Amazon provides a label with the address you specify. The buyer uses it to return the item to you, you refund them when you receive it. What you refund them depends on the reason for the return. If they have simply changed their mind, you have to refund the price and the outbound postage. If it’s the wrong item or a materially different item from that listed, or a faulty/damaged item, you have to refund the return postage also (at the cheapest rate). If the item is returned in a poorer condition than you sent it, you are entitled not to refund the entire amount, but good luck with proving that the buyer is responsible that! At all costs be polite to the buyer and go along with the process in order to pre-empt negative feedback or an A-Z claim, which will damage your all-important seller metrics.

For more info, click the help button at the top of your Seller Central screen and search for “Manage Returns”.