Sellers are reeling after Amazon dropped a bombshell announcement on those who use FBA to store and fulfill their inventory. One reader told us, “Now FBA is going to make it worse when they lose things, which happens on the regular basis.” Not only will Amazon’s error in “losing” inventory be more costly to sellers when its policy takes effect next year, but sellers are concerned it’s another way for Amazon to learn exactly what sellers are paying to source their inventory.
The Amazon merchant told EcommerceBytes:
“The policy today is they will reimburse us for the value we would get from Amazon after the sale of the lost items,… When they lose a shipment, they pay me back for the amount I would have received from them once each of those items have been sold.
“This new policy, which like most policy changes from Amazon, increases costs to the seller, changes the reimbursement to our Wholesale cost.
“So when they lose a shipment, we will only get back what we paid for the product initially, from our supplier. Nothing reimbursed for our time, the cost to send the item in, labeling, packaging or the placement fees that are charged in advance when you create a shipment.”
One seller on the Amazon discussion boards pointed to an approach they believed the company should take instead. “If this policy change is being made because Amazon is losing too much money on lost inventory, the solution a normal company would go with is “lets stop losing so much inventory” not “lets just pass our incompetence costs onto someone else.””
The announcement came a month after Amazon vowed not to make any FBA fee changes in 2025 (“Read Amazon’s Lips: No New Fees in 2025“) – a fact sellers were quick to point out.
Many sellers expressed concern about providing Amazon with detailed data about their inventory sources and costs. Amazon is giving sellers an alternative to providing it with their manufacturers costs – it will provide an estimate “based on a comprehensive evaluation of comparable products sold by Amazon, by other sellers and through wholesale channels.”
An Amazon moderator responded to one seller’s comment expressing such concerns by writing the following:
“The protection of your information is our top priority, and your specific cost data is not shared with any other seller in Amazon’s store, including Amazon Retail. This data is used to calculate your potential reimbursement, and to improve the usability and effectiveness of our services for your benefit. If you do not want to share your cost data, the reimbursement will be calculated using our estimated value of other similar products sold. For information about how we collect and process your information, please visit our Privacy Notice.”
The response was met with skepticism from some posters on the board.
In its email notification to merchants on December 18th, Amazon wrote in part:
“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 fulfilment centres, 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.”
Amazon merchants and consultants were also discussing the forthcoming policy on LinkedIn, such as a consultant who wrote:
“This is honestly terrible. Now Amazon can lose inventory and say “whoops”, and then decide what a fair reimbursement is on their end. And then find the inventory again and resell it themselves. No conflict of interest there…
“Of course, Sellers/brands can tell Amazon their cost of manufacturing cost (WTF) and I’m sure Amazon will not use this data for other purposes.
“Not to mention that resellers, wholesalers, and distributors don’t even have access to manufacturing costs since they are already farther down the supply chain.
“Most Amazon policies have somewhat justifiable logic, this is a pure money grab and flies in the face of standard industry practices at both other retailers and 3PL providers.”
The EcommerceBytes reader referenced above described how the new policy would affect him by providing an example of a typical inventory shipment to Amazon fulfillment centers and the reimbursement amount he would receive now if Amazon lost his shipment. He compared it to the amount Amazon would reimburse him after the new policy takes effect – it was a difference of over $300.
“It’s frustrating, but they’re big and I’m little and there’s nothing I can do about it.”
The new policy is set to take effect on March 10, 2025. The announcement and seller reactions can be found on Amazon Seller Central.
Update 12/23/2024: Edited for grammar and clarity.
There’s lot’s folks can do. Quit selling on rip off Amazon. Or cut back your sales and tell them they are being punished and why.
Cut the head of the snake off. Seller don’t need Amazon, but they need sellers.
I will have to correct you a little bit. Amazon does not need U.S. based sellers, but needs Chinese based sellers as Walmart does now too.
They don’t “need” sellers at all… MOST sellers are competing with Amazon for the “Buy Box”, what they want is to find out what your paying so they can go to that company and demand they sell it to them for less then they are selling it to you.
I have watched Amazon for the past few months selling stuff that I know for a fact is far less than wholesale cost, both Walmart and Amazon have been battling back and forth driving the prices wayyyy below wholesale cost in order to try and dominate one another, items with a wholesale cost of over $30 are being sold retail for less than $15, items with wholesale cost of $9 – $10 being sold at $8 or less (all of this with free shipping mind you)
How do I know?? Because some products I deal with have 1 distributor and manufacturer in the world, and my rep has been quite adamant in telling me that she handles both Walmart and Amazon as well and they are not paying any less than the rest of us and they’ve been warned multiple times to stop driving the prices down below cost..
Now, if they will ever do anything about it who knows, I seriously doubt it… BUT who knows.. they could if they wanted too.. I know both of them are taking a beating on losses because of it.. how long they can hold out and how much of a beating they can withstand is anyone’s guess, I figure one day someone will notice their bots driving the prices down are costing them tons of money in losses, I’ve seen it before with Amazon but it never lasted more than a few days and they would catch it and bump it back up, but this has been going on for at least the last 3 – 4 months and neither one has budged..
Amazon does not care about it’s sellers, it only cares about Amazon, if hundreds of thousands of sellers left tomorrow Amazon would keep trucking along and continue raking in massive profits, the only thing that will hurt Amazon is if another site would come along that could actually do some damage.. TEMU isn’t it, Ebay will never recover back to it’s glory days, Walmart blew the chance they had and Alibaba doesn’t have a chance.. Facebook Marketplace had a chance and blew it by screwing up the place for everyone and Etsy doesn’t have what it takes either.
We need something new… that’s all their is to it.
Amazon is doing this, so they can exploit sellers product sources legally to buy the products directly and sell them under Amazon. This leaves out the third party sellers.