FBA nightmares are all very REAL. We’ve experienced less than some over 7 years and 300,000 units, but called WHOA yesterday. Here is our checklist for those considering the FBA program showing why large sellers like ourselves would LEAVE the program:
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FBA cannot count, Check-in is totally broken. Items will NEVER be checked in accurately in the current system. Expect a continuous 5%-10% error rate across all shipments, regardless. (for Case Packs - shipping ONE product per box. If you send “Single Units” or Mixed Items in boxes expect a much higher Error Rate of 50%-60%. This will be YOUR fault, always.)
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If you accidentally send EXTRA units to Amazon, these are kept by Amazon as Free Units. Product sent but not entered in your Shipping Plan is an “unforgivable mistake” and you are punished by forfeiting said Inventory. For any Shortage in that Shipment which contained extras, Amazon now uses these “free extra units” to offset your lost units and you will receive no reimbursements for them. But, it gets MUCH WORSE!! If your “free extra unit” was worth $5 but your “actual lost unit” was worth $290, it doesn’t matter - all confirmed extra units have INFINITE VALUE to cancel any lost unit from said shipment. Extra Units Received can and will be used to offset VERY EXPENSIVE INVENTORY, regardless of financial loss to Seller! (We have experienced it for items in same shipment, someone needs to confirm if this crosses over to other shipments)
The fact that EXTRA UNITS HAVE INFINITE VALUE should give tremendous pause to use FBA. If you are selling products within a wide price range, you are setting yourself up for extreme losses when the inevitable mistake occurs. (Example: 3 Laptops + 12 USB Cables planned, employee puts 15 USB cables in box. 3 Extra USB Cables sent will DISQUALIFY REIMBURSEMENT for 3 lost laptops!)
AND, you will experience too many “EXTRA UNIT COUNTS” which you never sent and are truly not your fault. Factory Case sent has 24 pieces, but Amazon shows 27 received. These 3 “Bogus Extra” units become a BLANK CHECK for Amazon to cancel out any expensive unit THEY ACTUALLY “LOSE” from that shipment. Amazon will never believe your Reconciliations, no matter how obviously you can prove them. Got any proofs including Tracking Numbers, Signatures, Box Weights, Bin Checks, Pictures, Invoices, Video Evidence, Notarized Affidavits, Multiple Human Witnesses, Court Orders, Temper Tantrums, or FBI Investigations? This is now all irrelevant to Amazon.
- NO MORE RECOURSE! If Amazon doesn’t promptly “check in” your inventory, showing the Full Unit Count under the Reconcile Tab, then it is simply lost. Today, you cannot get $$ back for it, and Reps are just not friendly or understanding. Yesterday, Amazon refused to even investigate or acknowledge Tracking Number showing “Delivered” to their warehouse as proof of delivery, USING THEIR CARRIER. Wouldn’t even research it.
The only “proof of delivery” used by Amazon now is when someone opens your box and starts scanning products. (THIS IS INSANE, but 100% true). We’re not seeing Delivered Boxes appearing later if they miss initial Check-in. Delivered Boxes lost inside FBA warehouses are no longer checked in days/weeks later once Reconciliation appears. If missing Units don’t show up as missing in Reconcile Tab, they are simply kept by Amazon, and NO REIMBURSEMENT will be granted, even though you have PROOF OF DELIVERY. (Logically, a box Delivered but not Checked In should eventually get Checked, but Delivered goods have been vaporizing for too many, Tracking is IGNORED, and NOT being reimbursed.)
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NO INSURANCE CLAIMS HONORED! If you use Amazon Partnered Carriers and the product is lost before getting to Amazon, do not expect help from Amazon to recover your losses. The carrier will tell you it’s Amazon’s problem and Amazon will tell you it’s the Carrier’s problem.
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Amazon’s unwavering position is WE ARE INCAPABLE of making a mistake. They will trust their 2 week old trainee over their 7 figure veteran seller any day of the year. Expect to have your intelligence insulted constantly and continually, and you never have any credibility with Amazon. It is always 100% the Seller’s fault, regardless of your issue, so prepare for great difficulty and much time spent getting things resolved. Keep antacids handy
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EXPECT HIGH Buyer return rates, product losses, warehouse damages, & extra overall costs. Buyers are abusing Prime benefits like never before. For each sold unit, you’ve lost Shipping costs + 3% of selling price. Full refund is always given to the buyer from YOUR current proceeds. ($15 unit nets $9 after fees. Buyer buys 6 of them then returns. We got $54 to our Settlement, but $90 refund is taken back). Our average loss on Returns is 40% of retail price. Some issue will affect at least 5% of all units sold. If we sell 100,000 units, FBA creates gobs of extra work for 5,000 of them.
Buyers WILL destroy, partially use, do experiments, or simply exchange your products for something else, but always get a FULL refund. Amazon never checks any return for accuracy or completeness and virtually never punishes buyer Fraud and Abuse toward a seller. (They take action on items THEY sell, but not on ones YOU sell)
Buyers are usually charged something for Returns EXCEPT for these 2 reasons: “Item Defective”, or “Not as Described on Website”. 95% of buyers lie about the Reason they are returning - to get that Free Return Label. Amazon never shares return $$ with sellers. But Amazon punishes you for these “bogus return reasons” and could close your listings.
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Larger FBA orders are usually bad, seldom good. You are charged 100% FBA Fees for each unit, so it’s sickening when Multi Unit orders are RETURNED. We finally set Max Order Quantity = 3 to stop this nonsense. Competitors love buying 50+ Units and then return them to drain your inventory or crush your business, costing you $100’s each time. Businesses love to make large orders before testing product, then return it all. Amazon has NO MECHANISM to protect against ABUSE, buyer stupidity, or rogue competitors.
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INVENTORY HOLDING ACCOUNT is a giant problem and will delay or prevent reimbursements. It also makes Auditing and Reconciliations a nightmare. Amazon does not keep “clean books” like other Fulfillment companies. After they pad their “Inbound Receive Counts” with false positives, or “find reimbursed units later”, they add units to a “Holding Account”. This means NOT a part of your Inventory, not available to be sold, and Amazon owns them. Amazon keeps so many Units off your books and uses them to offset future shorts, customer returns, and warehouse damaged units. You never know what is in this account or when it will appear. This whole thing seems very bizarre and extremely shady, but does NOT appear to benefit sellers or make us feel comfortable at all.
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INSTANT Buyer Refunds, forever Seller Reimbursements. Every time a buyer clicks the Return button, the money is instantly taken. Buyer usually doesn’t return the item but it will be 45-65 days before you receive Reimbursement. Amazon issues “auto reimbursements” about 50% of the time. The rest of the time you will have to follow up, open the babysitting Case, or hire 3rd party software to do each and every reimbursement. It gets old!
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3rd Party Auditing. You will need a service and pay them $100’s to keep track of all your Lost Inventory and Buyer Refunds so you can collect all your $1000’s rightfully due once you reach a certain volume. Typical cost is 25% of the refund collected from Amazon.
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Stealing SUPPLIER Information. We have come to realize that so many Shortages are INTENTIONAL, otherwise they make no logical sense. Amazon did not get this big BEING stupid, but it is very clear they PLAY stupid all too well. It became CRYSTAL clear when Invoices became required for 100% of all Cases. (Amazon creates a fake Shortage on all your items, forcing you to provide Invoices to get money back. NOW Amazon has captured your Supplier Info on 100% of FBA items, and soon they will be selling them. It is PUBLIC knowledge they were doing this, but HOW they are doing it is ever more clear.)
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Your FBA Inventory is ALWAYS in motion, and some units will move multiple times, which wears the packaging out. If you are selling large amounts of an FNSKU, 40-70% of Units are constantly in Transfer, which means they cannot be sold until landed, requiring a much larger inventory to meet demand and more “backorders” for buyers. You are still charged Storage Fees on all items, while it takes WEEKS for them to crawl around the USA.
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Inbound Receiving and intra-FC transfers are NOT fast. From the time UPS Ground reaches your Receive Center it will take anywhere from 10-20 days to become mostly available to order. Pallets take 20-30 days to reach Dock plus another 20 days to reach Buy Box. When 1 out of 120 FC’s sells a unit, another one starts moving there. Today, 40% of your total FBA inventory NEVER stops moving until it is 100% sold out. It takes a LOT longer to sell out because of all these time consuming transfers.
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STORAGE Fee and Dimension “calculations”. The way their laser scanner works is to create a “virtual box around absolute outermost points”. Imagine a rolled up Newspaper or Socks inside a large plastic bag. While you could fit 50 of them inside a 12x12x12 area, the Laser Dimensional Scanner doesn’t look inside clear plastic bags, nor consider these bags are stackable in a bin. Thus, you may see 8-12 Newspapers or Sock type products taking a full Cubic Foot of Storage instead of 50+ units. Dimensions Control FBA Shipping costs too, so using plastic bags will kick your FBA Fee up to next tier because of extra plastic flopping around. Storage Fees get really high, really FAST, becoming insane during the Holidays. You must shrink down your packaging to an absolute minimum, pack tightly into small boxes, shrinkwrap rather than Poly Bag. Failure to do this will obliterate your profits, but it is NOT intuitive or well explained in Help.
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Extra PACKAGING Requirements to use FBA. Few people can figure this one out before experiencing substantial learning pains and FBA restrictions. All Units sent to FBA must be in adequate package suitable for shipping that unit as is. Amazon doesn’t baby any items, they throw stuff around like UPS terminals. So if you are going to go through this much trouble, just ship it yourself.
Too many sellers have FBA privileges suspended because they cannot figure out how to adequately prepare their items. These fly down conveyor belts at 60mph and must survive rough handling in and out of bins traveling cross country to many Fulfillment Centers. EVERYTHING must be boxed, bagged, taped, flaps secured, bubble wrapped, or shrinkwrapped to protect against dropping, kicking, throwing, scuffing, tearing, dirt, fingerprints, etc. The buyer must receive your FBA units in PRISTINE brand new condition just as when they walk into a retail store.
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Amazon will be selling YOUR TOP products soon. This just happened to us! Once something reaches 10-20 units per day, you can expect Amazon to be your next Competitor. Amazon is now selling our #1 Seller which forces us off the page or to drop price $5 and cut Margin by 50%. Of course Amazon and Suppliers deny such things, but the truth is very plain. This can cost you $10,000 on up each time it happens, but make no mistake, it HAPPENED only because you used FBA
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Stranded Inventory. There are too many FC which do not process Inventory Removals. At least once per month we try to pull something and it will take WEEKS to be “transferred to a warehouse that can send back to us” which requires opening a ticket. It is bizarre that all Amazon Warehouses send Buyer orders, but all can’t process Seller MCF or Removal Orders??
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You must babysit everything, too little tooling for your benefit. Amazon does NOT provide enough automated process for the Seller. You must OPEN A CASE to request refund, open reimbursement claims, solve Inventory problems. Once you reach 1,000+ units per month, it becomes exhausting how much work actually needs done daily. After all Amazon automates EVERYTHING for itself, just nothing for the Seller which BENEFITS them. Any process which TAKES from a Seller is fully automated however
We should never have to “apply for reimbursement” Amazon’s system should do it’s own automate audits, seeing all Received Units - Sold Units - Remaining Units = Reimbursed Units. This could all be so simple, yet Amazon makes it way too difficult. FBA keeps you in that constant state where Amazon rightfully owes you lots of $$$, for which you will have to Open Case, experience difficulty collecting, and much of it will be Reduced or Denied.
- Artificial Intelligence = Satan. I cannot put into words how utterly and absurdly incompetent this “technology” is. I call it Artificial INCOMPETENCE. It virtually never makes the right decision. It seldom fully understands your need, but can NEVER fully meet it without requiring Human Action. BUT, Amazon still thinks its smarter than any Seller who ever lived, and the Terminator has been fully released to wreak havoc in your business.
Also bear in mind, Amazon’s AI cannot make a mistake either, and all of it’s decisions are final. Amazon is using A.I. to do virtually everything in its operations, and to make massively impacting mission critical decisions affecting your account and livelihood. When it visits your account or gives you it’s Answer it’s pretty much never the desired outcome. Keep Valium Handy for all AI interactions
- LACK OF REAL SUPPORT, NONE LEFT FROM USA. This should be #1 on the list, but you shouldn’t need Support every day. WHEN you need Support, good luck! Amazon has fired all USA workers, the only staff appearing to be from the USA are salesmen for FBA Europe or stuff like that. So you have 7 and 8 figure businesses making Amazon over $2,000,000 per year net fees. Their mission critical issues are being decided by someone in India or Phillipines making $150 per month who hasn’t USED AMAZON, nor SOLD ON AMAZON, nor RAN A BUSINESS, who clearly does not UNDERSTAND what the Seller is trying to say. They don’t understand our Language or our Terms, they don’t share our values or beliefs. Worse, they are GETTING A VERY BAD ATTITUDE and it’s just not worth it to have to deal with them. Arguing is pointless once a couple offshore decisions are made, you aren’t winning
If you don’t do FBA, you will rarely have to deal with any Support. So few issues with Merchant orders and a fraction of the returns. It seems better to take the sales hit and avoid dozens of high stress hours per month dealing with myriad issues just to make a few $1000 extra. Too many Prime orders aren’t permanent anyway!
The idea that 85% of Amazon buyers are all Prime is simply NOT TRUE. When we turned off our Merchant Fulfilled offers, sales plummeted. Prime buyers account for 70% of sales when an item is PRIME. When the item is not Prime, sales reach 80% of Prime volume. There are some people who filter for Prime only, but those very people will buy 20 things and return 17 of them.
We no longer care what the fallout is, even if sales fall 80%, we are just done with FBA until it changes. We are losing $1000’s per month, but when Amazon is NOT accountable for DELIVERED FBA GOODS, this has ceased to be a manageable relationship. It is unacceptable and OUT of control what A.I. is doing and yet how vulnerable we feel with $100k inventory sitting in warehouses which could be snatched from us at any moment and WE HAVE NO RECOURSE??
