Amazon’s new Fulfillment by Amazon (FBA) reimbursement policy, set to take effect in March 2025, is causing concern among sellers. The policy shifts reimbursements for lost or damaged inventory from sales value to manufacturing costs—excluding shipping, freight, and duties.

For small businesses, this creates serious challenges, from rising costs and cash flow issues to limited reporting and rejected claims. Let’s break down what’s changing, why it matters, and what you can do to adapt.

What Is the New Amazon Reimbursement Policy?

Amazon’s updated policy for FBA sellers introduces these key changes:

1. Reimbursement Calculation:
• Amazon will only reimburse based on manufacturing costs, NOT the sales value. Costs for shipping, freight, and duties will no longer be covered.
2. Input Options for Costs:
• Sellers can input their own manufacturing costs via the “Manage Your Manufacturing Cost” page (available January 2025) or accept Amazon’s estimates.
3. Claims Process:
• Claims require more documentation and are frequently rejected, even when sellers prove Amazon is at fault.

Why the New Policy is a Challenge for Sellers

The policy creates several pain points:

1. Limited Reporting:
• Amazon reports only go back 60 days, making it nearly impossible to track long-term trends, evaluate losses, or validate claims.
2. Increased Costs:
• Sellers must absorb costs for shipping, freight, and duties, while maintaining higher buffer inventory—leading to rising manufacturing and storage expenses.
3. Cash Flow Issues:
• Small businesses face tighter cash flow due to the need for additional inventory, tying up capital that could be used elsewhere.
4. Rejected Claims:
• Even when sellers can prove Amazon mishandled inventory, claims are frequently denied. Many sellers rely on third-party agencies to file claims, losing up to 20% of reimbursements in fees.

What Percentage of Inventory is Typically Lost or Damaged by Amazon?

While Amazon doesn’t disclose exact figures, industry estimates suggest 1-3% of inventory is lost or damaged annually in FBA warehouses. For high-volume sellers, this can result in ten of thousands of dollars in losses every year.

How Sellers Can Adapt

1️⃣ Reevaluate Pricing Strategies:

• Adjust prices to cover all costs, including shipping, freight, and duties.

2️⃣ Plan for Inventory Losses:

• Maintain buffer inventory, but monitor cash flow carefully to avoid overextending your resources.

3️⃣ Diversify Sales Channels:

• Reduce dependency on Amazon by selling on other platforms or building your own eCommerce site.

4️⃣ Create Tracking Templates:

• Use templates to document inventory shipments, claims, and losses. This builds a comprehensive data set beyond Amazon’s limited reporting.

5️⃣ Download Reports Monthly:

• Regularly archive key reports, such as the Inventory Adjustments Report and Inventory Event Detail Report, to maintain visibility.

6️⃣ Evaluate Your Amazon Strategy:

• Assess whether selling on Amazon remains profitable given the increased costs, operational headaches, and policy restrictions.

Final Thoughts

Amazon’s 2025 FBA reimbursement policy puts small businesses at a disadvantage. By limiting reporting, reducing reimbursements, and rejecting claims, Amazon is shifting the burden onto sellers.

For many small businesses, these changes may force tough decisions: raising prices, diversifying sales channels, or leaving the platform altogether.

If you’re navigating this policy change, start by taking control of your data, reevaluating costs, and exploring alternative marketplaces. The key is ensuring your business remains sustainable—even when Amazon isn’t on your side.

Have Questions?
How are you managing these changes? Share your thoughts below—I’d love to hear from you.