Amazon have announced a major change to their FBA lost and damage inventory reimbursement policy. From the 10th of March, they will no longer reimburse you based on the sale price of your item, but instead on the manufacturing cost.
Lost and damage inventory used to be good news for sellers – it was even better than a sale as you got the full ask price with no customer service or returns issues to worry about. Now, you could be facing a loss when Amazon start to reimburse you based on the product manufacturing cost of the affected inventory.
Currently based on sale price, your reimbursements have been based on indicators including:
- The median price at which you have sold the item on Amazon over the past 18 months
- The median price at which other sellers have sold the same item on Amazon over the past
- 18 months
- The current list price you have set for the same item on Amazon or the mean list price if
- you have multiple listings for the same item.
- The current list price for the same item from other sellers on Amazon.
From the 10th of March 2025, your reimbursements will be based the manufacturing cost for your products which will be based on:
- Manufacturing cost – means your cost to source a product from a manufacturer, wholesaler, reseller, or produce the item if you are the manufacturer. It excludes costs such as shipping, handling, customs duties, or other costs
- Amazon will provide a manufacturing cost estimate for you. This estimate is based on a comprehensive evaluation of comparable products sold by Amazon, by other sellers and through wholesale channels.
- You can provide your manufacturing costs directly. If you don’t provide your own costs, Amazon will automatically apply our estimate which you can change when you’re ready.
You will be able to view and manage manufacturing costs in the Inventory Defect and Reimbursement portal starting in late January using a new Manage Your Manufacturing Cost page.
This is a major change as your sale price will include allowances you’ve built in for shipping, handling, customs duties and other costs. Basing the price on manufacturing costs will result in considerably lower reimbursements than in the past.
For items that are lost or damaged after a customer order in Amazon’s store, Amazon will continue to reimburse you for the sales price on the original order minus applicable fees.
