Coming across used items when shopping online is very common. But, normally, customers back away from these offers because they believe they’ll receive faulty products.
However, most shoppers don’t realize that some of these items were returned unused. So, they have a great value at a fraction of the original price.
That is the key to Amazon Warehouse: The marketplace sells open-box and like-new items to customers at great discounts.
But what does this mean to sellers who ‘waive’ part of their stock to Warehouse deals? Let’s find out.
In this post we’ll detail how Amazon Warehouse works and the challenges it poses to sellers.
What is Amazon Warehouse?
Simply put, Warehouse Deals is another branch of the retail giant’s machine. You could say that it is a second Amazon marketplace.
Warehouse Deals focuses on discount items. Its purpose is to sell any products that do not fit Amazon’s high standards.
Let’s say a customer receives a brand-new order from the marketplace. Soon, he realizes that the item is a different color from what was ordered.
So, the shopper then returns the product. Some items will go back into the seller’s inventory. Those that don’t make the cut, but are still in “good” condition, may end up as Warehouse deals.
Amazon reviews each product and chooses those that qualify as warehouse deals. The marketplace then confirms that an item is fit for sale as a “used item.” And automatically, its price will go down.
Customers can then shop quality used products in 25 different departments. Best of all, they can buy those items at a fraction of the original price.
Some of the most popular items in Amazon Warehouse are:
- Books
- Tools & Hardware
- Video games
- Smartwatches
- Electronic devices
- Home accessories
- Headphones
Granted, Amazon Warehouse amounts to lottery shopping. Users must check often and order quickly, since stock can vary, and the best deals get snatched quick.
Amazon Renewed
The Renewed marketplace is similar to Warehouse Deals. Amazon Renewed features repaired and refurbished products at great discounts for customers.
Renewed items have minimal wear & tear signs (when seen from 12 inches away). Plus, any missing accessory is replaced by Amazon (some may be from generic brands).
Customers can save from 30% to 50% buying renewed items. These can range from the following categories:
- Smartphones and smartwatches
- Tablets and computers
- Home, kitchen and garden tools
- Consoles and video games
- And many more
Amazon Renewed is also backed by the Amazon Renewed Guarantee, a 90-day return policy if the product doesn’t work as expected.
How Does Amazon Warehouse Work?
Amazon Warehouse products go through a 20-point quality inspection process. When an item is deemed fit for the marketplace, Amazon gives a complete description about its overall state.
Product listings describe the item with 1 of 4 conditions:
- Like New. The item is in mint condition, with all its accessories, and the packaging may have minor damage.
- Very Good. The item has limited use but remains in good condition. It may show some small scratches or blemishes, and have some accessories missing.
- Good. The item shows signs of wear but is in overall good condition. Accessories, manuals or assembly tools could be missing. The packaging shows some damage.
- Acceptable. The item is fairly worn but functions properly. It may show visible scratches, blemishes or dents, and may lack multiple accessories.
One potential downside for buyers is that Warehouse products are void of the manufacturer’s warranty. However, all items are backed by Amazon’s fulfillment machine:
- Products are packed, shipped and delivered by Amazon.
- All Warehouse deals are Prime Eligible.
- Users enjoy 24/7 post-order customer service.
- Products are backed by Amazon’s 30-day return policy.
What Sellers Should Know About Amazon Warehouse
You might be thinking, “Why not sell through Warehouse Deals?” Well, only Amazon can sell products through Warehouse.
But how can the retail giant sell your products without your permission?
First off, your Seller Central settings are set to allow Amazon to repackage and resell for unfulfillable and reimbursed items.
Keep in mind that Amazon does not have to notify you when they sell your products. Besides, Warehouse items are fully managed by Amazon.
And this is within policy. Let’s look at Amazon’s Return Policies to understand how Amazon Warehouse may affect sellers.
The Amazon FBA Lost & Damaged Inventory Reimbursement Policy states that sellers can get product refunds under the following conditions:
- Items get lost or damaged in Amazon’s fulfillment centers.
- Items go missing under Amazon’s care for 30 consecutive days.
- Items get lost or damaged by carriers or distributors.
- Items being shipped to an Amazon fulfillment get lost or damaged by an Amazon partnered carrier.
If Amazon damages or mixes up your products before sending them out, the marketplace has two options:
- Replace the item with one using the same FNSKU, or
- Pay the value of the lost inventory to the seller
The retail giant considers your overall sales history, the ASIN sales history, and average FBA selling price to determine an item’s value.
When this situation arises, Amazon will reimburse you for the shipping cost. But according to their policy, that allows them to sell the returned items at Amazon Warehouse.
Everything we just discussed is within policy, because the marketplace pays you when they issue a reimbursement.
Note: the replacement value cannot exceed $5,000. When a product exceeds that price range, Amazon recommends purchasing third-party insurance.
Customer Experience
This means you won’t deal with processing returns, but you’ll also lose control over customer experience.
Users don’t usually look at the sales channels, but they do consider your brand’s quality.
So, if a customer purchases a faulty item from Amazon Warehouse, they will blame you, the seller.
And when you are out of the loop, you can’t make amends to unhappy buyers.
Pricing
When you have products in Warehouse Deals, customers have two options: choose the new, more expensive offer, or go with the use, discounted sale.
Amazon warehouse may reduce your pricings, which means you could be competing against yourself
Another point to consider is the Buy Box competition.
Since Amazon Warehouse can list products as special offers, they can beat you out of the Buy Box with your own products.
If you’ve been selling on Amazon for a while, you know that winning the Buy Box is an essential part of your success.
Final Thoughts
Do you think Warehouse Deals can take a toll on your business? Then maybe it’s better to have your open-box products returned directly to you, and not to Amazon.
As we said, Seller Central is set to have Amazon reimburse you the returned product. All you need to do is remove Amazon’s option to repackage damaged and open box items from your settings.
You will have to pay the return fees yourself, of course. If you’re not there yet, then you can resell those perfectly good products in another marketplace.
But you have another choice. If you find your items listed on Amazon Warehouse, contact the marketplace to suggest changes, when you see incorrect data.
The goal is to keep an open connection to your customers. Control the selling journey, manage expectations and avoid unhappy returns.
Better to stay in the loop to boost your reputation and always deliver great products.
Author
Esteban Muñoz
Esteban is an SEO copywriter at AMZ Advisers, with several years’ experience in digital marketing and e-commerce. Esteban and the AMZ Advisers team have been able to achieve incredible growth on the Amazon platform for their clients by optimizing and managing their accounts and creating in-depth content marketing strategies.
