News / FBA seller fury as Amazon dials back compensation for lost products

Wawritto |

Amazon recently extended its pursuit of third-party online sellers to move and store their products to freight forwarders using airfreight, but its latest move is prompting users of its Fulfilment By Amazon (FBA) service to consider alternative providers.

Private networks like Amazon or Walmart have been increasingly chasing third-party volumes to bolster utilisation. Amazon’s most recent push came in November when it invited freight forwarders to move air cargo on its freighter networks in North America, Europe and Asia. However, users of FBA are looking elsewhere since the ecommerce giant announced cuts to its compensation for lost or damaged shipments set to come into effect on 10 March.

So far it has reimbursed FBA customers for the sale value of lost items, but from March it will only compensate shippers for the wholesale cost at which they acquired the product, framing the change in terms of easier and faster compensation.

“We’re constantly refining our operations and processes to prevent products from being lost or damaged and having to be reimbursed. For cases where reimbursement is necessary, we’re focused on ensuring timely compensation. We now offer automatic reimbursements for items lost in our fulfilment centres, saving you time and eliminating the need for you to submit a claim to receive reimbursement,” it told users.

FBA users were not impressed, as comments on Amazon discussion boards amply show. They were quick to point out that they would have to shoulder the costs associated with packaging, labelling and other related activities in the process.

One of the tamer comments was that “now Amazon can lose inventory and say ‘whoops’, and then decide what a fair reimbursement is on their end”.

“The overwhelming majority of third-party sellers are not the manufacturer of the products they sell. The manufacturing cost has nothing to do with our cost and the actual value of the inventory,” another pointed out.

One industry consultant weighed in labelling the change as “a pure money grab” that “flies in the face of standard industry practice”.

And there are concerns about disclosing details of inventory sources and costs. Amazon wants FBA customers to provide this information to determine the compensation. Alternatively it will use its own estimate, “based on a comprehensive evaluation of comparable products sold by Amazon, by other sellers and through wholesale channels”.

A number of comments reveal pent-up frustration over repeated loss of goods. One said: “You guys are horrendous at scanning-in products and you lose thousands of our products every single year, and now the plan is to have small businesses lose a bunch of money because you guys can’t get your act together.”

Others pointed out that the change in compensation was announced barely a month after Amazon had pledged not to make changes to FBA fees in 2025, and some were smarting from a glitch in Amazon’s system last month that delayed the posting of sales on sellers’ payment dashboards, This meant during the delay they could not receive full disbursements, possibly causing cash flow problems for some. It took Amazon several days to fully correct the problem.

Will this policy change give forwarders cause to reconsider using the Amazon Air networks to move airfreight? If anything, it should be more difficult to lose a pallet or a container than a few boxes.