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Effective March 10, 2025, reimbursements for inventory lost or damaged before a customer order will be based on the manufacturing cost* of the product rather than the sales price.
With this new update, sellers will have two options to determine manufacturing costs:
- Amazon’s Estimate: Based on comparable products sold by Amazon, third-party sellers, and wholesale channels.
- Provided Costs: Sellers can directly submit their manufacturing costs through the new Manage Your Manufacturing Cost page in Seller Central.
*In this context, manufacturing cost refers to the cost to source a product from a manufacturer, wholesaler, or reseller.
According to Amazon, sellers can provide the proof of their cost of sourcing and be reimbursed accordingly. If sellers do not wish to provide their cost, Amazon will use their own cost estimate. The estimate is calculated by evaluating the sourcing cost of comparable products sold by Amazon, by other sellers, and through other wholesale channels.
If no costs are provided, Amazon will apply its estimate by default. The flexibility to update costs will remain available even after the policy goes into effect.
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Key Features of the Update
A new portal for managing manufacturing costs is set to go live in late January 2025, offering sellers an intuitive interface to review and update their costs efficiently.
This streamlined approach is intended to be consistent with Amazon’s existing reimbursement practices for non-Amazon sellers who use its logistics services, and is more aligned with broader industry standards.
How to Prepare
Sellers are encouraged to review and, if necessary, update their manufacturing costs before the March 10 deadline. Here’s how you can get started:
- Navigate to the Inventory Defect and Reimbursement portal in Seller Central.
- Access the Manage Your Manufacturing Cost page and locate the relevant FNSKU/ASIN.
- Enter or adjust your manufacturing cost, and save your changes.
- Monitor the status of submissions directly in the portal.
What to Expect Moving Forward
- Reimbursement Scope: For items lost or damaged after a customer order, Amazon will continue to reimburse sellers for the sales price minus applicable fees.
- Limitations: Shipping costs, customs duties, and other additional expenses are not included in the reimbursement calculation under the updated policy.
- Data Protection: Amazon assures that seller-provided cost data will remain confidential and will not be shared with other sellers or Amazon Retail.
Why This Change?
Amazon has cited a need for standardization and alignment with broader logistics practices as the driving force behind the update. The shift to cost-based reimbursements aims to ensure sellers are made whole for their losses while improving operational transparency and efficiency.
For more information, Amazon has enhanced its FAQ section within Seller Central to address common questions about the policy update.
How This Fits into Amazon’s Reimbursement Process
Amazon’s reimbursement process has long been a critical safeguard for sellers, ensuring they are compensated for inventory mishaps within Amazon’s fulfillment network.
Recent changes, such as the reduced reimbursement window and auto-reimbursement process, demonstrate a trend toward streamlining operations and setting clearer guidelines for sellers to follow.
By introducing cost-based reimbursements, Amazon aims to provide a more consistent and predictable approach while aligning with practices used by other logistics providers.
