How Amazon Broken Item Returns Process Is Driving Sellers To Leave Amazon

How Amazon broken item returns process is driving sellers to leave Amazon as the platform’s return system becomes increasingly problematic for third-party sellers. With return fraud rates skyrocketing from 5% in 2018 to nearly 14% in 2024, and Amazon quality control failures leading to dangerous situations, many sellers are questioning whether the platform’s benefits outweigh its growing costs and risks.

The returns crisis on Amazon has reached a breaking point, with sellers facing mounting fees, fraudulent returns, and quality control failures that threaten their businesses and customer safety. The platform’s “Fulfilled by Amazon” (FBA) program, which handles returns for 86% of sellers, has become a source of frustration rather than convenience, as Amazon automated systems fail to catch obvious problems and fraudulent returns.

The financial impact on sellers is staggering. Return processing costs 30% of an item’s price, meaning sellers must sell 2-3 additional products just to break even on a single return. With return rates more than doubling from 8% to 17% over the past five years, many sellers are finding it increasingly difficult to maintain profitability on the platform.

The human cost is equally concerning. Stories of Amazon reselling items with bodily fluids, broken safety equipment, and other dangerous conditions highlight the platform’s inability to properly inspect returned items. These failures not only damage seller reputations but also pose serious health and safety risks to customers.

The Return Fraud Epidemic: A Growing Crisis

Return fraud has become a massive problem for Amazon sellers, with fraudulent returns increasing nearly threefold since 2018. The anonymity and ease of online shopping have created an environment where consumers feel emboldened to abuse return policies, leading to devastating consequences for small businesses.

The most common forms of return fraud include wardrobing (using items for specific events then returning them), returning empty boxes or incorrect items, and returning damaged or soiled goods as new. A staggering 64% of shoppers admitted to wardrobing at least once a month in 2024, nearly three times more than in 2023, while 75% admitted to embellishing or exaggerating return reasons.

The impact on sellers is profound. Rachelle Barron, who sells reusable swim diapers, nearly lost her business when Amazon failed to catch dried poop in a returned diaper and sent it as new to a customer. The resulting bad review caused her sales to tank from $1 million, demonstrating how a single quality control failure can destroy a business.

The financial burden of return fraud extends beyond the direct costs of processing returns. Sellers must also factor in the lost inventory, potential customer service issues, and the long-term damage to their brand reputation. For many small businesses, these costs are simply unsustainable.

Amazon Fee Structure: Making Returns Even More Expensive

Amazon response to the returns crisis has been to implement new fees that further burden sellers. In 2023, the platform added a $1 fee for customers on some returns handled by UPS, and in 2024, it introduced steep new returns fees for FBA sellers based on return rate thresholds.

The new returns threshold fees range from $1.65 to $160 plus, depending on the product’s weight and return rate. These fees are in addition to existing reverse shipping and processing fees, creating a multi-layered cost structure that makes returns increasingly expensive for sellers.

The fee increases have forced many sellers to raise their prices, with 65% of sellers reporting price increases in 2024 directly due to Amazon fee changes. This creates a vicious cycle where higher prices lead to more returns, which leads to higher fees, which leads to even higher prices.

The financial pressure is particularly acute for small businesses that rely heavily on Amazon for their sales. With return rates on Amazon being more than three times higher than on other platforms like eBay and Walmart, many sellers are questioning whether the platform’s reach justifies its costs.

Quality Control Failures: Putting Customers at Risk

Amazon quality control failures in handling returns have reached dangerous levels, with numerous reports of the platform reselling items that should never have been returned to inventory. These failures not only damage seller reputations but also pose serious health and safety risks to customers.

Lisa Myers, inventor of the Ceres Chill breast milk chiller, experienced one of the most egregious examples when Amazon resold a returned item that still contained someone else’s rotten breast milk. The customer who received the item was understandably horrified, and the incident nearly destroyed Myers’ brand reputation.

The problem extends beyond just gross items. Amazon has been caught reselling broken car seats, items with bodily fluids, and other dangerous products that should never have been returned to inventory. These failures highlight the platform’s inability to properly inspect returned items at scale.

The lack of quality control is particularly problematic for baby and children’s products, where safety is paramount. GoodBuy Gear, a company that specializes in reselling returned baby items, has developed a rigorous 50-point inspection process that takes 15 minutes per item and involves four employees. Amazon automated systems simply cannot match this level of scrutiny.

The Environmental Impact: A Hidden Cost

The returns crisis on Amazon has significant environmental implications, with millions of items ending up in landfills or being incinerated each year. According to reverse logistics software provider Optoro, returns generated an estimated 29 million metric tons of carbon emissions in 2024, with 9.8 billion pounds of returns ending up in landfills.

Amazon response to this environmental crisis has been mixed. While the platform has introduced programs like “Grade and Resell,” “FBA Liquidation,” and “FBA Donations,” these programs only address a fraction of the returns problem. The vast majority of returns still end up being destroyed or sent to landfills.

The environmental cost of returns extends beyond just waste. The carbon footprint of processing returns, including reverse shipping, inspection, and disposal, adds significantly to the overall environmental impact of e-commerce. For environmentally conscious sellers, this creates an additional reason to question their reliance on Amazon.

The circular economy approach, where returned items are given a second life through resale or donation, is still in its infancy on Amazon. While the platform has made some progress in this area, the scale of the returns problem far exceeds the capacity of these programs to handle it effectively.

Seller Strategies: Fighting Back Against the Returns Crisis

Faced with mounting costs and quality control failures, many Amazon sellers are developing strategies to minimize their exposure to the returns crisis. These strategies range from improving product listings and customer communication to completely abandoning the FBA program.

Mike Jelliff, who sells professional music gear, has implemented a comprehensive system to fight return fraud, including 40 cameras to track every outgoing item, incoming return, and unboxing. This system has helped him reduce his return rate and protect his business from fraudulent returns.

Other sellers are choosing to handle their own returns rather than relying on Amazon’ FBA program. While this approach sacrifices some of the benefits of FBA, such as the Prime badge, it gives sellers much more control over the return process and helps protect their brand reputation.

Some sellers are also working with specialized companies like GoodBuy Gear to handle their returns. These companies provide the level of inspection and quality control that Amazon cannot, helping to ensure that returned items are properly evaluated before being resold.

Frequently Asked Questions

A Real-World Example: The Small Business Owner’s Struggle

Jennifer Martinez, who runs a small home goods business selling kitchen accessories on Amazon, has experienced firsthand how Amazon broken returns process is driving sellers to leave Amazon. “I used to love selling on Amazon because of the reach and convenience,” she explains. “But the returns situation has become completely unsustainable for a small business like mine.”

Jennifer’s return rate on Amazon is 12%, compared to just 2% on her own website. “The difference is night and day,” she says. “On my website, I can communicate directly with customers and help them before they need to return something. On Amazon, there’s no communication, so customers just return items without even trying to resolve issues.”

The financial impact has been devastating. “I’m paying more in return fees than I’m making in profit on some products,” Jennifer explains. “Amazon new return threshold fees have made it impossible for me to compete with larger sellers who can absorb these costs.”

The quality control failures have also damaged her brand. “I had a customer receive a returned item that was clearly used and damaged,” she says. “They left a terrible review, and my sales dropped by 40% for that product. It took months to recover, and I’m still not back to where I was.”

Jennifer is now in the process of transitioning away from Amazon. “I’m building my own website and focusing on other marketplaces,” she says. “It’s scary to give up Amazon traffic, but I can’t afford to keep dealing with their broken returns system.”

Her experience illustrates the broader problem facing Amazon sellers. “The platform used to be a great equalizer for small businesses,” she says. “But now it’s become a place where only the biggest sellers can survive because they’re the only ones who can afford all the fees and problems.”

Don’t Let Amazon Returns Crisis Destroy Your Business

The returns crisis on Amazon represents a fundamental threat to the platform’s long-term viability as a marketplace for small and medium-sized businesses. While the platform still offers significant reach and convenience, the costs and risks associated with its returns system may outweigh the benefits for many sellers.

The solution requires action from both Amazon and sellers. Amazon needs to invest in better quality control systems, reduce fraud, and create a more sustainable fee structure. Sellers need to develop strategies to protect themselves from the returns crisis, whether through better product listings, direct customer communication, or diversification to other platforms.

The future of e-commerce depends on creating a more sustainable and fair returns system. While Amazon has the resources to address this crisis, it remains to be seen whether the platform will prioritize seller success over short-term profits.

For sellers struggling with Amazon returns crisis, the time to act is now. Whether through improved fraud prevention, better customer communication, or platform diversification, taking control of your returns process is essential for long-term business success.