Overview

Amazon will change the way it compensates FBA sellers for inventory that disappears or is damaged inside its fulfillment centers. Beginning in 2025, reimbursements will be based on the product’s manufacturing cost rather than the selling price or the legacy formula. Sellers need to understand the new calculation method, how to submit their own cost data, and what actions are required to protect their margins.

Key Points

• Manufacturing‑Cost Basis — Reimbursements for lost or damaged units will reflect the cost to produce or source the item, not the retail price.
• Definition of Manufacturing Cost — Amazon counts the expense of acquiring the product from a factory, wholesaler, or reseller, or the cost of self‑manufacturing; it excludes shipping, handling, customs duties, and other ancillary fees.
• Seller‑Provided Costs — Sellers may upload their own verified manufacturing costs to replace Amazon’s default estimate.
• Amazon’s Default Estimate — If a seller does not submit data, Amazon will generate an estimate using pricing information from comparable items sold across its marketplace and wholesale channels.
• Pre‑Order vs. Post‑Order Losses — The new cost‑based rule applies only to inventory lost or damaged before a customer order is placed; losses after an order remain reimbursed at the sales price minus fees and VAT.

How the New Reimbursement System Works

1. Cost Estimation Engine — Amazon’s algorithm scans product listings that it sells, third‑party offers, and wholesale price feeds to produce a benchmark manufacturing cost. Example: For a silicone spatula sold by multiple sellers at $15, the system may calculate a benchmark cost of $6.
2. Seller Cost Submission — Sellers can log into a dedicated page in Seller Central, enter their actual cost per unit, and attach supporting documents such as invoices or production sheets. Example: A private‑label brand uploads a $4.50 per unit cost for the same spatula, backed by a factory invoice.
3. Reimbursement Calculation — When inventory is reported lost or damaged before an order, Amazon applies the cost figure (either the seller‑provided value or the algorithmic estimate) to determine the reimbursement amount.