The eCommerce industry is moving into a new phase. Amazon, the world’s largest online marketplace, has introduced a returnless return policy. This change allows buyers to receive refunds without sending the product back. For customers, it is a win.
For sellers, it is more complex. The shift saves Amazon money, reduces logistics stress, and creates convenience. But sellers lose inventory, profits, and in some cases, even ownership of their products.
In 2024 alone, U.S. online retailers lost close to $890 billion because of returns. Amazon’s strategy aims to control this cost, but sellers carry much of the burden. To remain profitable, every seller must understand the three critical changes: Returnless Resolutions, Returned Item Evaluation, and Damaged Inventory Ownership. This guide explains what they mean, how they impact your business, and what strategies sellers can use to protect margins in 2026.
Why Amazon Pushes Returnless Returns
Returns are expensive. Every step of the process costs money. Shipping fees, repackaging, inspections, and restocking all add. For low-value products, the return often costs more than the product itself.
Amazon knows this. By introducing returnless returns, the company cuts its logistics costs dramatically. Customers keep the item. They still receive their refund. Amazon avoids processing, storage, and shipping expenses.
For Amazon, this is smart. For customers, it feels generous. But for sellers, it creates challenges:
- Lost revenue from refunded sales.
- We cannot resell the lost inventory.
- Increased risk of fraud and abuse.
Amazon presents this policy as a way to simplify shopping and improve customer loyalty. The truth is, sellers bear the burden of cost directly.
Understanding the Three Return Policy Updates
Amazon introduced three main settings inside Seller Central to handle returns. Sellers must review these carefully, because each setting carries benefits and risks.
1. Returnless Resolutions
Returnless Resolutions allow sellers to give refunds without asking customers to ship items back. It works best for:
- Low-value products where return shipping costs exceed product value.
- Fragile products often damaged during shipping.
- Items with high rates of unsellable returns.
For example, if you sell a phone case worth $8, asking a customer to return it costs more than the product itself. Enabling Returnless Resolutions saves time and money.
But for higher-value items, this option can destroy profit margins. If a customer keeps a $50 product and still gets a refund, the seller takes a big loss. That is why you should use this setting with caution.
2. Returned Item Evaluation
When this option is active, Amazon decides whether returned items can be resold. If someone turns it off, they mark all returns as unsellable, even if the product is in perfect condition.
Keeping this enabled is usually safer. It allows sellers to reclaim value from products in good condition. It also allows sellers to receive reimbursement when customers return damaged items.
The risk, however, lies in Amazon’s decision-making process. If Amazon marks a perfectly good item as unsellable, sellers lose potential revenue. Still, most sellers prefer to keep this option active, since disabling it guarantees higher losses.
3. Damaged Inventory Ownership
This is the most controversial change. In the past, when Amazon damaged inventory, it reimbursed sellers, and sellers could reclaim ownership of their products. Now, sellers receive reimbursement only for sourcing costs. Amazon keeps the damaged products and resells them through Amazon Warehouse or other outlets.
This creates two problems:
- Sellers lose control over their products.
- Amazon earns profit by reselling items it damaged.
For branded sellers or those with premium items, this is a serious concern. You may not want Amazon reselling your products at a discount, especially without your consent.
Why These Changes Matter for Sellers
At first glance, these updates look like small adjustments. In reality, they change the balance of power between Amazon and sellers. Here is why they matter:
- Sellers absorb the financial risk of returns.
- Inventory ownership shifts away from sellers.
- Amazon profits from products damaged in its warehouses.
- Fraud opportunities increase as some buyers exploit returnless refunds.
- Reimbursement values are lower than market prices.
These factors reduce profitability and increase uncertainty for sellers who rely heavily on FBA.
When Returnless Returns Work in Favor of Sellers
Returnless returns are not always negative. For certain products, they make financial sense. For example:
- Low-cost accessories such as cables, phone cases, and pens.
- Items prone to damage during return shipping, like glassware.
- Products frequently returned in poor condition, such as beauty items.
In these cases, enabling Returnless Resolutions saves sellers from paying higher shipping and inspection fees.
The key is to evaluate product categories carefully. Sellers should not apply one setting across all listings. Instead, we should review each ASIN individually.
The Rising Trend Beyond Amazon
Amazon is not the only retailer pushing returnless returns. Walmart, Target, and Overstock have adopted similar policies. Their logic is the same. Letting customers keep low-value products reduces costs and builds loyalty.
Chewy, a major pet supply retailer, also uses returnless refunds. Customers receive a refund and donate the product to a local shelter. This not only reduces costs but also creates goodwill.
The trend is spreading fast across retail. Within a few years, returnless refunds may become standard across most online platforms.
The Psychology Behind Returnless Refunds
Why does this strategy work so well with customers? The answer lies in psychology.
When customers receive a refund without returning a product, they see it as a gift. This triggers the principle of reciprocity. People feel more loyal to brands that treat them generously.
A study from the University of Notre Dame found that returnless refunds boost customer loyalty. They also increase word-of-mouth marketing and repeat purchases. Trust plays a big role. When businesses trust customers, customers return the favor with loyalty.
For Amazon, this strengthens its customer base. For sellers, it complicates inventory management and profitability.
Fraud and Abuse Concerns
While returnless refunds build loyalty, they also attract fraud. Some buyers abuse the system by repeatedly claiming defects. They get free products and refunds.
Amazon monitors accounts with suspicious activity, but sellers remain vulnerable. Fraudulent returns cut deep into margins, especially for small businesses.
A Seller’s Action Plan
To manage these challenges, sellers need a strategy. Here are five steps every seller should take in 2026:
- Analyze return data. Use Amazon’s FBA Returns Report to see which products have high return rates. Identify problem categories.
- Review return settings. Customize Returnless Resolutions, Returned Item Evaluation, and Damaged Inventory Ownership for each product type.
- Factor refunds into pricing. Build return-related costs into product pricing to protect margins.
- Monitor suspicious behavior. Keep track of accounts that request excessive refunds. Report abuse to Amazon.
- Diversify sales channels. Do not rely only on Amazon. Use Shopify, eBay, or Walmart Marketplace to balance risk.
Best Practices for 2026
- Enable Returnless Resolutions only for products under $15.
- Keep Returned Item Evaluation active to protect reimbursement eligibility.
- Review Damaged Inventory Ownership carefully, especially for branded products.
- Track profit margins monthly. Adjust strategies as return rates shift.
- Communicate clearly with customers in product listings to reduce returns caused by confusion.
FAQs About Amazon Pushes Returnless Returns
It allows customers to get a refund without sending the product back.
Yes. Sellers lose the product and refund the customer. It only makes sense for low-cost products.
It is a setting that lets Amazon decide if returned products are resellable.
If Amazon damages your inventory, they reimburse you at sourcing cost but keep the item.
Yes. Sellers can customize them in Seller Central for each ASIN.
Final Thoughts
Amazon pushes returnless returns to reduce costs and build customer loyalty. For buyers, it feels like a reward. For Amazon, it means savings and stronger customer trust. But for sellers, it creates new risks. Lost inventory, reduced ownership, and higher chances of fraud all affect profitability.
The good news is that sellers can adapt. By analyzing returns, customizing policy settings, and diversifying sales channels, sellers can reduce losses. The key is balance. Returnless returns are here to stay. Sellers who understand the system and apply smart strategies will continue to thrive in Amazon’s competitive marketplace.