Amazon recently announced that Fulfillment by Amazon (FBA) fees would be frozen for 2025 in the US, and no new fees would be introduced. But in classic Amazon sleight of hand, they’ve made a move that allows them to stay true to their word while still improving their bottom line.

Starting March 10, 2025, Amazon will implement changes to its Fulfillment by Amazon (FBA) Inventory Reimbursement Policy, specifically, how they will pay out claims for lost or damaged inventory. The new plan is to start reimbursing Sellers the Manufacturing Cost for each item rather than the current reimbursement rate equal to the Amazon Sale Price. Manufacturing Cost is defined as the cost of sourcing a product from a manufacturer, wholesaler, or reseller, excluding expenses like shipping, handling, and customs duties. Some estimate that this change could slash reimbursements by as much as 60% on average, posing a substantial loss for FBA Sellers that rely on their new condition inventory to make new sales and earn new customers. The policy page will be updated to reflect the changes after the policy goes into effect in March.

Unfortunately, there is little that can be done other than to take prompt action between now and the transition date to maximize the reimbursements owed under the current policy.

The New Calculation

Amazon offers two ways to determine Manufacturing Costs:

1. Amazon Estimates: Amazon will determine cost based on a comprehensive evaluation of comparable products sold by Amazon and competitive Sellers.


2. Seller-Provided Costs: Starting January 2025, sellers can configure their manufacturing costs through a new “Manage Your Manufacturing Cost” page in the Inventory Defect and Reimbursement Portal. Amazon reserves the right to ask for proof to validate the amount.

It’s worth noting that the new payout rate applies to items that are lost or damaged before the item is sold on Amazon’s store. Items that are lost or damaged after a customer places an order will continue to be reimbursed at the Amazon Sales Price minus applicable fees.

While Amazon now offers automatic reimbursements for eligible items to save Sellers the time it takes to submit a claim, this new payout rate represents a substantial financial change. Thus, keep a keen eye on inventory status and submit claims promptly, or risk losing the opportunity to collect reimbursement at the current 2024 rate and safeguard entitled revenue.

The Losses Add Up

Some reports estimate that reimbursements can account for 1 – 3% of most Sellers’ revenue. With payouts dropping by 60% or more, even smaller Sellers stand to lose tens of thousands of dollars annually—more if they sell in high-value categories or products prone to pre-fulfillment damage.

New Administrative Burden

Sellers must now provide (and continuously manage) accurate manufacturing costs on new Seller Central screens to avoid discrepancies and limit inevitable disputes with Amazon. The alternative is accepting Amazon’s determination of value, which will not likely be a favorable number.

Time-Sensitive Claims

Reimbursement claims for lost or damaged items must be filed within 60 days of the reported loss or damage. Delays in filing claims could result in missed reimbursements.

To maximize recaptured value, Sellers should take the following steps:

• File Claims Before the Deadline: Sellers must prioritize filing eligible claims ahead of the March 10 deadline to receive reimbursements based on the Amazon Sale Price.


• Use Tools and Technology: Advanced auditing tools, such as those provided by GETIDA, can automate most identification and submission work. They can also help identify overlooked claims, ensure compliance, and maximize reimbursements.

Optimize Manufacturing Cost Reporting

Starting January 2025, Sellers should:

• Use the “Manage Your Manufacturing Cost” page to input accurate costs.


• Regularly review and update cost data to reflect market changes.


• Prepare necessary documentation to support cost claims to expedite the reporting updates.

Summary

Whether you’re a veteran at this and have ample experience regularly submitting claims or haven’t gotten around to it yet, Amazon’s upcoming FBA Inventory Reimbursement Policy changes will hurt Sellers through reduced payout amounts–to tens of thousands of dollars on average. We shouldn’t be surprised that Amazon announces no FBA fee increases for 2025 but then reduces payouts that will dramatically affect the bottom line of its third-party Sellers. Different sides of the same coin. But predictable. And there’s no shortage of stories going further back.

All e-commerce retailers should diversify their fulfillment strategies and have FBA alternatives in place when Amazon exercises its whim and throws its “partners” under the bus again. It’s a matter of when, not if.

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