Amazon’s latest update to its Fulfillment by Amazon (FBA) inventory reimbursement policy introduces a significant change that has sparked widespread concern among sellers, with heated discussions surfacing on platforms like Reddit. Released on December 18, 2024, the announcement outlines new rules aimed at creating more consistency in how reimbursements are calculated across the platform—but many sellers worry about the potential financial impact.
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The new Amazon reimbursement policy will take effect on March 10, 2025. Sellers need to be prepared for the shift and adjust their processes well in advance of this key date, as the shift could lead to significant reductions in payouts for lost or damaged inventory.
Previously, Amazon reimbursed sellers based on the sale price of an item when it was lost or damaged in fulfillment centers. However, starting March 10, 2025, reimbursements will be calculated based on the manufacturing cost of the item. This means that instead of being compensated for the full retail value minus fees, sellers will now receive an amount closer to the raw cost of the product—including material, production, and other directly associated costs.
For many sellers, this change could lead to a substantial reduction in reimbursement amounts, driving urgent conversations online about how to adjust their operations and documentation practices before the changes take effect.
Key Details from the Amazon Policy Update
Amazon’s updated FBA reimbursement policy includes several critical changes and new tools aimed at streamlining how costs are calculated for lost or damaged inventory. Here’s a closer look at the key components of the update:
1. Manufacturing Cost Estimate
If sellers do not provide their own cost documentation, Amazon will apply a cost estimate based on industry benchmarks and data from similar products sold by other sellers, wholesale channels, and Amazon’s internal analysis.
While this default estimate may be convenient, it could undervalue your actual costs—potentially leading to lower reimbursement amounts. Submitting your own documentation ensures that your reimbursements reflect the true cost of your product.
2. New Portal for Managing Costs
To help sellers adapt to the new reimbursement system, Amazon is launching new tools within the Inventory Defect and Reimbursement portal:
- Availability Date: The portal will be accessible in late January 2025, giving sellers a few weeks to upload their cost data before the policy takes effect.
- Manage Your Manufacturing Cost Feature: This feature allows sellers to submit detailed manufacturing costs directly to Amazon, ensuring that reimbursement calculations are as accurate as possible.
3. Reimbursements for Items Lost Post-Sale
The policy update clarifies that the new rules only apply to items lost or damaged before a customer places an order. For inventory lost or damaged after an order has been placed, Amazon will continue reimbursing sellers based on the sale price minus applicable fees (such as referral fees and fulfillment charges).
This distinction means that sellers can still expect more favorable reimbursements for post-sale losses, but pre-sale losses will now require close attention to cost submissions to avoid financial losses.
Expert Insights: Navigating the FBA Reimbursement Policy Shift
Incrementum Digital CEO Liran Hirschkorn and Yoni Mazor, Co-Founder of GetIDA, highlight key implications of Amazon’s new policy and shared actionable strategies for FBA sellers:
The Monopoly Reality
One of the central challenges is Amazon’s extensive control over the fulfillment process:
- Prime Badge and Buy Box Priority: Sellers must use FBA to retain the coveted Prime badge, which significantly improves their chances of winning the Buy Box and increasing sales.
- Limited Alternatives: There are currently no third-party logistics (3PL) providers that can match Amazon’s scale, shipping speeds, or customer trust.
Because of this, many sellers feel “stuck” with FBA, but as Liran emphasized, being stuck doesn’t mean being powerless. Sellers can still take steps to safeguard their margins and remain competitive.
Strategies for Smart Sellers to Protect Margins
1. Delivered Duty Paid (DDP) Shipping
One way to maximize reimbursements under the new rules is by structuring your shipments as Delivered Duty Paid (DDP). This means including costs such as:
- Duties
- Insurance
- Shipping fees
By documenting these additional expenses, you can present a more accurate and comprehensive cost for reimbursement purposes.
2. Comprehensive Cost Documentation
To avoid Amazon relying on potentially low default cost estimates, sellers should submit invoices that include all relevant production costs. This should cover:
- Material and production costs.
- Labor costs, if applicable.
- Any associated fees tied to getting your product ready for sale.
The more detailed and legitimate your cost documentation, the better your chances of receiving fair compensation.
3. Use Reimbursement Services
Services like GetIDA can help sellers identify missed reimbursements and ensure claims are filed correctly and efficiently. By maximizing claims at the sale price before the March 10, 2025, policy change, sellers can recover more funds in the short term and build a strong financial cushion for the transition to cost-based reimbursements.
Implications for Sellers: Key Challenges and Opportunities
Amazon’s reimbursement policy update presents both challenges and strategic opportunities for FBA sellers. To remain profitable, sellers must rethink their cost structures and explore ways to reduce their dependency on Amazon’s ecosystem.
1. Financial Impact
For many sellers, the shift from sale price-based to cost-based reimbursements could result in a significant drop in compensation—potentially as much as 72%. This means that every instance of lost or damaged inventory now represents a much greater financial burden, making it crucial to minimize these occurrences and accurately report product costs.
2. Operational Adjustments
With Amazon requiring more precise cost data, sellers must implement stronger internal processes for tracking:
- Material and production costs
- Shipping, duties, and insurance
- Packaging and prep expenses
These adjustments may require collaboration with suppliers and logistics partners to create comprehensive documentation that meets Amazon’s standards.
3. Diversification to Protect Margins
As competition in e-commerce grows, sellers should consider expanding beyond Amazon to offset potential revenue losses. Viable channels include:
- Walmart Marketplace: A growing player in online retail with Prime-like logistics options.
- TikTok Shop: A fast-rising platform for social commerce, especially for consumer-friendly products.
- DTC (Direct-to-Consumer): Building your own e-commerce presence via platforms like Shopify offers more control over pricing and margins.
Sellers who proactively refine their operations and diversify their sales channels will be better equipped to handle the margin pressures introduced by the new reimbursement policy. Those who remain solely dependent on Amazon may find it harder to recover lost revenue as the new rules take effect.
Action Plan for Sellers: How to Prepare Before and After the Policy Change
With Amazon’s new reimbursement policy taking effect on March 10, 2025, sellers must have a clear plan in place to minimize financial losses and adapt to the updated rules. Below is a step-by-step guide to help sellers maximize reimbursements and strengthen their operations.
Before March 10, 2025: Maximize Sale Price-Based Amazon Reimbursement Claims
- Submit All Reimbursement Claims:
Ensure that all claims for lost or damaged inventory are submitted while Amazon is still reimbursing based on the sale price of items. This will be your last opportunity to receive reimbursements at full retail value. - Audit Past Losses:
Conduct a thorough review of your historical inventory to identify any missed reimbursement opportunities. Use reimbursement services, like GetIDA, to recover funds from past discrepancies and optimize your claims before the policy change.
After March 10, 2025: Adapt to Cost-Based Reimbursements
- Leverage the Inventory Defect and Reimbursement Portal:
Familiarize yourself with Amazon’s Inventory Defect and Reimbursement Portal, available in late January 2025. Use the new Manage Your Manufacturing Cost feature to submit accurate, comprehensive cost data.- Include all relevant costs, such as duties, insurance, shipping, and packaging, to avoid Amazon’s potentially lower default cost estimates.
- Evaluate FBM (Fulfilled by Merchant) for Select Products:
For some SKUs, it may be worth exploring FBM as an alternative to FBA, particularly if the cost-based reimbursement policy makes certain products unprofitable to store in Amazon’s fulfillment centers.
- However, consider the trade-offs—FBA provides the Prime badge, which can significantly boost conversions.
- A hybrid approach (using FBA for high-demand products and FBM for low-margin or bulky items) can help balance visibility and profitability.
By taking immediate action before the policy change and optimizing processes afterward, sellers can reduce financial risk and maintain competitive margins. The key is to stay proactive—whether through timely reimbursements, precise cost tracking, or strategic fulfillment decisions.
Exclusive Offer: $400 in Free FBA Reimbursements
New users can claim $400 in free FBA reimbursements by joining GetIDA. Their Amazon reimbursement services help sellers audit their account, identify missed reimbursement opportunities, and recover funds for lost or damaged inventory—all before the policy shifts to cost-based reimbursements.
What You’ll Get:
- A full audit of your Amazon account for historical discrepancies.
- Automatic submission of claims to recover funds at the sale price before the new cost-based rules take effect.
- Hands-free management to maximize your reimbursements without extra hassle.
Claim your $400 in free reimbursements here.
With limited time before the reimbursement policy changes, this offer provides a valuable way to improve your cash flow and protect your business ahead of 2025. Don’t miss this chance to optimize your reimbursements and prepare for the changes ahead.
Book a Free Audit With Our Team
Navigating these changes doesn’t have to be overwhelming. Our team specializes in helping brands optimize their Amazon strategy, improve margins, and scale across multiple channels.
As an Amazon Advanced Partner, we offer a detailed account audit to identify areas for cost savings and growth opportunities. You’ll walk away with expert guidance on ad performance, AMC insights, and fulfillment strategies.
Take the first step—book your free Amazon audit today.
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