Amazon’s Reimbursement Policy Updates: What Sellers Need to Know

Amazon is enhancing its reimbursement process with two key updates aimed at improving efficiency and transparency for sellers.

First, starting November 1, 2024, Amazon will proactively reimburse sellers for FBA items lost in fulfillment centers, with reimbursements issued immediately upon loss reporting. 

Second, Amazon is slashing the window for reimbursement by almost 90% from 18 months to 60 days. This means less time to file, and more chance of missing claims.

Finally, for FBM sellers, new reimbursement caps for Multi-Channel Fulfillment will also be introduced on August 23, 2024, impacting how inventory losses and damages are compensated.

Staying informed about these updates is crucial for sellers, as they can directly impact profitability by ensuring correct compensation for lost items and managing reimbursement limits effectively.

Keep reading to understand these changes in detail and ensure you’re fully prepared.

Amazon’s Update on Reimbursement Automation and Eligibility Window: A Closer Look

Starting November 1, 2024, Amazon will implement significant changes to its reimbursement process for FBA sellers. These updates aim to streamline the process of managing lost or damaged inventory, making it more efficient and less time-consuming.

However, the changes come with new timelines for filing claims that you need to be aware of. Here’s an overview of the updates and their potential impact on your business.

Proactive Reimbursement for Lost Items

One of the key changes is the introduction of proactive reimbursements for FBA items reported as lost in Amazon’s fulfillment centers (FCs). This means that Amazon will automatically issue reimbursements as soon as loss is reported, eliminating the need for you to manually file claims for these incidents. You can track these reimbursements in the Amazon reimbursements report on Seller Central, providing a more seamless experience that saves time and effort.

Benefits

• Efficiency: Automatic reimbursements simplify the process, allowing you to focus more on your core business rather than administrative tasks.
• Transparency: The ability to track reimbursements in real-time helps you stay informed about your inventory status.

Limitations‍

• Manual Claims Still Required: Not all situations are covered by the proactive reimbursement policy. There is also still a chance that some rightful reimbursements may be missed. If you do not receive an automatic reimbursement and believe your inventory has been lost or damaged, you will still need to file a manual claim. Additionally, all removal claims will continue to require manual filing.

While the proactive reimbursement system offers a more efficient way to handle lost items, sellers still need to be vigilant about monitoring their inventory and filing necessary claims within the updated timelines. Understanding these changes and adapting to them is crucial for maintaining smooth operations and protecting your business interests on Amazon.

For more detailed guidance, review the updated FBA inventory reimbursement policy and stay informed about further changes that may impact your operations.

Updated Eligibility Window for Filing Claims

In addition to automating reimbursements, Amazon is updating the eligibility windows for filing manual claims, effective October 23, 2024. Here are the key changes:

• Fulfillment Center Operations Claims: These claims must be submitted within 60 days (previously within 18 months) of the item being reported lost or damaged.
• FBA Customer Returns Claims: Can be submitted between 60-120 days (previously between 60 days and 18 months) after the customer refund or replacement date. Claims should not be filed before 60 days to allow time for the customer to return the item.
• Removal Claims for Items Lost in Transit: These must be submitted 15-75 days (previously between 14 days and 18 months) from the shipment creation date. Claims should not be filed before 15 days to ensure the shipment has time to be delivered.
• All Other Removal Claims: Must be filed within 60 days of the shipment being delivered back to the seller.

Challenges

• Shorter Time Frames: You may find the updated timelines challenging, especially if you are not accustomed to monitoring your inventory closely. This change necessitates a more proactive approach to inventory management and claims filing.

Seller Feedback and Concerns

The response from sellers to these changes has been mixed, highlighting both optimism and skepticism. Some sellers appreciate the automation of reimbursements, which promises to reduce the administrative burden.

However, there are concerns about whether these automated processes will adequately address all issues, particularly in complex cases like “empty box” incidents where items are reportedly missing despite confirmed delivery from their 3PL warehouse to an Amazon FC.

Some sellers expressed doubts about Amazon’s internal controls, questioning how significant quantities of goods, like entire pallets, could go missing without more rigorous oversight. Others voiced frustration over what they perceive as frequent changes to policies that seem to favor Amazon’s operational efficiencies over seller protection.

Amazon’s New Multi-Channel Fulfillment Reimbursement Caps

In a separate update, Amazon is revising its reimbursement policy for Multi-Channel Fulfillment (MCF) orders, effective August 23, 2024.

These caps set maximum reimbursement limits for items that are lost or damaged during the fulfillment process, varying by country.

This update aligns Amazon’s policy with industry standards, ensuring a more consistent approach to handling reimbursements across different regions. Here’s a detailed look at these changes and their implications for sellers.

New Reimbursement Caps by Country

The updated reimbursement caps per eligible unit are as follows:

• Australia: $450 AUD
• Canada: $400 CAD
• France: €275 EUR
• Germany: €275 EUR
• Italy: €275 EUR
• Japan: ¥2500 JPY (calculated as (50,000 * 0.2) + (10,000 * 0.05))
• Mexico: $5,000 MXN
• Spain: €275 EUR
• UK: £250 GBP

These caps represent the maximum amount Amazon will reimburse for each eligible unit that is lost or damaged during the fulfillment process.

Impact on Sellers

• Standardization Benefits: Aligning with industry norms provides predictability, but the capped reimbursements may not fully cover losses for all sellers, particularly those with high-value goods.
• Insurance Considerations: Sellers dealing with high-value items that exceed these caps are advised to consider third-party insurance to cover potential losses beyond the reimbursement limits. For example, sellers handling electronics, jewelry, or other high-cost items may face significant out-of-pocket expenses if the value of a lost or damaged item exceeds the reimbursement cap. This additional step adds complexity and potential costs for sellers, especially those with a diverse range of product values.