As exciting as Q4 is for Amazon sellers, January is dreadful. All consumers on the planet make their returns in one month. Sellers don’t know if they are profitable until February when the returns are over. And then there’s the question of what to do with all those returns. There aren’t very many good answers.
Most reverse logistics companies also have a threshold number of returns that you must have per month to participate in their programs. This effectively eliminates about 90% of Amazon sellers. I was delighted to talk with Brandon Dupsky of Back-Track about this problem recently and how his company is solving it for e-commerce (not just Amazon) sellers.
At eGrowth Partners our focus is on compliance, so we only get involved with returns when Amazon is taking down listings for Used Sold as New or some other product quality or policy violation. Sellers know that these claims are often about the fact that Amazon repackages/resells our returns and doesn’t care that there are missing parts, the product is dirty, etc. While I don’t have a solution for making Amazon workers pay attention to your returns, I do have some workarounds:
- Seal your product in such a way that it is obvious that it has been opened.
- Don’t require returns on low dollar items. Just refund them. No return, no problem. Obviously, you want to do this on items that make sense.
- Make Amazon send you your returns every day.
The first approach is helpful but not comprehensive. If your return rate is only slightly above normal, this may be enough to keep you below the threshold. Some of those bad returns will be shunted aside and not resold.
The second approach works but may not be practical for your inventory. It can be fairly pricy too if your product is one where buyers often make mistakes or buy multiples in order to get the right fit, etc. You don’t want to train your buyers to lie so they can keep the product for free.
The third approach is very effective, but time consuming. For the ASINs where you are getting product quality complaints, you would look at your returns every day, grab the unique identifier, open a case with Seller Support and ask them to return those specific items to you. You must do it quickly or else your item could be resold in the meantime.
What we do for our retainer clients is look at the returns report for problem ASINs and determine how Amazon has categorized the return. If it is labeled as defective/damaged or missing parts or damaged in the warehouse, that item should definitely be removed. If it is more of a “didn’t like the color,” “didn’t need two of them,” kind of thing you can probably leave it alone. You keep doing this until you get rid of the bad inventory.
What you will learn quickly is that a relative handful of actual products are causing your account a lot of harm. I am assuming here that you don’t have actual product quality problems. If you look back over 3-4 months you will see the same unique identifiers show up again and again as a bad product is returned, sent back out, etc. Those you should be able to eliminate in the first month.
To stop future repeats, you’ll remove items that are probably a problem. Other common reasons for complaints are poor quality/defective products or confusing listings. Pull your returns report weekly and try to look at the reasons objectively.
You may think it is crazy that buyers don’t understand how to use your products, for example, but if that’s what you are reading in the complaints, then make your listing clearer. Provide better instructions with the product. Use images to explain. Try to make it as bullet proof as possible. If your product is fizzling out on buyers, stop selling it until you can fix the problem with your manufacturer. I’ve seen so many sellers keep selling defective products and then wonder why their ASINs keep getting suspended and their metrics are poor. Fix the problem before Amazon notices it.
Lastly, look at your packaging. Many times, buyers complain because they get the product all beat to heck, dirty and just not pretty. It’s still new inside the box, but it looks like it sat in someone’s garage for a year. Amazon will send your fragile item out in a plastic bag and there’s nothing you can do about it. It is up to you to make sure the packaging is rugged enough to withstand the rigors of the warehouse and shipping.
For some of our brand clients we recommend that they get certified for Amazon’s frustration-free packaging program and have unique packaging for their online sales vs retail. This makes a lot of sense for electronics, glass items, candles, food in jars, toys and much more. Amazon even gives your offer priority on the platform if you are certified. Certification is easy. You hire one of Amazon’s recommended companies to design your package, get certified and then go into production. Check out details HERE.
That takes care of compliance and reducing buyer complaints and returns. Now you must figure out what to do with those returns—which is where Brandon comes in.
Interview with Brandon Dupsky of Back-Track
Q. How do you define “Reverse Logistics?”
A: In simple terms, logistics is the flow of products from point A to point B. Logistics includes things such as transportation, warehousing, as well as all the data to manage the flow of products efficiently. After getting my MBA in college, I worked in the “Logistics” department for a large manufacturing company called American Tool Companies, best known for the Vise-Grip but also many other tools. We had factories and warehouses across the world. It gave me tremendous hands-on experience when it came to managing a large network of goods flowing from point A to point B, where efficiency can equal saving millions of dollars.
Reverse logistics is simply the “Reverse” flow from point B back to point A. Or in many cases the product does not flow all the way back to point A with the use of intermediaries who specialize in the reverse flow of goods. This is primarily because logistics systems are designed to be extremely efficient one direction (forward) and therefore not well suited to manage the flow of goods the other direction. The most common purpose of reverse logistics is to manage the flow of online customer returns.
Cynthia’s PS: This process also works for items you’ve told Amazon that you want returned to you through their unique identifier. Back-Track’s thorough assessment of your returned items can help you prove to Amazon that it is, in fact, their fault and not yours that buyers are getting imperfect items. Additionally, it can help document online shoplifters. You should always report those guys even if you won’t get a reimbursement out of it. Amazon will take action against a buyer with multiple complaints of shoplifting.
Q. How does the returns process work for your Amazon clients?
A: At Back-Track we receive returns for over 500 Amazon sellers and have built a process that is highly automated and hands-free for them. The majority of sellers use FBA exclusively and so when a customer chooses to return an item, it ships back to the Amazon FBA facility. After a very quick assessment by Amazon’s warehouse employees, they decide if the item is opened or not and if the item can be resold by Amazon or not. If not, the item goes into what’s called “Unfulfillable Inventory” in Amazon.
Sellers simply enter the Back-Track address that we give them into Seller Central for “Automatic Removal of Unfulfillable Inventory” and every week Amazon automatically ships all the seller’s unfulfillable inventory directly to Back-Track. Once we receive the goods, our team of techs inspect the item, photograph the item, grade the condition, check for accessories and document the condition of the box. Sellers can watch this activity and see the photos on the Back-Track dashboard in real-time.
The next stage of the process is the recovery stage. Based on the Seller’s “Business Rules,” sometimes we will ship the products back to FBA if they are in 100% new condition or if the seller wishes to sell as “Used Like New” condition. Sometimes the business rules tell us to resell the products on the seller’s behalf as an open box item through many channels, such as our local retail store, Facebook Local, eBay, Wish, Wal-Mart and sometimes on Amazon if the Seller approves. Our goal is to resell the seller’s products so that each month we owe them money for their customer returns.
Cynthia’s PS: This process also works for items you’ve told Amazon that you want returned to you through their unique identifier. Back-Track’s thorough assessment of your returned items can help you prove to Amazon that it is, in fact, their fault and not yours that buyers are getting imperfect items. Additionally, it can help document online shoplifters. You should always report those guys even if you won’t get a reimbursement out of it. Amazon will take action against a buyer with multiple complaints of shoplifting.
Q. Can sellers send you returns from their other ecommerce outlets?
A: Yes. We receive a truckload of products from Wal-Mart daily, as well as directly from our clients, for transactions on other marketplaces such as eBay or online websites.
Q. Where do you resell the returns?
A: We are a multi-channel seller that resells customer returns online and offline. We have a physical retail store in Lincoln, Nebraska called BuyBox Club, which is how we resell items where shipping is an issue. This can be big heavy items or even smaller items with a low price point where the cost to ship would consume all the profits.
The retail store allows the next buyer to see the item and condition before making the choice to buy. For items that receive a C grade or have accessories missing, we will push these types of items to the retail store to be resold “as-is”.
We also resell products online across many marketplaces such as eBay, Wish, Facebook and occasionally Amazon. With the practice of buying online and picking up at a physical retail store, we also allow local buyers to buy the item online and pick it up at our Buy Box Club retail location.
Finally, Back-Track has a growing network of wholesale customers who buy in bulk from us. This is mostly for the liquidation inventory that we receive. Wholesale customers can be mom and pop retail stores, small retail chains or even bin stores occasionally. Again, this is mostly for new products that we are liquidating for sellers and not customer returns.
Q. Do you have a minimum contract?
A: Back-Track does not currently require a minimum sales volume, length of service or minimum commitment. We can do this because our system is highly automated so to be nearly the same efficiency at both small and large scale. This is also a personal wish on my part as I’ve been in eCommerce for 23 years, and I enjoy helping entrepreneurs at all stages of their adventure. I know the challenges of a small startup as well as a large enterprise with hundreds of employees.
We have clients that are just starting off and have not even sold their first item all the way to sellers who have over 500 employees and sell over $150 million/year on Amazon.
Q. How do payments work?
A: Payments for inspection and recovery tasks are invoiced every Saturday for the week and paid by credit card, PayPal or ACH for big accounts.
We reconcile and report sales activity on the 10th of each month for the previous month’s sales and send out payments.
Q. What kind of percentage can I expect to recoup on my items?
A: The range can be between 10% – 80% before our 50/50 revenue split. This is a reflection of “Supply and Demand” just like selling on Amazon.
Cynthia’s PS: Amazon’s own liquidation program is generally pennies on the dollar. It is better than having to pay them to dispose of or return your items, but it is perhaps more appropriate for low dollar items that will cost more to return, process and resell than can be recovered in resale. Be sure you also have control over your settings or Amazon will liquidate your unsellable inventory without your permission.
The current default is liquidation, and many sellers are unaware that they are giving away their unsellable inventory that way. In addition, even if you’ve turned that program off, the next time Amazon reboots the platform, it will re-establish itself as the default. Eventually Amazon will fix this problem, but until then, be diligent and check your settings regularly.
Q. What about items that can’t be resold? What happens to them?
A: Sometimes we will donate items to a charity at the seller’s request. This allows them to get a possible write-off. Sometimes we can resell the goods in bulk in a wholesale fashion.
Q. Are there particular categories for which you won’t accept returns?
A: We accept a wide range of customer returns from home goods, toys, electronics, kitchen, outdoor, sporting goods, and clothing. We try to avoid products that have expiration dates such as food items, supplements, or dietary items. We also avoid items that could have trademark infringements.
Cynthia’s PS: most ingestibles and topicals can’t be resold for safety reasons, and you want to arrange for your dissatisfied customers to get a full refund without returning the product. If your product has a tamper-proof seal and is still new with plenty of expiration time, you may want to re-sell it on Amazon, but there is no place on Amazon for expired or used products in these categories. Please be aware also that if a brand is enforcing on Amazon, it is likely also enforcing on other platforms. It may be difficult to find a place to sell your items unless you can prove authenticity to the brand’s satisfaction.
Q. What are the situations – if any – for which you recommend trashing the returns or having Amazon liquidate the returns through its program?
A: Low price point items below $10 are a challenge to recover any remaining value. Items where the shipping cost of the item is greater than the remaining value are also good candidates for Amazon liquidation.
Cynthia’s PS: if you plan to donate inventory to charity, it is better to send directly to the charity from Amazon rather than go through a service like Back-Track. This is a good option for new inventory that is moving slowly or no longer profitable on the platform. You don’t want to send returns to a charity unless it is a thrift shop or other organization that welcomes used items. Most toy/kid charities require new items.
Q. How is what you do different from a typical liquidator?
A: Typical liquidators are focused on volume. Moving pallets of products for pennies on the dollar. They also have very little control or concern for where the product ends up being resold. Many Amazon sellers find their same items being resold back on Amazon when the product flows through traditional liquidation – at a much lower price and poorer quality than new.
Cynthia’s PS: the problem with liquidators is they often sell shelf-pulls and returns which means that your buyers could be getting damaged, defective inventory with missing parts. Most brands don’t want their inventory liquidated this way as it might damage the brand’s reputation. You also have to deal with expiration issues for topicals and ingestibles even if they are new in package. There ARE buyers for expired items, just not on Amazon.
Q. Do you only accept returns in the US, or do you have branches in other countries?
A: Currently, we are only set up in the USA. However, over 70% of our client base is made up of sellers from all around the world that sell their goods in the USA.
Q. Where do I sign up?
A: We have a very simple sign-up form on our website that will take less than two minutes. www.GoBackTrack.com. We review your products as a fit for our service. Once confirmed, you’ll receive a login email to our online dashboard and another email explaining where to ship your goods and how to set up the auto-ship in Amazon. You can be up and running in five minutes.
