inventory	Remove and investigate supplier
Carrier Damaged	Damaged during Amazon delivery	Placed in unfulfillable inventory	Claim reimbursement from Amazon
Warehouse Damaged	Damaged in Amazon warehouse	Placed in unfulfillable inventory	Claim reimbursement from Amazon

Average Return Rates by Category

Return rates vary significantly by product category. Understanding typical return rates helps you factor them into your margin calculations and stock planning. Use Keepa data alongside these benchmarks when evaluating wholesale products:

Category	Average Return Rate	Main Return Reason
Health and Beauty	2 to 4%	Allergic reaction or not as described
Kitchen and Home	3 to 6%	Not as expected or size issues
Sports and Fitness	4 to 7%	Size fit or performance issues
Electronics	8 to 15%	Defective or compatibility issues
Clothing and Fashion	15 to 30%	Wrong size or not as described
Pet Supplies	2 to 4%	Pet did not like product
Toys and Games	3 to 6%	Not as expected or gift duplicate

Managing Unfulfillable Inventory

Unfulfillable inventory is returned stock that Amazon has graded as unsellable. You have several options for dealing with it — each with different costs and recovery values:

Option 1 — Create a Removal Order

Request Amazon to return unsellable stock to your address. Amazon charges a removal fee per unit — typically £0.25 to £0.60 depending on size. Once you receive the items you can inspect them yourself — sometimes items graded unsellable by Amazon are actually in good condition and can be relabelled and resent as new FBA stock or sold through other channels like eBay.

Option 2 — Amazon Liquidations Programme

Amazon offers a liquidations programme where they sell your unsellable inventory to third party liquidators on your behalf. You receive a small percentage of the estimated recovery value — typically 5 to 10 percent of the original sale price. This is lower value than removal but requires zero effort on your part.

Option 3 — Disposal

For genuinely damaged or worthless items Amazon can dispose of them on your behalf for a small fee per unit. This is the lowest recovery option but removes storage fees immediately and eliminates the need to process physical returns yourself.

Option	Cost	Recovery Value	Best For
Removal Order	£0.25 to £0.60 per unit	Highest — resell yourself	Items likely in good condition
Liquidations	No upfront cost	Low — 5 to 10% of value	Large volumes of unsellable stock
Disposal	£0.15 to £0.30 per unit	Zero recovery	Genuinely damaged or expired items

How to Claim Reimbursements for Amazon Damaged Returns

When Amazon damages your stock in their warehouse during storage or shipping you are entitled to reimbursement. Amazon does not always process these reimbursements automatically — you may need to claim them manually.

Types of Reimbursements You Can Claim

• Items damaged in Amazon warehouse before sale
• Items lost in Amazon warehouse — never found after investigation
• Items damaged by Amazon during fulfilment
• Customer returns where Amazon issued refund but item was never returned
• Shipment discrepancies — items in shipment not checked in by Amazon

How to Check and Claim Reimbursements

How to Reduce Your Return Rate

While some returns are unavoidable there are specific steps wholesale sellers can take to keep return rates as low as possible:

Strategy	How It Reduces Returns
Source only authentic branded products	Genuine products meet customer expectations — fewer not as described returns
Ensure listing accurately describes product	Accurate descriptions prevent disappointed customers
Check product quality before sending to FBA	Inspect stock on arrival — never send damaged units to Amazon
Pack products securely for FBA shipment	Proper packaging prevents transit damage causing defective returns
Avoid high return rate categories initially	Choose categories like Health Beauty and Pet Supplies with low return rates
Monitor return reasons regularly	Identify patterns — address recurring issues at source

Including Returns in Your Profit Calculations

Returns have a direct impact on your actual profit margins. Here is how to include them in your calculations for accurate financial planning:

Conclusion — Returns Are Manageable With the Right System

Returns are a normal part of Amazon FBA selling — not a crisis. With FBA handling the returns process automatically your main responsibilities are monitoring return rates managing unfulfillable inventory and claiming reimbursements for items Amazon loses or damages.

The best protection against high return rates is sourcing authentic quality products from verified wholesale suppliers. Genuine branded products from reputable brands consistently produce lower return rates than unverified or grey market stock.

Browse our Brands Directory to find verified wholesale suppliers or check out our Amazon FBA Wholesale Beginners Guide for the complete wholesale system.