The Amazon Grade and Resell Program is an amazing opportunity for sellers to reclaim revenue and maximize their inventory, despite facing returns from buyers. In this fresh new interview of the MyFBAPrep Interview Series, James Lewis of Amazon and Rachel Go from MyFBAPrep unpack why the program is such a huge win for sellers, how to fully leverage it, how it works, and what to watch out for.

Transcript

[00:00:00] Rachel Go: First of all, thank you, James, again for joining us. To kick things off, could you please introduce the new Grade and Resell program and who it’s for?

[00:00:10] James Lewis: Hi Rachel. My name’s James Lewis. I am the Senior Program Manager for Grade and Resell in Europe. So, Grade and Resell is a program that helps Fulfillment by Amazon sellers recover value from their unfulfillable customer returns. So, instead of paying for removals or disposal, sellers can transform returned inventory into an additional revenue stream, and it gives them access to a new segment of deal-focused shoppers. So, instead of the sellers having to process returns on their own, they can have Amazon grade the eligible customer returns for resale into a used condition, and then, Amazon will create those listings on the seller’s behalf. And once the product is listed in a used condition, sellers continue to maintain control of the pricing and the listings, similar to how they do with their new inventory currently.

[00:01:00] Rachel Go: So, why did your team decide to introduce this initiative?

[00:01:03] James Lewis: There were three main reasons, the first one being that returns represent untapped value, the second being that customer demand for quality secondhand goods is rising. And the third is that obviously as Amazon, we want to extend the product lifecycle to help meet our sustainability goals, so through Grade and Resell, sellers can essentially achieve all three. They can convert those returns into new incremental sales and get better overall recovery than they would with disposals or removals and at the same time, they’re connected with Amazon customers that are actively seeking out discounted pre-owned items in a good condition.

[00:01:48] Rachel Go: So, what are some of the key factors or considerations that went into the mechanics behind this program?

[00:01:53] James Lewis: We needed a solution that was simple for sellers, firstly, that was good quality and something that preserve the control that sellers need. For many years, we’ve had a two-stage grading process, which we’ve used in retail, and that’s an initial check to identify if any returns can be sold as new, and then a detailed secondary inspection, which assigns one of the four used item conditions. Those conditions are “Like New,” “Very Good,” “Good,” and “Acceptable.” And once we’ve assigned those conditions, we then, generate customer-facing condition notes, which is a description of the condition of that used product. So, FBA sellers have always had access to that initial check, but Grade and Resell offers sellers the opportunity to utilize that secondary inspection, and get their items graded into a used condition as well.

[00:02:48] Rachel Go: So, what are some of the biggest mistakes you see sellers make in the Grade and Resell program, or what do you want to warn them not to do?

[00:02:55] James Lewis: So, when sellers enroll, they’re asked to enter the recovery percentage of the new price that they want their items to be listed at. For example, if they’re selling something in a used “Like New” condition, they might want to set the price at 90% of the new price.

[00:03:12] However, some sellers accidentally enter the discount percentage instead. So for example, they put 10% instead of the 90%. So, that obviously means that they price the items way too low. So, my advice on that would be just to really make sure you double- and triple-check those numbers before saving your settings.

[00:03:32] I should also point out that sellers can go back at any time to update those settings. But it’s a simple thing that obviously could have big consequences if you don’t get [it] right.

[00:03:43] Rachel Go: And what are your top tips for sellers to fully leverage the new Grade and Resell program?

[00:03:48] James Lewis: Firstly, I would say that enrollment is simple. So, my top tip is to give it a go and see if it works. By having the items graded and resold by Amazon, sellers should find that they save time and money processing their returns. They should also make use of Returns Central and the Grade and Resell report in Seller Central, which will give them great insights into the G&R performance.

[00:04:13] I would also say to sellers, your feedback really matters to us. And a lot of the existing features that we now see in the program were derived from feedback that we got during the EU launch. So, I really encourage sellers to share your experiences with the Grade and Resell team, because that’s what helps us to improve the program for everyone.

[00:04:35] Rachel Go: Are there any special restrictions or qualifications in joining the Grade and Resell program?

[00:04:40] James Lewis: Yes, there are a few. Not everything can go through the Grade and Resell program. There are a few eligibility rules that we need to keep in mind. So, for starters, items need to have an average selling price above around $13, and that’s because we want sellers to still get profit out of this after the FBA and Grade and Resell fees. So, obviously a higher priced item gives you a better net recovery. There are also some products [that] we can’t include, such as meltable products, consumables, anything that’s with an expiration date or hazardous or needs special approval.

[00:05:20] We would also exclude things like counterfeit products—basically anything that you wouldn’t expect customers to want to buy in a used condition.

[00:05:31] Rachel Go: What are the fees for the Grade and Resell program and how are sellers charged?

[00:05:34] James Lewis: So, the program’s got flat processing fees, based on the size and the weight of the item. For example, in the U.S., it’s $1.50 for a small standard-sized item, and $1.80 for a large standard item, and the full rate card can be found in the Help pages on Seller Central. The great news for sellers is that if an item is too damaged to be resold and it gets graded as unsellable, they won’t be charged any fees at all.

[00:06:02] So, the sellers only get charged and they’re only paying for what actually gets a second chance. The sellers can keep track on their fees in a few places on Seller Central: the Payments dashboard—Statement view on the FBA fees and the transaction reports are the best places, and they’ll show up there as Grade and Resell fees.

[00:06:25] And as I’ve already hinted at, to make the most of the program, we recommend enrolling the higher priced items. That way, the sellers will see a more solid return after the fees.

[00:06:36] Rachel Go: Can you go over how sellers can decide the pricing discount of items that go through the Grade and Resell program, and how does that look like?

[00:06:43] James Lewis: Yeah, of course. Sellers have a lot of flexibility when it comes to pricing their used items. So, as I’ve already briefly mentioned, when you first sign up, you’ll find the pricing controls on the Enrollment page. So, you set those recovery percentages based on the item’s condition. Whether it’s “Like New,” “Acceptable,” “Good,” “Very good” and the sellers can go back and update those settings at any time. The sellers can also update individual listing prices at any time, so you’re not locked into those pre-set prices. To do that, all you need to do is hop onto your ‘Manage Pricing’ on your listings and tweak the individual listings as you see fit.

[00:07:22] One thing to keep in mind, as this does catch sellers by surprise, is that the used prices currently do not automatically update when the new item price changes. So, for the time being, you’ll need to manually sync those used prices, and having said that, we are launching a new feature later this year that will automate that.

[00:07:42] But my advice for now is to regularly check those prices and update if necessary.

[00:07:48] Rachel Go: Can sellers decide which items go through the Grade and Resell program, or what about which SKUs?

[00:07:53] James Lewis: Yes, absolutely. So, sellers have control over which items participate. Sellers can remove selected ASINs at any time, using the Enrollment page, which is under the Automated unfulfillable settings.

[00:08:08] Sellers have the option to exclude up to 2000 ASINs, and all they need to do is add a list of those ASINs and then, they will get excluded. For tracking, sellers can track their G&R SKUs and their inventory pages by looking for the standard naming format that G&R SKUs have. So, all G&R SKUs will have the prefix “amzn.gr” and they can search for that in the inventory pages to seal their G&R SKUs.

[00:08:39] You can’t manually restock those G&R SKUs, and that’s because of the nature of how they are created. We are checking the condition of that item, and then, creating the SKU based on the damage and the condition that the item has.

[00:08:53] Rachel Go: Can you share some of the initial seller feedback on the program?

[00:08:56] James Lewis: The feedback has been really encouraging and there’s probably three key themes that we see. The major one is the lower storage costs and fewer pile-up of returns. So, sellers have shared that before enrolling, most of their returns just sat in the warehouse and they were accruing storage fees.

[00:09:15] But with Grade and Resell, they’ve been able to clear that out and recover value without much extra work on their side. Secondly, fewer returns are getting sent back to them, so they’re seeing a noticeable drop in the number of returns making their way back to their own location. So, that obviously helps them to reduce their overheads, and save time.

[00:09:38] And then, thirdly, sellers have shared that even small recovery adds up and really benefits them. Some sellers reported that just 5% of returns being recovered has made a significant difference to them. So, I’d say, overall sellers are happy and they’re seeing real value in the program. [For] some, it’s the money savings, [for] some, it’s the efficiency and [for] some, it’s just not having to worry about handling those returns.

[00:10:04] Rachel Go: Can you tell us what other countries the Grade and Resell program is available in?

[00:10:09] James Lewis: Currently, Grade and Resell is open to all sellers, with businesses in the US, UK, or EU.

[00:10:17] Rachel Go: Will reviews for the Grade and Resell items affect seller’s original product ratings?

[00:10:22] James Lewis: Currently, yes. And reviews for the resold items may contribute to your product’s overall star rating. So, we’re continuing to refine the details on this, but in general, customer feedback on the g G&R purchases is linked to the main listing, and that being said, your account health will not be impacted by any negative feedback tied to G&R items, specifically. If there’s an error on our end, we make sure that doesn’t impact your performance metrics and we are committed to supporting your business whilst ensuring transparency for the customers.

[00:10:57] Rachel Go: How do returns work in the Grade and Resell program? So, for example, if an item is returned twice, do they go into unsellable inventory? Are there any thresholds for how many times an item can go through the program? Can you take us through that?

[00:11:11] James Lewis: Returns work in the same way as with new items. The customers have the same returns promises, quality guarantees, and right now, we don’t have any limits on how many times an item could go through G&R and then, be returned. So, we don’t automatically block an item just because it’s been returned more than once. That could potentially be a concern, and we understand that, and that’s something that we’re actively keeping an eye on. And our goal is to keep the process as flexible as possible while obviously ensuring that customers receive quality products. So, again, I would say to sellers, if you’re seeing some issues around this, please raise it to us and give us that feedback, so we can improve the experience for everyone.

[00:11:59] Rachel Go: Do you have any last tips or encouragement for sellers who are in the program or thinking of joining?

[00:12:04] James Lewis: To sellers that are in the program, I would say thank you and please keep using it and please give us that feedback, so we can make it even better for you. For sellers that are thinking about giving it a go, like I said earlier, I do recommend just try it out. You shouldn’t really stand to lose anything. It should just be gains in profit or time or recovery.