Inventory glossary
What is Restocking fee?
Restocking fee is a charge a supplier or retailer deducts when goods are returned, meant to cover the cost of inspecting, repackaging or putting the item back into stock.
If your suppliers charge restocking fees on returns, it changes how you handle wrong orders, damaged shipments and excess stock you want to send back. Knowing the fee upfront helps you decide whether returning slow-moving stock is worth it or whether you are better off discounting it and selling it through.
When you negotiate with suppliers, ask about restocking fees before you place a purchase order, not after you need to return something. Build the fee into your decision on order quantities, since ordering too much and hoping to return the excess can cost you more than expected.
Example
A candle store orders 200 units of a scent that does not sell. The supplier agrees to take back 80 units but charges a 15 percent restocking fee on the return value. The 80 units cost 6 dollars each, so the return value is 480 dollars. The fee is 72 dollars, so the store gets back 408 dollars instead of 480.
Common mistakes
- Assuming all suppliers accept returns without checking their restocking fee policy first.
- Not factoring the fee into the real cost of overordering when planning quantities.
- Forgetting that restocking fees often apply to customer returns too, not just supplier returns.
Restocking fee and SteadyShelf
SteadyShelf helps you order closer to actual demand so you rely less on returning excess stock and paying restocking fees in the first place.
SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.
Related terms
Return to vendor · Purchase order · Excess inventory · Overstock · Supplier
FAQ
Does a restocking fee apply to every return?
No. It depends on the supplier's policy and sometimes on the reason for the return, such as a defect versus a change of mind.
Can a store avoid restocking fees entirely?
Only by ordering quantities it can reliably sell, so returns are rarely needed. Some suppliers also waive the fee for damaged or incorrect shipments.
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