Amazon sellers are getting a short reprieve from an unpopular FBA policy change that the company announced in December that was set to take effect on March 10. Instead, Amazon is delaying the policy until the end of March, it announced on Friday.
Amazon had told sellers who use its FBA fulfillment program that it would begin reimbursing them differently for items lost or damaged when they occurred before any customer orders – it said it would base the reimbursement amount on the product manufacturing cost of the affected inventory. “”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,” it explained.
As an Amazon seller told us at the time of the policy announcement, Amazon currently reimburses sellers the amount they would have received had the item sold, meaning the new policy will save Amazon money but will hit FBA sellers hard.
Another aspect of the policy that was upsetting to sellers was the fact they would either have to provide Amazon with details of their inventory sources and costs, or else Amazon would estimate their costs. The following excerpt is from a comment a seller posted on Friday in reaction to that aspect of the policy change:
“Amazon has no legitimate reason to demand sourcing costs from sellers. This requirement gives Amazon direct access to proprietary pricing information, which could be used to negotiate directly with suppliers, undercut third-party sellers, and unfairly control the marketplace. This raises serious ethical and potential legal concerns regarding anti-competitive behavior.”
Amazon’s Friday announcement about the policy implementation delay follows:
New effective date for FBA inventory reimbursement policy
The updated Fulfillment by Amazon (FBA) inventory reimbursement policy will now go into effect on March 31, 2025, instead of March 10, 2025. We made this change to give you more time to manage your costs through the Manage Your Sourcing Cost page in the Inventory Defect and Reimbursement portal.
Since January, we’ve been gradually rolling out the Manage Your Sourcing Cost page to ensure a high-quality experience. All sellers will have access to this page by February 28, 2025, giving you time to review and submit your costs before the new policy takes effect.
For more information about the FBA inventory reimbursement policy, go to Changes to program policies.
One of the sellers reacting to Friday’s announcement left the following comment:
The policy changes are concerning for those dealing with collectibles (toys, cards, sports memorabilia, etc) and high-value items. We should be exempt.
Unfair Valuation: Amazon’s shift to manufacturing cost-based reimbursement severely undervalues collectibles.
Burden of Proof: Sellers are now responsible for submitting proof of actual costs pro-actively, an unreasonable and time-consuming task, especially for those with large number of SKU’s.
Incomplete Compensation: The new policy fails to account for shipping, placement fees, and prep fees, local storage, labor and other operational costs, leaving sellers to absorb these significant costs.
Arbitrary Cost Determination: Amazon’s method of estimating sourcing costs is opaque and often inaccurate, potentially undervaluing items significantly. A quick glance at the dedicated Source cost page and I can see its about 40% or more below my costs.
Time-Consuming Updates: Sellers are expected to manually update and maintain cost information for all SKUs proactively, an unreasonable demand on their time and resources.
Unsellable Item Devaluation: Reimbursement for unsellable items is based on a “discounted sale” valuation, further reducing compensation.
Loss of Potential Profits: If Amazon loses and later finds a high-value item, they retain the right to dispose of or sell it, potentially profiting from the seller’s loss. A rare Charizard card can sell for $270,000, yet Amazon would only reimburse the original cost of $4.
Punitive Measures: The policy introduces strict penalties for “premature or numerous requests,” effectively discouraging sellers from seeking rightful reimbursement. Why would I be penalized for trying to be made whole?
This policy update unfairly shifts the financial burden onto sellers, particularly impacting those dealing with collectibles and high-value items. It’s a concerning development that threatens to erode seller profits and trust in Amazon’s FBA program.
At this rate I might have to explore other platforms, Walmart, mercari, ebay, my own website.
What use to be a great selling platform has become a giant headache.