Are you an Amazon FBA seller? Then, Amazon most likely owes you money!
Through our discussion with several Amazon FBA sellers we discovered a few months ago that many FBA sellers were being owed money for damaged stock in Amazon’s warehouses. We performed several analyses and one of our case studies, a UK business making approximately £10k revenue per month by shipping around 1000 units was owed around £5k for the last 18months! Crazy right?
What’s more, Amazon’s Term of Service only allow claims to date back 18months so Amazon FBA sellers should not wait any longer to start recovering their money.
This initial analysis increased our intrigue and so we decided to investigate further in order to understand what is happening and how widespread this issue is.
Damaged Inventory: What Amazon FBA Sellers should know
When you entrust your goods with Amazon fulfilment services, they take their responsibility seriously. Your products are processed quickly, customers receive their orders quickly and well packaged.
However, from time to time one of your products may get damaged whilst in transit from one Amazon warehouse to another or whilst being moved within a warehouse.
When this happens, Amazon will either replenish your stock with the same item from somewhere/someone else, or refund you in cash for the value of the item.
But here’s the catch. Amazon is not a perfectly oiled machine when it comes to paying out money. This means, third party sellers are not always refunded. And if you don’t raise a claim against Amazon within a certain period of time, then you’ll never see this money again.
Refunds not returned to Amazon: FBA Sellers taking on the costs
When customers ask Amazon for a refund, Amazon obliges and reimburses the customer immediately using the third-party merchants’ money.
But customers don’t always return their products, in which case, Amazon should reimburse the merchant for the value of the item.
However once again, this is inconsistently done, meaning you are not always reimbursed for the value of the item when it is not returned.
This leaves FBA sellers with two options:
- Do nothing as you don’t have time to chase after Amazon, or
- Spend several hours & days reconciling around 7 reports needed to derive the appropriate result. And then spending hours filing cases with Seller Support and following up on each one.
Thankfully, there is a third way! There are several tools out there that calculate what you are owed. Once you’ve entered your data they calculate what you are owed and produce you a report. Here is a short review of each:
They calculate 20 use cases and will charge you either 10% of the amounts actually recovered by filing claims on your behalf so you don’t have to do the leg work, or you can pay 30$ a month to have the report prepared for you every month with all the information you need to file claims yourself.
They calculate the most number of use cases. They charge 25% of the total amount estimated as an up front fee for the report which you then have to file yourself.
They charge 8% of the total amount estimated as an up front fee for the report which you then have to file yourself.
They file claims reimbursements automatically for $75 a month (you get other tools for that money too). They open cases on Amazon for you automatically, and the results are presented very neatly on their platform. However, they also recently had an official complaint against them from Amazon.
They charge a one time fee of between $127 to $247 depending on how many features you want to be included. They provide you with a report for you to file claims yourself.
They charge 25% of the total amount actually recovered. They file claims on your behalf.
Our investigation so far has found that nearly all FBA sellers are owed at least something. This varies greatly depending on volume of sales and value of inventory.
Stay tuned for a follow up article where we will share some of the statistics of our detailed findings and uncover the true scale of this issue.
What are your thoughts on this- should sellers chase after Amazon for claims? Tell us below or Tweet us!