Mastering Amazon FBA Reimbursement: How Does It Work?

September 21, 2020
Written by Nicasio Co III
amazon fba reimbursement calculation

There are three main fulfillment methods that you can choose from as a seller on Amazon. There’s Fulfilled by Amazon, Fulfilled by Merchant, and Seller Fulfilled Prime. If you’re a new seller on the platform, you might be inclined to use FBA as your fulfillment method. While it has a lot of advantages, you can only maximize it by learning about how Amazon FBA reimbursement works.

How Does Amazon FBA Reimbursement Work?

One of the biggest frustrations for a seller on Amazon is reimbursements Usually, it automatically means that you’re going to lose money. However, you also have to accept that this comes with selling on the platform. You can’t just expect that every customer will be satisfied with the products you’ve put out. You also don’t have full control over what happens during shipping or when your products are with Amazon.

So before you feel bad about any potential  reimbursements that you will have to deal with, it’s important that you understand how it works and how these are categorized.

Basically, if you’re using FBA as your fulfillment method, it means that Amazon is processing and shipping orders on your behalf. Should there be any reimbursements made, these are owed to you in return, here are the main categories that Amazon FBA assigns them to.

1. Inbound shipment issues

Since you’re sending your inventory directly to Amazon’s warehouse, you are bound to encounter some issues when it comes to its inbound shipping. You might encounter some missing units wherein Amazon wasn’t able to scan all of the units that should be in your inventory. It’s also possible that some units were damaged or lost when in transit to the FBA warehouse.

Another common scenario would be some stocks are deducted after the shipment closes. In this case, you will see that Amazon received the units correctly; it’s just that some items have been deducted for some reason.

What’s good with Amazon FBA is that it protects its sellers. This means that once you’ve already sent it to them and they have cleared it, Amazon will reimburse any form of discrepancies on the number of units.

2. Lost inventory.

This is one of the main causes for Amazon FBA reimbursements. Since Amazon handles a lot of seller inventory in their warehouse, it is possible that some of your products may get mixed up with others. It’s a common scenario that most FBA sellers are experiencing.

3. Damaged inventory.

Since your inventory is stored within Amazon’s warehouse, you cannot fully be assured that all items are going to be spotless. Usually, employees may accidentally damage your items when fulfilling your orders. It’s also possible that these were damaged by couriers when in shipment. 

When this happens, you should be able to get a Damaged Inventory report, which you can access through Seller Central. However, there are some cases wherein such damages go unnoticed, and customers may receive damaged products.

There are a lot of possible reasons why your inventory may be damaged by Amazon. Usually, these are coming from customer returns or problems within the warehouse. But if you’re selling with Amazon FBA, you should not worry too much about the cost of the damaged items.

Amazon is supposed to refund you for the items that are deemed damaged. However, there are cases wherein these aren’t credited. It is usually in these times that you will have to be proactive about your Amazon FBA reimbursement, or you won’t receive anything in return.

4. Customer returns.

There are a lot of possible issues with regards to your reimbursement. However, the most common will have to be the products returned by the customers. Every day, Amazon deals with hundreds of customer returns. These are the possible reimbursements that may be accredited to you.

  • Restocking fee.

For some issues, Amazon charges a 20% restocking fee from the customers which they take from your account. It’s possible that after restock, Amazon forgets to refund that fee back into your account.

  • The customer refunded more than the actual price.

When the customer refunded the wrong price, these are deducted from your account as well. It can also be that they refunded more than one unit but returned only one.

  • Received the refund but did not return the product.

When Amazon issues a refund to the customer, but the customer did not return the product, then that’s a loss for you, as well.

  • Sellers received the replacement item but did not return the product.

In most cases wherein customers are willing to get a replacement item, and these are shipped to them, the customer is required to ship the defective or rejected item back. There are some instances, however, that customers don’t resend the rejected items.

  • Returned products cannot be sold.

Returned products usually have some defects or problems associated with them. When this happens, these products are already deemed as unsellable and should qualify for Amazon FBA reimbursement.

  • Returned product wasn’t added to the inventory.

Another possible issue would be that the returned items were received by the warehouse, but, for some reason, these weren’t added to the inventory.

5.  Errors for FBA Fees

When you’re using Amazon FBA as your fulfillment method, it’s worth noting that there are a lot of fees associated with it. There are commission fees, storage fees,, and shipping fees that you will have to deal with.

These fees will depend on the niche you’re selling within, or the time wherein your products are in Amazon’s warehouse. Basically, the fees depend on different variables such as the size of your product, season stored, and length of time stored in Amazon’s warehouse . It may also be the reason why your reimbursement fees are getting mixed up. With that, you have to make sure that the fees you’re charged with all add up.

7. Errors with order quantity

This is also a common scenario that usually happens for Amazon FBA sellers. Customers who only may have ordered one may have been shipped two items. Most customers don’t ship the excess items back due to the time and hassle.

For you, though, this means a lot; one of your inventory items is now unaccounted for . Usually, Amazon does not notice the error on its own. Instead, you will have to detect the discrepancies and make a proactive move of letting Amazon know of the situation.

How Long Does It Take for Amazon to Refund?

This question, along with “how to refund on Amazon,”  are two of the most frequently asked questions for these types of situations. There is no straight answer on how long does Amazon take to issue reimbursement for sellers. However, it might help you to understand how the system works.

1. Amazon decides whether a return is possible.

Based on the FBA customer returns policy, it is Amazon’s discretion whether or not an item will be eligible for return or not. As a seller, you do have to understand that customer obsession is one of Amazon’s core values. This means that the company is a pro-customer rather than pro-seller. They even accept returns beyond the specified time frame to show how much they value their customer’s buying experience.

This means that should a customer request a refund or return, Amazon will be the one to decide. Aside from handling your fulfillment, you’ve also handed off the customer service part to them when you’ve agreed to do Amazon FBA. This is also the reason as to why there is no definite time on how long your Amazon FBA reimbursements may take. 

2. Returns

The returned items are not going to be sent to you. Instead, it will be directly sent to Amazon’s warehouse. From there, employees will be the ones to determine whether the items returned can still be sold or not. If these are eligible for selling, the items are returned to your inventory. However, if these aren’t, they will still assess whether it’s the fault of the customer or it’s Amazon’s (handling, processing, and shipping). It’s only after that point that the company decides whether you’re eligible for reimbursement or not.

Amazon will not accept any responsibility when the damage has been done by the customer. This means that if upon assessment of the product Amazon deems that the cause of damage was done by the customer, you won’t get any refunds for it. 

Key Take-away

Amazon FBA is undeniably one of the best fulfillment methods that you can get. This is true whether you’re just a new seller on the platform or you’ve been selling on Amazon for a couple of years. With that, one of the things that you have to fully acquaint yourself with is how Amazon FBA reimbursement works. It’s a little bit complicated to get to know, but once you’re familiar with it, it removes all the stress on your part whenever there are some problems with your items.

It’s understandable to not fully get the gist of how Amazon’s reimbursement system works. Do you need help in making sure that your reimbursements are all filed properly? We can help you deal with that! Schedule a call with one of our Amazon seller account specialists today. Schedule a call with Jenette by sending her an email at [email protected].

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