Overview

Amazon is making a significant change to how it reimburses FBA sellers for lost or damaged inventory. Starting March 10, 2025, reimbursements for items lost or damaged before a customer order will be calculated based on the product's manufacturing cost rather than the previous method. This shift represents one of the most impactful policy changes for FBA sellers in recent years, directly affecting how much money sellers recover when Amazon loses or damages their products in fulfillment centers.

What's Changing

• New reimbursement basis — Amazon will now reimburse sellers based on the "manufacturing cost" of affected inventory, defined as the cost to source a product from a manufacturer, wholesaler, or reseller, or the cost to produce the item if you are the manufacturer.
• Excluded costs — The manufacturing cost definition specifically excludes shipping, handling, customs duties, and other ancillary costs, meaning sellers will not be reimbursed for these expenses when inventory is lost or damaged.
• Two cost-determination options — Sellers can either let Amazon estimate their manufacturing costs using comparable product data, or provide their own manufacturing costs directly through a new portal.
• Post-order reimbursements unchanged — For items lost or damaged after a customer order, Amazon will continue to reimburse based on the sales price of the original order minus applicable fees.

How Manufacturing Cost Is Determined

Amazon is giving sellers two paths for establishing the manufacturing cost used in reimbursement calculations. The first option is Amazon's own estimate, which the company says is based on a comprehensive evaluation of comparable products sold by Amazon itself, by other sellers on the marketplace, and through wholesale channels. This automated approach means Amazon will look at market data to determine what it believes a product costs to source.

The second option puts control in the seller's hands by allowing them to submit their own manufacturing costs directly. If a seller chooses not to provide their own figures, Amazon will automatically apply its estimate. Importantly, sellers can update and change their manufacturing costs at any time, so the initial Amazon estimate does not have to be permanent. A new dedicated page within Seller Central will allow sellers to view, manage, and update their manufacturing cost information.