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Update to the FBA inventory reimbursement policy
Note: This article was updated on December 19, 2024, to include a clarified definition of "manufacturing cost."
We’re updating our Fulfillment by Amazon (FBA) inventory reimbursement policy to help provide you greater transparency and more predictability in how reimbursements are calculated for items that are lost or damaged before a customer order. This will help drive a more consistent approach that works as we support sellers with supply chain services across their sales channels.
Effective March 10, 2025, we’ll reimburse you based on the product manufacturing cost of the affected inventory. "Manufacturing cost" means your cost to source a product from a manufacturer, wholesaler, reseller, or produce the item if you are the manufacturer. It excludes costs such as shipping, handling, customs duties, or other costs.
To help provide you greater control and accuracy, you can choose how we determine the manufacturing cost for your products:
- We’ll provide a manufacturing cost estimate for you. This estimate is based on a comprehensive evaluation of comparable products sold by Amazon, by other sellers, and through wholesale channels.
- You can provide your manufacturing costs directly. If you don’t provide your own costs, we’ll automatically apply our estimate which you can change when you’re ready.
To help you prepare, you can view and manage manufacturing costs in the Inventory Defect and Reimbursement portal starting in late January using a new Manage Your Manufacturing Cost page.
We’re constantly refining our operations and processes to prevent products from being lost or damaged and having to be reimbursed. For cases where reimbursement is necessary, we’re focused on ensuring timely compensation. We now offer automatic reimbursements for items lost in our fulfillment centers, saving you time, and eliminating the need for you to submit a claim to receive reimbursement.
For items that are lost or damaged after a customer order in Amazon’s store, we’ll continue to reimburse you for the sales price on the original order minus applicable fees.
For more information on the policy change, please visit the Changes to program policies.
243 replies
Seller_3qllv6SY8mdjV
This makes no sense because the cost the seller shoulders to get the product to Amazon obviously includes shipping, prep costs, *ahem* "Placement fees", and MANY other factors. NOT just the manufacturing cost. I might pay a supplier $10 for a product, great. But then I have prep costs, packaging, shipping, placement fees, duties, etc. My actual money out of pocket for the item might be $15 by the time Amazon has the chance to lose it in their warehouse. So if the product is selling for $30, it would make sense for Amazon to assume my cost is $15. Roughly half of the selling price. THAT would be fair. I might not even complain if they assumed $14. But we all know that in this scenario they will "estimate" the cost at $4-$5.
How much do you want to bet Amazons "esitmated" cost will be laughably, outrageously, ridiculously low? And as mentioned, even if I take the time to show them the invoice (which they will steal that information to use against me by the way), that IS NOT my actual cost to get the product to Amazon, so its a lose-lose.
How much more do they think they can squeeze us?
Do they really think killing the goose to get the golden egg is a good idea?
Seller_TyNPnzv9SaYa3
Just spoke with one of our suppliers who also sells directly to Amazon (vendor central) they where just terminated as a vendor and told they have to switch to FBA. They are totally unprepared for dealing with FBA and are gonna get hammered by both Amazon and customers.
Seller_hBE1qZpAB3GIB
To take nothing away from the concern over Amazon's definition of "manufacturing cost" or from anyone's previously stated objections to this policy, there's a phrase in that sentence that is doing a LOT of heavy lifting that isn't getting the same kind of attention: "based on."
"Based on" opens the door to meaning almost anything. It could mean that Amazon will give you a number of cents equal to the first non-zero digit of your manufacturing cost. Or, if Amazon reimburses you 0.3% of your manufacturing cost each time, that's still "based on the product manufacturing cost."
I might otherwise be content to believe that this phrasing is an accident of word selection, but it is provided in the context of explaining how Amazon will be converting random amounts of our inventory to unsellable and not equitably reimbursing us for doing so, so I'm not giving the benefit of the doubt. Maybe @Jim_Amazoncan put our minds at ease by explaining that "reimburse you based on the product manufacturing cost" truly means "reimburse you an amount equal to the product 'manufacturing cost.'"
Seller_gwzuNYC3ogYNo
Does anyone have this 'Manage Your Sourcing Cost' Page on their Inventory Defect and Reimbursement page? How good/bad is it?
Seller_XllmU7FPBolLr
@Jim_Amazon - what is the policy guidelines when representing Source Value? I have entered product MFG cost and uploaded a pdf invoice from my last order with the MFG. I am being denied they say >> "Submitted value falls outside policy guidelines. View Policy" > https://m.media-amazon.com/images/G/01/rainier/help./Redlined_FBA_Reimbursement_policy_US.pdf The link to the policy is a pdf that is showing the current edit changes in Microsoft Word that someone was doing. Its incomplete and doesn't give much substance to be honest.
- Is there a threshold or percentage that Amazon automatically denies if its "X" amount above what they are estimating?
- Besides waiting 30 days to again show Amazon our actual invoice price, is there another appeal process through seller support?
- If Amazon is saying they will pay MFG cost, how can Amazon deny that if we are showing the invoice that we paid?
As if this policy isn't already getting enough bad feedback and negative attention, the fact that sellers can't even get MFG cost back (separate from all the other inherited costs of running your business) and Amazon is going to low ball all of the costs from the get go is a kick in the rear.
Seller_gwzuNYC3ogYNo
@Jim_Amazon
When the policy takes effect on March 31, 2025, you'll also be able to dispute the amount using the Get Help page if we processed a reimbursement transaction.
-Jim
Is this in the documentation or hearsay, for lack of a better word?
Can we provide invoices AFTER the auto-reimbursement has been applied?
It would be simpler to upload files as needed than to provide 500, 1000, or 2000 individual files proactively.
Seller_qYuL3d46JR1Py
@News_Amazon
We are the manufacturer. How should invoice look like? Any samples?
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