Overview

Effective March 10 2025, Amazon switched the basis for FBA loss and damage reimbursements from the retail selling price to the actual manufacturing cost of each SKU. The change directly reduces payout amounts for many private‑label sellers, making accurate cost documentation a critical operational priority.

Key Points

• Reimbursement basis shifted — Amazon now calculates compensation for pre‑sale inventory loss using the documented cost of goods, excluding shipping, duties, and handling fees.
• Mandatory cost submission — Sellers must upload per‑SKU manufacturing cost evidence (invoices, payment records, production expense reports) through a new Seller Central portal.
• Default estimates applied — If sellers fail to provide their own numbers, Amazon will assign an internal estimate derived from comparable product data, which can be lower than actual costs.
• Scope limited to pre‑order losses — The new formula only covers items lost or damaged inside fulfillment centers before a customer order is placed; returns and customer‑caused damage remain under existing rules.
• Margin‑sensitive impact — Private‑label brands with manufacturing costs representing 15‑30 % of the retail price can see reimbursements drop by 75‑80 % per incident, while wholesale resellers may experience little change or even a modest gain if Amazon’s estimate exceeds their true cost.

How the Reimbursement Calculation Works

1. Cost data upload — Sellers submit a PDF package for each SKU that includes the manufacturer’s invoice, proof of payment, and any ancillary production expenses. For example, a seller of a $28 kitchen gadget would upload a $5.40 invoice showing the exact production cost.
2. Amazon verification — The platform reviews the submitted documents, matches them to the SKU, and stores the verified cost in its system. If the documentation is incomplete, Amazon flags the SKU for default estimation.
3. Loss claim processing – When Amazon records a loss or damage event before a sale, it multiplies the verified manufacturing cost by the quantity affected and issues a reimbursement. Using the previous example, a loss of 10 units would generate a payout of roughly $54 (10 × $5.40) instead of the prior near‑full‑retail amount of $280.