BLOG: Retail
3 Min Read | August 28, 2025 | BY Benjamin Weyrich
Introduction
In recent weeks, Amazon has introduced several new measures. In addition to a new search algorithm that more strongly rewards external traffic and customer retention, the company is also reshaping its vendor structures. In June 2025, Amazon launched a new Return Rate Program designed to penalize products with above-average returns. For 1P vendors, this marks a fundamental shift in operational accountability — and a wake-up call for brands with inefficient quality controls or vague product descriptions.
Under the new policy, Amazon automatically flags frequently returned items, charges manufacturers for return costs, and deducts shipping and handling fees. Combined with changes to the search algorithm that now rewards low return rates, returns have become a core performance KPI for every 1P vendor.
What Is Amazon’s Return Rate Program?
Amazon now labels certain products as "Frequently Returned Items" when their return rate exceeds the average for comparable listings. Once flagged, Amazon can return goods to the manufacturer without approval.
Vendors are required to:
- Reimburse 100% of the product cost
- Cover an additional 10% shipping and handling fee
If the vendor rejects the return, Amazon can add a disposal fee. These products are identifiable via badges on detail pages, the Concessions Hub, and the Voice of the Customer dashboard in Vendor Central.
This policy aligns with other recent compliance updates: a new “In Full Delivery” chargeback category now bundles three previous penalty fees:
- Orders where the confirmed quantity is changed too late (“down-confirm”)
- contains too few units (“Not Filled”)
- or too many units (“Overage”) now trigger automated penalties.
While the “Not Filled” fee has been reduced to 5%, overage deductions remain at 100% of the cost of goods. Amazon automatically verifies whether confirmed order quantities, Advance Shipment Notifications, and invoices match – discrepancies result in immediate chargebacks.
How Amazon Penalizes High Return Rates?
The new returns policy shifts the risk for poor product quality or misleading expectations back onto manufacturers. In sectors with traditionally high return rates – such as fashion, consumer electronics, and home & garden – this can result in significant costs. Amazon is signaling that high return rates will no longer be tolerated without consequences. This move aligns with the company’s strategy to streamline Vendor Central and encourage smaller suppliers to move to the 3P marketplace.
The automated chargebacks also raise the bar for supply-chain precision. Incorrect quantities or late down-confirmations are penalized immediately. Vendors who previously benefited from manual goodwill must now manage their processes with far greater accuracy.
5 Actions 1P Vendors Must Take to Reduce Return Rates
Conclusion
Amazon is sending a clear message: quality, transparency, and operational excellence are now the foundation of its vendor program. Vendors who fail to control their processes risk losing visibility in the new search algorithm and facing high return costs under the High Return Rate Program.
For brand manufacturers, this presents an opportunity to gain a competitive edge through data-driven analysis and improved products. Early adopters can strengthen their relationship with Amazon, boost customer satisfaction, and increase profitability.
About the author
Benjamin Weyrich
He is the Founder and Managing Director of CATAPULT. With around ten years of experience in ecommerce and business intelligence, he focuses on strategic consulting for global brands aiming to strengthen their market position both on and beyond Amazon. Through his deep expertise, he helps companies make data-driven decisions and scale their growth across digital channels.
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