If you find that you are unable to fulfill the order or any portion of the order after it has been confirmed, it will be necessary to issue a refund.
Please note that this article applies to orders managed through your seller account in the orders section, when viewing a specific order. Orders managed via data feeds have additional functionality.
What is the difference between canceling an order and refunding an order?
In the simplest terms, an order cancellation is a pre-fulfillment task, and a refund is a post-fulfillment task. An order can only be canceled if it has not yet been confirmed. Once an order has been confirmed, if you are unable to fulfill the order or can only partially fulfill the order, it will be necessary to issue a refund.
This is primarily due to how Amazon systems process buyer payments for seller-fulfilled orders. When a buyer places a seller-fulfilled order, an authorization for the entire order amount is placed on the buyer’s credit card. This essentially places a hold on the funds, but does not actually debit the buyer's credit card.
Canceling an order will release the “hold” and because the buyer’s credit card was never actually charged, a refund is not necessary.
Once an order has been confirmed, the buyer’s credit card is debited for the entire order amount. This is true even if only a single item in a multi-item order has been confirmed.