Amazon Reutrn Policy Driving Sellers to Leave
Amazon, the world’s largest online marketplace, built its empire on the promise of speed, convenience, and a customer-first philosophy. Now, that same convenience is driving a growing number of third-party sellers to reconsider their future on the platform. For years, Amazon’s ultra-lenient returns process has delighted customers—but at a significant and often devastating cost to the sellers who make up over 60% of the site’s retail transactions.
Behind the scenes, the returns process has become a mounting crisis—one plagued by high costs, rampant fraud, and mounting frustration. Some sellers are scaling back their inventory on Amazon. Others are pulling out of Fulfillment by Amazon (FBA), the logistics program that once offered small brands a shot at Prime-enabled success. A growing number are choosing to leave Amazon altogether.
A Returns Policy That’s Too Easy?
Amazon’s returns policy is simple: if you don’t like it, you can send it back—often for free and sometimes without even repackaging the item. For customers, it’s frictionless. For sellers, it’s a logistical and financial nightmare.
While some returns are legitimate—wrong size, wrong color, defective item—many more are not. Sellers report a wide range of abuse: customers using an item for a short time and returning it (known as “wardrobing”), sending back used or damaged products, or even returning the wrong item entirely. Some sellers have opened returned boxes to find fake versions of their own goods, empty packaging, or even random household trash.
“There’s no consistency and no protection,” said Rachel Lin, who sells children’s gear on Amazon. “We’ve received returned items that were clearly used—like strollers with food crumbs and wear on the wheels. One time, we got back a diaper bag with dirty diapers still inside.”
And that’s not a one-off. Another seller in the health and wellness category described receiving a breastmilk chiller back from a customer with someone else’s spoiled breastmilk still inside. “It’s not just gross—it’s dangerous. We can’t resell that. It’s a total loss,” they said.
Returns Fraud Is Skyrocketing
According to industry estimates, returns fraud costs U.S. retailers more than $100 billion annually, and Amazon is especially vulnerable. In part, that’s because Amazon often issues instant refunds—even before the item is shipped back—and because their warehouses often don’t verify the contents of returned packages.
Some fraudulent schemes are elaborate: customers buy an expensive product, then return a counterfeit or older model. Others simply send back an empty box. Because sellers using FBA rely on Amazon to process returns, they often have no visibility into what was received or whether Amazon’s team flagged an issue. In many cases, they don’t even get the returned item back.
“Amazon just refunds the customer and charges it against our account,” said Carlos Ramirez, who sells electronics accessories. “We don’t get a chance to appeal unless we catch the fraud ourselves—and by then, the money is already gone.”
For many sellers, the financial loss is compounded by lost inventory, lost ranking in search results, and penalties for “high return rates,” even when those returns aren’t their fault.
Amazon’s Response: New Fees, New Labels
In response to seller complaints and growing return abuse, Amazon has recently introduced two major policy changes:
-
Return Processing Fees for Sellers: As of 2024, Amazon began charging sellers a per-item fee for returns on certain products fulfilled through FBA. The idea is to encourage sellers to list items more accurately and reduce low-quality listings. However, many sellers see it as an added burden on top of already razor-thin margins.
-
“Frequently Returned Item” Labels: In an effort to alert shoppers before they buy, Amazon now adds a warning label to listings with high return rates. The label reads: “Frequently Returned Item: Check product details and reviews to avoid disappointment.”
While these efforts may help reduce frivolous returns and encourage better listings, many sellers argue that they don’t go far enough. “It’s a band-aid on a broken system,” said one apparel seller. “We need better fraud prevention, better vetting of returns, and some accountability on the buyer side.”
The Cost of Convenience
At the heart of the problem is Amazon’s customer-first philosophy, which has historically prioritized shopper satisfaction over seller protection. The company’s goal is to eliminate barriers to buying—and returning—anything. But that model depends on sellers absorbing the fallout.
For merchants, the impact can be devastating. High return rates reduce profitability, and the unpredictability makes it hard to plan inventory or cash flow. Some sellers say they’ve lost tens of thousands of dollars due to bad returns, with no way to recoup the loss.
Sellers who use Fulfillment by Amazon are especially vulnerable. While FBA offers access to Amazon Prime customers, faster shipping, and Amazon-run logistics, it also removes sellers’ control over the returns process. And when things go wrong, sellers say it’s nearly impossible to get meaningful support from Amazon’s automated systems.
Sellers Push Back—Or Log Off
The growing frustration has prompted a shift in strategy for many businesses. Some are pulling back from Amazon entirely, reducing their dependence on the platform and focusing instead on their own e-commerce websites or other marketplaces like Walmart, Etsy, and Shopify.
Others are moving away from FBA and opting for Fulfilled by Merchant (FBM), which gives them more control over returns but less visibility in search results and fewer sales.
“We’re scaling back and diversifying,” said Maria Thompson, who sells home décor products. “Amazon used to be 90% of our revenue. Now it’s closer to 40%. We can’t afford to keep losing money on bogus returns.”
Some sellers are also banding together to lobby Amazon for reform. On seller forums and through trade groups, they’re calling for more transparency in the returns process, tougher action on fraud, and a greater voice in how their businesses are impacted.
A Tipping Point for Amazon?
Amazon has built its reputation on putting customers first—but as more sellers voice their frustrations and begin to walk away, the company may be approaching a tipping point. If enough merchants leave, it could hurt Amazon’s product selection, pricing, and even its dominance in the e-commerce landscape.
For now, shoppers may continue to enjoy easy returns and lightning-fast refunds. But behind the scenes, a growing number of sellers are asking the same question: how long can we keep paying for Amazon’s convenience?
And if Amazon doesn’t find a better balance between customers and sellers soon, the answer may be—not much longer.
