Amazon’s recent announcement regarding its FBA (Fulfillment by Amazon) inventory reimbursement policy is causing quite a stir among sellers. What used to be a manageable inconvenience—items lost or damaged in Amazon’s fulfillment centers—is now a potential profit-killer for many.

Effective March 10, 2025, Amazon will significantly cut reimbursements for lost or damaged inventory, and the implications for marketers and small businesses are downright terrifying.

In a move that Amazon frames as a “benefit” to sellers, the company’s recent announcement reveals it will be updating its FBA inventory reimbursement policy to provide more “transparency and predictability.”

Sounds nice, doesn’t it? Well don’t you believe it.

Starting March 10th, Amazon will only reimburse sellers for the manufacturing cost of the lost or damaged items, not the retail price.

If you’re selling a product for $10 but it only costs you $2 to produce, Amazon will now reimburse you only the $2—the manufacturing cost—leaving you to eat the $8 difference. No shipping costs, no handling fees, and certainly no customs duties will be reimbursed. For those who rely on Amazon’s system, this shift is a major blow.

This policy change could prove catastrophic for smaller sellers who often rely on tight profit margins. Without sufficient reimbursement, many businesses will be left with no way to recover their losses from Amazon’s own mishandling of inventory.

The Even Bigger Issue: Conflict of Interest

Amazon controls every part of the logistics process, including warehousing, distribution, and fulfillment. This gives them a lot of power, but it also introduces a major conflict of interest. If Amazon loses your inventory, there’s nothing stopping them from keeping it and reselling it under their own private label, which has happened before. With fewer financial consequences for Amazon, the incentive to mishandle or “misplace” products only increases.

Sellers are left at the mercy of Amazon’s lackluster internal processes, and they’re expected to bear the financial burden.

Marketers who rely on Amazon for traffic and fulfillment will face rising costs, while Amazon continues to gain more control over the market. As Amazon raises fees, introduces new charges, and undercuts sellers with its own product lines, smaller businesses will struggle to stay afloat.

Bottom Line

While Amazon presents this new reimbursement policy as a way to create “more transparency,” the reality appears much more sinister.

For marketers and sellers, this change means more risk, more uncertainty, and potentially devastating financial consequences.

Amazon’s new policy shifts all the blame and financial responsibility for lost inventory directly onto sellers, making it harder than ever to turn a profit.

This could very well mark the end of Amazon’s once-supportive relationship with small businesses—and the start of a much more expensive and less reliable platform for sellers.

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