Amazon sellers are deeply concerned about a recent change to the company’s reimbursement policy, one which is leading many to question their future selling on the platform. Fulfillment By Amazon (FBA) sellers were promised by the company there would be no fee hikes this year, but many say the new policy change might as well be a fee change by another name. “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,” the company announced. Here’s what Amazon is changing, and how it may impact customers as well as sellers.
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New Year, New Rules
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Up until now, Amazon would reimburse FBA sellers for the retail cost of lost and damaged inventory, but under the new rules which kick in on March 10, 2025, sellers will only be reimbursed for the manufacturing cost of items, not the full retail cost. This could cost sellers a significant amount of money. “Just before the holidays, when a lot of people shut down, they sneak in this little bombshell that has real financial repercussions for a lot of sellers,” Jon Derkits, a former Amazon corporate employee who has been selling on Amazon for five years, tells Modern Retail. “I understand the outrage.”
Manufacturing Vs Retail Costs
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FBA sellers, which make up 60% of sales on the entire platform, are given the choice of letting Amazon decide the manufacturing cost “based on a comprehensive evaluation of comparable products sold by Amazon, by other sellers and through wholesale channel,” or forcing sellers to provide proof of their manufacturing costs to Amazon.
Privacy Concerns
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Sellers are deeply worried about the privacy issues raised by handing over that information to the company. “With Amazon saying, ‘Hey, give us your cost,’ that’s like giving up your competitive advantage to these sellers,” Joshua Rawe, co-founder of AmpliSell, tells Modern Retail. “They’re like, ‘Well if I give you my cost, you’re going to go out and figure out how to source it cheaper and create an Amazon brand of my product.’ That’s every seller’s worst fear.”
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Protecting Data
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Amazon spokesperson Mira Dix says the sellers’ fears are unfounded. “Protecting sellers’ data is very important to us, and we follow strict data protection policies,” she says. “Specific cost data is not shared with any other seller in Amazon’s store, including Amazon Retail, and this data is only used to calculate sellers’ potential reimbursement and to improve the usability and effectiveness of our services.”
Impact On Sellers
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Sellers are worried about staying in business after this new policy goes into effect. “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,” a seller tells EcommerceBytes. “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.”
Impact on Shoppers
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Shoppers may have to deal with higher prices to offset the money lost via the new Amazon policy. “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,’” one seller says.