Amazon is stealing money! The new FBA compensation policy only compensates sellers’ costs!

Recently, Amazon US has once again updated its FBA inventory compensation policy, which mainly involves adjustments to the compensation standards!

According to the latest announcement, starting from March 10, 2025, Amazon will change the compensation standard for inventory lost or damaged before customers place an order from the original compensation based on the sales price ( average order value ) to compensation based on the "manufacturing cost" of the product .

The "manufacturing cost" here refers to the cost of the goods purchased by the seller, including the cost of purchasing from manufacturers, wholesalers or distributors, or the cost of producing by oneself, but does not include other costs such as shipping, handling fees, tariffs, etc.

The core changes of this policy are:

The first type: The seller directly provides the manufacturing cost , such as purchase invoice + logistics invoice and more information.

Second: The platform provides sellers with a manufacturing cost estimate. This estimate is based on a comprehensive assessment of comparable products sold on Amazon, other sellers, and wholesale channels.

If you choose to provide your own costs, you can manage and update your cost information through the Manage Your Manufacturing Costs page in the Inventory Defects and Claims portal in Seller Backend.

Currently, the button for this tool has appeared but it cannot be accessed. It will only be available for setting up in mid-to-late January.

For goods lost in Amazon's fulfillment centers, the compensation mechanism has not changed. Amazon will automatically compensate for lost items, and sellers do not need to submit a claim.

For goods that are lost or damaged after the buyer places an order , the compensation method will remain unchanged, that is, the compensation amount will still be calculated based on the sales price of the original order of the goods after deducting relevant expenses.

For goods that are lost or damaged before the buyer places an order , that is, goods that are still in the FBA warehouse, compensation will be made according to this "manufacturing cost" standard starting from March 10 next year.

Amazon will automatically compensate for lost or damaged inventory, but the amount of compensation is the cost price of the goods. And if the seller does not provide a cost basis, the platform's assessed cost will be automatically applied, and the seller can make modifications based on this.

Suppose your product is worth $100, but you cannot provide evidence such as a purchase invoice, and Amazon determines that the value is $20, then it will only compensate you $20.

As soon as this news came out, many sellers expressed dissatisfaction. Previously, it was calculated based on the sales price, but now it is calculated based on the manufacturing cost. It is just a change of two words, but for sellers, it means multiple costs are sunk.

Sellers generally believe that Amazon lost the product but only compensated the cost price, which is outrageous!

Compared with the current policy, Amazon's new compensation policy does ignore the interests of sellers. Because the product was lost in the Amazon FBA warehouse, it was 100% the platform's fault, and Amazon should have taken the initiative to provide compensation to the seller, but Amazon only wanted to compensate the manufacturing cost of the goods, which is far lower than the seller's actual cost and cannot cover its overall expenses, thereby reducing the seller's profit margin.

In fact, from product production to delivery to Amazon warehouses, sellers need to bear a number of expenses including manufacturing costs, item preparation costs (such as labeling, packaging, processing fees), transportation costs, storage fees, etc. These costs are important considerations for sellers when setting prices.

In addition, inventory loss may also trigger a series of chain reactions: out-of-stock situations lead to a decline in natural rankings, which in turn affects sales and profits; sellers need to invest more money and time to restore keyword rankings; insufficient inventory may also lead to additional fees such as low inventory fees, etc.; the administrative burden on sellers increases, and the need to track and record accurately will increase workload and operating costs.

Some sellers even worry about a potential conflict of interest with Amazon, since Amazon controls the handling of inventory and could theoretically "lose" items, compensate them at cost, and then resell them itself.

No wonder the sellers’ forums were abuzz with controversy as soon as this policy was released. In the future, how Amazon can balance the interests of the platform with the rights of sellers, and how sellers can effectively respond to this policy change, will become the focus of the industry.