Major Changes to Amazon’s FBA Reimbursement Policy
Amazon has announced a critical update to its FBA Inventory Reimbursement Policy, set to take effect on March 10, 2025. Under the new policy, reimbursements for lost or damaged inventory will be based on the **product's manufacturing cost**, rather than its retail value.
Previously, Amazon reimbursed sellers at the **full retail price** of the unit, minus **FBA storage fees and Amazon’s commissions**. The shift to manufacturing cost calculations represents a significant decrease in the amounts Amazon will pay sellers when inventory is lost or damaged in fulfillment centers.
What is Manufacturing Cost?
Amazon now defines manufacturing cost as the **cost to source or produce a product**, excluding additional expenses such as:
- Shipping and freight costs
- Customs duties and tariffs
- FBA storage and fulfillment fees
- Marketing and advertising expenses
This means sellers will likely receive **lower reimbursements** than under the previous policy, especially for products with high profit margins.
How Sellers Can Submit Manufacturing Cost Data
Amazon is introducing a **"Manage Your Manufacturing Cost"** tool in **late January 2025** that allows sellers to:
- Enter their own manufacturing cost data
- Upload supporting documentation (e.g., invoices, supplier agreements)
- Review Amazon’s estimated cost calculations
If a seller does not provide their own cost data, **Amazon will estimate the manufacturing cost** based on marketplace trends, which may result in lower reimbursements.
Impact of This Change on Amazon Sellers
Key Challenges
- Lower reimbursement amounts: Since retail price is no longer used, sellers will receive significantly less compensation for lost or damaged goods.
- More administrative work: Sellers must now gather invoices and cost documentation to ensure fair compensation.
- Risk of underestimation: Amazon’s cost estimates may not reflect actual sourcing costs, leading to lower payouts.
Potential Benefits
- More transparency: Sellers who provide accurate manufacturing costs can ensure they receive fair compensation.
- Less reliance on fluctuating sales prices: The new system avoids inconsistencies in marketplace pricing.
How to Prepare for This Change
Sellers should take these steps to protect themselves under the new reimbursement policy:
- Gather cost documentation: Maintain invoices, purchase orders, and supplier agreements.
- Regularly update cost data: If production costs change, ensure your records reflect the most accurate pricing.
- Monitor Amazon’s estimates: If Amazon’s cost calculations are too low, submit proper documentation to correct them.
- File reimbursement claims carefully: Keep track of lost or damaged inventory and ensure all claims include proper documentation.
What If You Receive an Unfair Reimbursement?
Since this policy could result in significantly lower reimbursement amounts, sellers should be proactive in disputing underpayments. If you believe Amazon has undervalued your inventory, you should:
- Submit a claim through the new "Manage Your Manufacturing Cost" tool.
- Provide supporting documents such as invoices, supplier receipts, or purchase orders.
- Escalate to Seller Support if your reimbursement amount is significantly lower than expected.
If Amazon rejects your claim or refuses to adjust the reimbursement amount, legal intervention may be necessary.
Need Help? Contact AMZ Sellers Attorney®
With Amazon’s new policy dramatically reducing reimbursement amounts, sellers must be prepared to defend their rightful claims. If you receive **unfair compensation** or need help submitting cost data, our team at AMZ Sellers Attorney® is here to assist you.
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