With millions of transactions occurring daily, Amazon is a global ecommerce powerhouse. As an Amazon seller, you get access to their loyal customer base and can distribute products without managing fulfillment, shipping, or customer service.
But with all the benefits of Amazon FBA, there are plenty of risks and frustrations.
Amazon is in charge, and there’s little you can do as a seller when one of their rules doesn’t go your way. One of the most common struggles for Amazon FBA sellers is lost revenue due to inventory damages and misplacements.
Fortunately, you can file claims for lost and damaged inventory and recover lost funds.
In this guide to FBA inventory reimbursements, we dive into this type of claim and show you how to successfully receive reimbursements credited to your account.
What is an FBA inventory reimbursement?
An FBA inventory reimbursement means that Fulfilled by Amazon (FBA) credits your seller account for lost or damaged inventory. Per Amazon’s terms of service, they are supposed to care for your inventory. You pay storage fees for inventory and commission fees when you make a sale. Any losses or damages should come out of Amazon’s pockets, not yours.
Types of FBA inventory issues
Below, we dive into the main types of issues with inventory for which you can receive reimbursement.
Incorrect receipt of inventory
Once you ship inventory to Amazon using one of their approved carriers, it’s supposed to be safely in their hands. You can check the received inventory report to make sure that the correct number of units was received. If fewer units are accepted than what you sent, you can get reimbursed for the cost of this inventory.
Inventory can also get lost in Amazon’s warehouses. It might be wrongly sent to a customer who didn’t purchase it, placed in another seller’s inventory, or otherwise misplaced. These losses can be a big source of reimbursement.
Amazon employees are expected to move quickly. As such, items can get dropped, broken, and damaged. You can receive reimbursement for any inventory damaged by Amazon’s employees.
Wrongfully destroyed inventory
Amazon is only supposed to destroy inventory with your permission or if it’s hazardous and doesn’t meet their requirements. You can file a reimbursement claim if your inventory is wrongfully destroyed without due cause.
How to get FBA inventory reimbursements
To successfully file an FBA inventory reimbursement claim, you need to have proof of the discrepancy. These types of errors are often automatically reimbursed by Amazon. For instance, if inventory is accidentally destroyed, you’ll receive a notification and the issue will show up in your refund report.
But other times, you need to do the heavy lifting. The best way to discover these issues is to reconcile your account.
Make sure to check the following reports for inventory discrepancies:
- Refund Report
- Manage Orders
- Inventory Adjustments
- Inventory Event Detail
- Removal Order Detail
- Received Inventory
- Daily Inventory Reports
Once you’ve found an issue, keep track of it in a spreadsheet. Wait 30 days for Amazon to reimburse you. If you still don’t receive a reimbursement, file a claim. Provide as much information as possible, such as the date of the issue and the reports that reveal the discrepancy.
When you get reimbursed for inventory, keep in mind that you’ll receive the amount that the inventory is worth (not what you would have made if you sold it to customers). This means the reimbursement puts the inventory at a wash.
Common ways to handle reimbursement requests
When it comes to finding opportunities for reimbursement and submitting claims to Amazon Seller Central, you have a few options.
- DIY – You can do it all yourself, from reconciling your FBA account to tracking errors to filing claims. It’s hard to do this on your own, and when you get busy, you might let these tasks fall to the wayside.
- Hire a reimbursement service – You can hire an FBA reimbursement company to track errors and file claims for you. Because most services only charge a commission upon successful reimbursement, this is the ideal method.
- Hire a virtual assistant – Lastly, you could hire a virtual assistant, but you’ll need to train them to audit your account and you’ll have to pay them for their work whether they get refunds for you or not. If you go this route, make sure to use a password manager like 1password to safely share your credentials.
5 things to look for in a reimbursement service
When hunting for an FBA reimbursement service, make sure that it meets these requirements.
1. No upfront charges
The service shouldn’t charge you anything up front. Instead, they should only charge a fee after they successfully acquire refunds from Amazon FBA. A 25% commission fee is standard.
2. Covers all potential opportunities for reimbursement
The service should not only handle FBA inventory reimbursements, but potential losses from misappropriated category fees, long-term storage fees, customer returns, and other FBA refunds.
3. Approved in the Amazon Seller app store
The Selling Partner Appstore is Amazon’s platform for approved third-party software and services that Amazon sellers can use to streamline and grow their businesses. Make sure the service you choose is listed in the appstore. You can view Refunds Manager’s listing here.
4. Follows Amazon’s terms of service
You don’t want to put your Amazon Seller account at risk. That’s why it’s important to check that the FBA reimbursement company always follows Amazon’s terms of service. This is typically the case if the service is approved in the Amazon Seller appstore, but it’s smart to double check. Make sure that they await the appropriate amount of time before submitting cases. In most instances, they should wait 30 days before filing a claim to give Amazon time to process the refund on their own. The company should also not file claims using bots, but should only file them manually.
5. Great customer reviews
And lastly, check real customer reviews. Look for a company that averages at least 4.5 stars. Refunds Manager has 5 stars out of hundreds of reviews on Trustpilot.
Protect your FBA account and get more money back. Learn more about Refunds Manager and sign up for a free account (no charges until you get paid).
7 key things to know about Amazon FBA inventory reimbursements
Sometimes, Amazon owes you FBA fee reimbursements and pays you the wrong amount or not at all. When this happens several times in a year, it can put a significant dent in your annual profit. To help you avoid such issues when selling on Amazon, here are seven things you must know about FBA inventory reimbursements:
1. Amazon destroys unsellable inventory
Amazon currently ships around 1.6 million packages a day, but that doesn’t mean the company successfully sells every item in its warehouse. According to a 2020 Washington Post article, Amazon warehouse employees in France and Scotland reported destroying hundreds of thousands of unsold inventory.
Amazon didn’t destroy these items because they were all defective or expired. FBA sellers store their wares in Amazon fulfillment centers to facilitate quick shipping. Some sellers stop paying storage fees for their items after they fail to make sales. Since Amazon needs to make room for new inventory, the company may destroy or donate unsold items abandoned by FBA sellers.
Other items that Amazon destroys include products rendered unsellable due to damage during shipping or storage. That means if you pay your FBA seller fees and Amazon accidentally destroys your items, you can claim FBA inventory reimbursement.
The same thing applies if a buyer returns your product with damages that render the item unsellable.
2. Amazon allows some customers to keep low-cost returns
Many shoppers have reported buying items from Amazon, initiating returns, and getting refunds without returning their initial purchase. While this can happen to any buyer, it’s most common among regular Amazon shoppers who have purchased items under $25.
Such a buyer will get two items for the price of one, and Amazon’s reputation as a trustworthy platform will remain untarnished. However, unless the seller can get an FBA inventory reimbursement, they will lose revenue from the unreturned product.
3. Inventory can get lost in an Amazon warehouse
There are currently around 2 million active sellers on Amazon. 73% of US Amazon sellers use FBA, and each FBA seller can store hundreds of items at Amazon warehouses. Amazon can have over 350 million items in storage at any given time.
With that many items going in and out of Amazon warehouses, inventory can easily get lost due to human error, unscrupulous employees, and other factors. If you are an FBA seller and your items go missing in an Amazon warehouse, you shouldn’t have to bear the cost of the loss.
After noticing the missing items in your FBA dashboard, report the loss to Amazon. If Amazon verifies your claim, they will replace the lost items or pay you the value of the lost product. However, Amazon will not refund your FBA and Selling Fees.
4. Amazon employees processing returns might not place the products in your inventory
Apparently, working in an Amazon warehouse is highly stressful. Stressed employees are more likely to make mistakes, which is why cases of Amazon employees sending returned items to the wrong seller are not uncommon.
If a buyer returns your product and Amazon doesn’t place the item in your inventory, you can’t resell it, and that will affect your earnings. Should Amazon add the item to the inventory of one of your competitors, the mistake could give your competitor an advantage.
Track your returned packages to verify that Amazon added them to your inventory. If Amazon correctly adds a returned item to your inventory, you should receive an FBA reimbursement that includes the 20% restocking fee paid by the buyer.
5. FBA inventory reimbursements are supposed to be processed by Amazon automatically
FBA sellers have to pay fees to sell items on Amazon. The fees cover Amazon’s handling of inventory, shipping, customer service, returns, and other tasks on behalf of the seller. If Amazon collects an FBA fee without fulfilling its duties, the seller should receive an FBA fee reimbursement.
For returned products, FBA sellers can receive reimbursements that cover:
- Restocking fees
- Inaccurate order refunds
- Cost of an unreturned item after a customer receives a replacement
- Missing order credits
The most common errors that lead to an FBA inventory reimbursement are products damaged or lost by Amazon warehouse employees, shippers, or customers. FBA reimbursements for such issues should be automatic, but this is not always the case.
If an FBA reimbursement isn’t automatic, you may not know that Amazon owes you money. Sellers with a high volume of sales on Amazon can lose hundreds to thousands of dollars yearly to such oversights. Protect your income by looking out for FBA fee discrepancies and claiming reimbursements manually.
6. Not all destroyed or lost inventory gets automatically reimbursed
Amazon isn’t omnipotent, and it has many users, so it’s understandable if it occasionally fails to reimburse an FBA seller automatically for lost or damaged inventory. If you have a lot of inventory and do not keep a close eye on your FBA dashboard, you may not know that Amazon owes you money.
Discover if Amazon owes you an FBA inventory reimbursement by searching these reports for discrepancies:
- Manage orders
- Inventory adjustments
- Inventory event detail
- Removal order detail
- Received inventory
- Daily inventory reports
The inventory adjustments report will contain your damaged inventory that Amazon has not reimbursed. Damaged unreimbursed items will go under Damaged at Amazon Fulfillment Center. If you find a damaged item in the report, and it is not under Transferred to Holding Account, Amazon owes you reimbursement for that item.
You can find inventory adjustments and other reports in your FBA seller dashboard. After identifying an issue, you must wait 30 days after the issue occurred to file a claim. The 30 days is sufficient time for Amazon to notice and rectify the issue on their end. If Amazon doesn’t initiate the reimbursement after 30 days, submit your claim to Amazon’s Seller Central support.
7. You can get inventory reimbursements without having to file claims yourself
You have to follow certain rules when applying for an FBA inventory reimbursement. Otherwise, Amazon will ignore your claim. Some of these rules include:
- One Issue Per Claim: Do not state multiple issue types in a claim. If you must list multiple items in a claim, all the items must have the same issue.
- State Your Actions: Your claim must specify the actions you have taken to have the issue resolved. For example, you can state that you’ve identified the items missing from your inventory and removed the ones already reimbursed by Amazon. If possible, include a CSV file that contains the contested items.
- State Duration: Your claim must mention how long you have waited for Amazon to resolve the issue automatically.
As you can see, filing a claim for FBA reimbursement yourself is possible but tedious. Also, there are no guarantees that you will get your desired results. Increase the chances of getting your refund from Amazon by hiring an FBA reimbursement service provider.
At Refunds Manager, we have nine years of experience helping FBA sellers protect their profits. We have successfully helped over 9,000 US Amazon sellers, and we look forward to helping you with your FBA inventory reimbursement.
Our experience provides us with everything we need to vet and submit claims that get the most favorable responses from Amazon. Even better, we don’t charge any upfront or monthly fees. You only have to pay us after your reimbursement claim is successful.