#117 - Avoid Paying More Than You Should in Logistic Fees: The Hidden Cost of Amazon Returns | JD Sass

Returns are not just a cost of doing business on Amazon, they are a system you can design to recover revenue and protect your brand. We talk with JD Sass, CEO of Axiom Return Solutions, about what really happens after a customer sends a product back and why reverse logistics is becoming a serious advantage for sellers who want higher profitability. 

We get into the Amazon-specific changes that are reshaping returns management: removal versus disposal costs, the tradeoffs of Amazon’s grade and resell program, and how returnless refunds can sometimes be the smartest move. JD also explains why brand control matters, including chain of custody, where inventory ends up, and how “good enough” grading can still lead to missing pieces, unhappy customers, and reviews that tank a listing. 

Then we go practical. We break down how reimbursement claims work in Seller Central, why the timeline is tighter than it used to be, and what documentation actually drives successful claims. JD shares simple, high-impact fixes like adding photos of every component to your listing, using replaceable inserts, and placing tamper-proof seals on every opening to reduce fraud and prevent used items from re-entering sellable stock. If you sell on FBA, Shopify, or other ecommerce channels, this is a blueprint for turning return data into better packaging, better listings, and better margins. 

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Transcript

Why Returns Matter For Sellers

SPEAKER_00 0:10

Very interesting world sort of that I think maybe a lot of sellers pass up on or uh don't get the chance to really dive deep into this side of things, even though I feel like it's super important for them to nail. Um so I'm excited to talk to you, JD, about the importance of your return process and how to maximize it for profit. Um, but also make sure that you're not letting anything slip through the cracks here. So very excited to have you on, JD Sass. Yep, I appreciate it. Glad to be here, man. Yep.

Meet JD Sass And Axiom

SPEAKER_00 0:39

I want to start with an intro of yourself, kind of give us an idea of who we're talking to, give us a reason to listen to you really. Um give us, you know, your experience in this world and and a lot of your qualifications.

SPEAKER_01 0:50

Yeah, absolutely. So my name is JD Sass. I'm one of the founders, uh, currently CEO of Axiom Return Solutions. We are specifically a reverse logistics company built for primarily Amazon sellers. We service D2C as well. Um, your Shopify, Walmart, Target, Best Buy, things like that. Um, we are heavily concentrated in the Amazon space. We help sellers recover revenue from customer returns. And that means a lot more than just let's throw your stuff on a pallet and liquidate it, right? Uh, we've been doing this for three years now, so somewhat new. But again, the only thing that we've done has been returns management. So I am the physical provider. I receive inventory, inspect grade. I also have a tech where I display a whole bunch of data to the partners that we get to work with. We've worked with a couple hundred resellers, wholesalers, uh, agencies, accelerators, uh, brand direct, private label on Amazon as their return address. So in Amazon, stranded, automated, fulfillable, unfulfillable, we receive inventory, as I mentioned. Everything is manifested or serialized with us. So we're scanning everything on inbound, inspecting grading. Let's reintegrate the new back to a primary sales channel. Can we refurb or repack to then reintegrate? What secondary channels are available? We file claims on fraudulent customer returns and damaged or missing pieces from removals is a big deal. Uh, forward downstream to another facility, a manifested donation or disposal, depending on how the company's structured and dispositions. But all that we've done, uh, it's been hard to not like chase butterflies or shiny keys, is just returns, right? That's the only thing. And in the Amazon world, there's a whole bunch that can be done to improve an existing company's setup. There are not a lot of service providers like us. There might be some who offer like consignment options or will just resell it for you. But we're interested in giving data back to decision makers to drive those decision-making processes on the front end. That's not something that I'm seeing done at scale by a third-party provider outside of maybe operations who are heavily um invested internally, larger companies who have the resources than are capable of doing this themselves. Um, can we reduce returns from happening, right? Can we do that at a listing across the supply chain? So uh that's a little intro. Um, I could go on and on, but we live in the returns world is the only thing that we do.

SPEAKER_00 3:16

I'm excited to get into it. It's a great start. You know, again, it's you're right. It's I don't see this a lot. Um, you guys are a bit of a unicorn there, which is exciting to get to kind of pick your brain a little bit on this. Yeah.

How Amazon Returns Have Changed

SPEAKER_00 3:26

Um the other piece I wanted to start with, too, since you've been in this now for a while, is tell me how the world of the Amazon return and the world of the reverse logistics has changed over the last the past, you know, five or so years. Like what has Amazon been doing that's been updating it, that's given way for a company like yours to really succeed the way it has?

SPEAKER_01 3:47

Yeah, absolutely. So I know um one is disposal costs. You know, they've they've implemented like their great in resale program. And I got to go to Accelerate last year, it was my first time. And I got to sit at some roundtable discussions with Amazon directly and ask questions as a service provider and not just a seller where it's clear it might not seem like it, I think, to sellers specifically. As a consumer, it's great. I buy an Amazon, I return something, I get my money back, right? They're king. It's I always know it's gonna be okay for me as a consumer, but as a business, your recourse and options can be somewhat limited. Now they've offered different, like they, you know, they update settings so you can choose how your returns are handled in Amazon. It could skip Amazon totally and just come back to a return address. They offer the grade and resale program where they will grade and then resell what's categorized unsellable inventory in Amazon, and then create used listings based on the grading, you know, based on the grading criteria. You've got the refurb. So there are options. And I think recently, today now, a big one for us uh is disposal is now the same cost. The cost to dispose of an item is exactly the same cost as it is to remove an item from Amazon. Disposal used to be cheaper, right? As a seller, cool, it's cheap, I'll just dispose depending on the average selling price. It might make sense to dispose. But now it's the same to remove. So why not remove that inventory simply to offset those costs, right? And as a brand, when you choose disposal in Amazon, it's clear in their terms, they can destroy, recycle, or resell your inventory. You waive all rights to that. So they're just gonna keep the proceeds anyways if they're able to resell it. Why not try to liquidate on the back end, if not through Amazon, to offset some of those costs because they are the same or they were a few weeks ago, cent for cent. Um so there's some incentive there. The grade and resell, I think we talk about bad reviews, you know, uh, could give could just tank a listing essentially. Um the grade and resell, they don't necessarily know what a brand, like a brand's new item might look like. Right. Like how what pieces, what components are in this set. So when they receive the inventory to grade it, if they don't know if it's complex or there's multiple pieces or inserts, or it's been used and then reintegrated back to a sellable status that's resold again, right? A customer gets it, it's been used or switched out or missing pieces, the brand takes a hit, you know, and so um they get the bad review, not Amazon. And that's I'm not pointing fingers, it's just my experience in the conversations that I've had, and especially with the reimbursements, they've shortened that window from I think 18 months to like 60 days now. So if you don't have it's it's it's quick, man. You got it. So you gotta you gotta have a process in place, and you can, it's very easy to do, at least for the claims that we file, to do that. And the pictures you have to take, file the case and upload. So um, you know, prior to that, recently now, I think there's a lot of incentive to have a solution on the back end.

Remove Versus Dispose And Control

SPEAKER_00 6:55

It's so interesting. They made the same, they made the remove and dispose process the same price. Um what why wouldn't you right? Why would you let them dispose of it? Unless it's of course like maybe like a two cent thing, it's gonna cost you more to ship it back than to even do it. But even then, I mean, is there a reason to ever dispose? It sounds like anymore.

SPEAKER_01 7:15

I'm I'm open to I'm open to that conversation where someone could say, you know, I want to pay Amazon to dispose of instead of remove it now, like depending on the inventory, perhaps it's hazardous and you don't have a facility to then dispose of it. But if you're removing it from Amazon to offset um, you know, to offset those costs, also from a brand control standpoint, I don't advocate disposal, but because everything is serialized or manifested with us, we will also dispose for brands. It's full chain of custody. Right now they know where this inventory has gone, where it was disposed of, when it was disposed. I put my signature on it and say this is when and where essentially we threw the inventory away. Right. And so from a brand's perspective, even to have transparency and control over where the inventory is being disposed of and curating a positive consumer experience, right? They don't, they might not want it to end up in an unauthorized retailer's hand or somewhere it's not supposed to. So um, yeah, send for cent the same. Uh there situationally might be some circumstances where it makes sense to have Amazon just dispose of it, but you've got your return list resolution program was another one that I maybe missed on the front end. You can allow the customer to keep the item. Like if it's a $10 item, you need to pay to have the item returned and then gone through Amazon more than likely is an option as well to mitigate some of those costs. You can you can update, like manage your source costs in Amazon. So you're making sure you're getting like your full reimburse value on those items. Because if you don't provide one, Amazon gives an estimate. And sometimes that estimate is lower than the value or the source cost, the cost of the item. So there are things you can do right now without using a a reverse logistics provider to capitalize on that.

SPEAKER_00 9:06

And it starts with just knowledge, just knowing that this stuff is out there. I was gonna say it this is all fascinating because again, as someone that is very feels very involved in the Amazon world, I I feel like I'm missing some of these pieces here. So this is great. You're filling in, filling in the gaps of my knowledge, it's great. Um, I I've seen it where uh this is I've definitely returned some stuff where they said the pr the seller was like, I don't even don't even send it back to me. Just keep it. It's not worth it. Um so that makes sense. I've also seen it. Um, this is more of a uh not really a prank video, but the guy uh uh ordered a bag of concrete on Amazon, filled it with sand, and used the concrete, filled the empty bag with sand, weighing the same amount, and sent it back. That's also okay something you deal with on a on a day-to-day basis. But that maybe that made me think of that somehow was was uh you got a bag of sand back and they said Amazon is is paying for it. But uh in any case, yeah, that's it's it's interesting to think about how many hidden costs that maybe a lot of sellers are not involved with on a day-to-day, but are are hurting the business? Is there anything else that uh we we haven't discussed yet that um we need to talk about on on the return side of things, or even more to that effect, how does a a poorly managed return process really really eat away at a seller's profitability?

How Bad Returns Destroy Profit

SPEAKER_00 10:23

Sure.

SPEAKER_01 10:24

So I think eating away profitability is when brands or sellers are trying to do things themselves. Um, I I don't know how to sell on Amazon, right? I'm sure there are a lot of people who are really, really successful, right? Um I just stay in my lane, I guess is what I'm trying to say. You know, is not trying to wear too many hats or do too many things at once. What does that look like? For everyone, it's different. Sometimes maybe liquidate through Amazon for the return side of things. Uh maybe send it to a provider who's just gonna consign it and sell it for you. Is is liquidation directly through Amazon the choice? Should you just be is disposal the best? Because you don't have a place for it to go, you can't find anyone to do it. Okay, what data is driving that decision? What proof do you have? And if you have a 5%, 10%, 20% return rate, and I've talked with brands, uh accelerators, uh, that type of model who are doing several hundred million dollars a year in revenue or north of that, who just choose disposal where it's somewhat um uh customary in the company and has been for a period of time to just throw it away. Okay, if your return rate's 20%, you're baking this into your land of cost of goods, you're not looking for any feedback, maybe you're having defective or bad product batch runs. Are you getting any feedback there to stop that? What if you cut that return rate in half? What if you can reintegrate? So I reintegrate across the board categorically close to 50% of what Amazon says is unsellable back as new inventory, which is considerable, right? Yeah. Categorically up and down from there, depending. Like HBA is is a little lower, 30 to 40 percent. Shoes and apparel are great, uh, for example, you know, but like what are you doing? Is that an area to improve? You all look at all these different metrics and softwares and agencies to do all these things. Well, shoot, if your return rate's 10%, what if we cut that in half? You know, that's significant. If you're doing a million, ten million, a hundred million a year in revenue, that can be very significant and get a whole bunch of data across the board to improve, like I said, production, manufacturing, packaging. What's the relationship look like with your fulfillment center? Are there areas for improvement there? Often the solution is very, very simple, but you just got to take a look at it. And is it always worth you as a seller doing it yourself? I I don't know. I'm happy to have a discussion about it. Feel free, anyone listening, like I'm I'm I'm a resource, very much we're a resource. Um, but there are definitely things that can be done. And are you letting data drive the decision-making processes for your business? Because Nampi, I'll tell you I I was talking about this the other day with someone. I might pull it up in my email to see how many times a CEO or CEO has said, our ops guy feels like we're doing the right thing. He feels like it, he's got a gut feeling. They they it's insane. It really is. Um, but that's that's just a normal place in the returns world. And it's very common where there is no no solution in play.

SPEAKER_00 13:36

Right. And it it seems silly because it feels like return data could be almost like a gold mine of feedback, of ways to improve. What are ways that it sounds like again, uh a lot of these companies are doing it based off feeling? What are ways that you guys translate that data and translate that information into actionable uh actions or actionable, um, what am I trying to say? Like how do you translate the data into cutting the return rate in half and cutting and making you more profitable?

SPEAKER_01 14:10

Yeah,

Simple Fixes That Drive Reimbursement

SPEAKER_01 14:11

actually, you know, the implement it's cool saying it, but the implementation and execution are two different things, right? Um oftentimes it is very simple. So two examples. One, we just did a pilot with a Halloween costume company. And if you ever bought a costume for Halloween, you know how they come. It's in the clear packaging with a cardboard insert and a picture of the costume and then the costume itself, right? Um what were happening? Customers are buying the costumes, maybe wearing it, maybe not, but then they return the costume and it doesn't have the insert, right, with the description of the costume, maybe pieces in the costume, um, maybe how to, you know, put the costume on, whatever it is, it's coming back missing pieces or components. Well, when you file these claims that we file in Seller Central, um, you have to take pictures of the product, the pieces, the shipping label, LPN, packing slip, upload it, right? And um, if it comes back missing pieces or components, it's it's an eligible claim to file. But what happens is on the listing page, on the display page of the listing, if there are no pictures of all the pieces or components, they will deny the claim. So how would you know um you know why you're being denied? Like I this is just a whole nother claim you can file. So we're able to add or suggest that images be added to the listing. Now images are there. We can now file these types of claims where they're missing pieces or components and be successful on them where previously we weren't, right? And I'm talking about about 10% of the items I receive, I can file a claim on. My my claims that I have to take pictures of. So on that, on that alone, some partners use us just to file those claims, right? To take pictures. That's a revenue driver right there. If you're paying to dispose, just like you're paying to remove, why not just remove it, get full value of 10% of the returns, depending on the volume. Does that make sense? What's the selling price of the item? If it's a hundred bucks, 200 bucks, can be fairly significant. And then uh very easy one. It so sometimes when you buy products, they'll have a tamper-proof seal on the top, right? You got to cut it to then open the box. Sometimes it's around all sides. What I find is oftentimes it's usually just on one. Right. But it should be anywhere there's an opening, right? Because what customers will do, like your concrete sand example, they'll open the bottom if there's no if there's no seal there, take the product out, use it, maybe switch it out, put it back in the box and return it. Right. Amazon gets it, the seal is still in place, it's new, right? It gets kicked back into sellable, seal's not just buys it.

SPEAKER_00 16:50

Tampered. Ugh. Sneaky.

SPEAKER_01 16:53

Yeah. So just put the seals on all sides. It's a solutions are oftentimes very, very simple. Um, you know, and and little things like that, again, translate on the front end in terms of profitability and driving revenue.

SPEAKER_00 17:07

Right. And this probably wouldn't be something that a newer or a less experienced seller would think of. Um aside from, of course, like I said, this, this, this, this topic feels like it goes under the radar in general. So for it to get that deep into the weeds, it feels like that wouldn't happen for a new seller. So this is good for them to hopefully to hear um and to know in general uh what is out there and what the return process is like. Are there any other examples you can give me on I love the real world examples of how to better enhance the packaging to minimize returns or push me not minimize minimize returns isn't the right word, but maybe it is. And and also on the this sealable example to push a request through for a reimbursement from Amazon.

Packaging Tweaks That Reduce Damage

SPEAKER_01 17:54

Yeah, so I I always suggest, well, one, just make sure all the pieces or components are available on the listing, whatever the product has, which of course, like a return happens before an item is ever purchased, you know, and and if you get an item, you buy an item from Amazon and it comes up and the box is all damaged and dinged, uh just return it. You know, I'll get a new one, right? I don't know if it's new or used, if this is how it's supposed to look. I don't know. Um, so brands that are not Amazon native and sell a lot brick and mortar, I'll see this maybe um as an example where the product just shows up. The product might be new, but the boxes are all blemished. There's just no consulting being done in the front, and like this has to be repurposed for Amazon, right? Amazon is a different animal in a lot of respects. So uh making sure all like pictures of pieces or components are there and really inserts. I love the inserts with pictures um uh of the product, instructions. Like in the soft line world, for example, in the linens, sometimes they'll have the the picture of the product on the actual polybag itself, or maybe it's sewn onto the what you know, one of the sheets or just a little piece of fabric in there. Put an insert, something that can be replaceable. Because when these items get opened or received by a customer, maybe they take the item, um, they they maybe they they take it out a little bit or move it around, put it back in. If you have the ability to put in a new insert, for example, right? Amazon's not slapping their labels over top of it, whatever shipping provider's not putting their labels over top of it. You have the ability at least to put in new informational, you know, graphics or whatever it might be about that item itself. So I always like the inserts. The tamper proofs are very easy. Um, if you don't know what your items are looking like on the back end, get some removed to you. You know, you'll find out very quickly if the information you're receiving from the customer in the return reports is accurate or not. Um so it just starts with laying eyes on the product. That's the first thing.

SPEAKER_00 20:04

And it's again, it's just fascinating. This this side of things.

The Future Of Reverse Logistics

SPEAKER_00 20:08

Um well, a question I always like to throw into the mix is is where do you see the future of this going? We talked about what has changed over the last couple of years, but where do you see the evolution of the return process going? Not maybe just specifically for Amazon, but also just for e-commerce in general in the next couple of years.

SPEAKER_01 20:26

It it's just becoming more accepted. I think I haven't been in here for a long time, but there are people that I speak to who have been around for decades, right? Um, in this industry. And it's just been uh like the stepchild, you could say, but just um kind of in the back corner, right? Like a not worried about it, we're not considering it. But more and more proof is coming out, data, to back this can actually be a lever and a tool that's useful. I'm not saying always, um, but certainly there is an opportunity to integrate this to an existing business and use it as a revenue or data driver, right? To accomplish different things that you might want to accomplish. Um, it's becoming more commonplace even at like events now. I just went to one in January, the um uh NRF, the Rev is now, you know, a part of that. I think it so it's just becoming more commonplace and it's easier to have conversations. Um, and it's not just received as like, oh yeah, we'll just throw your stuff on a on a pallet and liquidate it. There's a whole bunch more that can be done. Um, you just need to find a partner that'll do it with you or set something up internally. You get like you get the products at the end of their life cycle. They hold a lot of value there in terms of what you could learn from that and and truly curating a positive consumer experience and establishing that within a brand, I think, right? And I hear operators talk about it, uh, maybe not just brand over everything, right? And so, like how. How can we do that together to improve the current situation? That's it. And yeah, man, like sometimes that just means we don't work together anymore, right? Like you get the you get the data and now you're able to go and what you were doing was working. Yeah. Cool. But like now you know, at least now that's a proven decision. So I'm excited. Yeah, I'm excited. I don't I don't feel the water getting cold at all. So hopefully you started a nice little trend here. You're just at the front of the wave. That would be great.

SPEAKER_00 22:27

Yeah. That would be great. Yeah. No,

Wrap Up And Where To Connect

SPEAKER_00 22:29

it's it's it's I guess like I said, I d I love these episodes where I can talk about with talk with someone who knows a lot about a topic that I have very little knowledge of. Um thank you. Again, I I learned a lot today. So I really appreciate you you being a guest and and you doing this. We'll definitely have to have you on for more discussions. I'd love to get you on maybe around uh uh around Prime Day, talk about the the the high rate of returns and holiday season stuff and all that kind of good things. So no, I really appreciate you do doing an episode with us. I know we are working together a little bit now, which is very exciting. Uh I feel legally I have to mention that that you're um the partner of Velocity. Um so it's very exciting to get this to all of our partners and to get them a little bit more knowledgeable, like me now, uh a little more knowledgeable about the return process and maybe where they could do a little bit better on that end. Yeah.

SPEAKER_01 23:17

So yeah, absolutely. I'm grateful to be here, man. Anytime Prime Day. Q4 is big too.

SPEAKER_00 23:22

So I'm grateful to be here. Thank you. Yeah, we'll have to keep an ongoing uh segment on just on returns and stuff like that with you. So you have to keep it going. Sweet. Yeah, cool. JD, I appreciate you joining. I will have your LinkedIn as well as your website's homepage down below. So if you're looking for some return help, looking to understand your return data a little bit better, check it out and we'll go from there. Thanks, man. Appreciate it. Thank you all for watching. I'm your host, Velocity Pete, and we will see you next week.