Everything You Need to Know About FBA Inventory Reimbursement

Amazon FBA sellers move millions of products in the program. In 2023 alone, U.S. vendors sold 4.5 billion items, and while not all of those went through FBA, that kind of product volume means things will inevitably go wrong at some point. Items become lost or are damaged during shipment or in the warehouse, and when that happens, Amazon owes you reimbursement.

Previously, sellers had to file a claim manually for inventory lost or damaged in Amazon’s care. In 2024 though, the FBA inventory reimbursement process has become significantly easier, and as of November, much of it will happen automatically. That means less for you to worry about and keep track of. However, it’s still important to understand how FBA inventory reimbursement works, what your role is in the process, and how to monitor missing and lost inventory so you can file manual claims when necessary.

What is Amazon FBA inventory reimbursement?

An FBA inventory reimbursement has Amazon pay you for inventory lost, damaged, or overcharged while in their care.

You receive reimbursement based on the cost of the products. Amazon will either estimate this amount, pay based on your invoice, or pay the rate the manufacturer invoiced after you supply that documentation. They won’t cover funds spent on shipping or Amazon prep costs though, so it’s in your best interest to prep products as carefully as possible to reduce the risk of inventory being lost.

For example, if Amazon accepts your inbound boxes as two units instead of two boxes containing 50 units each and inventory is lost as a result, you’ll spend unnecessary time and effort pursuing a reimbursement. To reduce the potential for such issues, make sure box and pallet labels and barcodes meet FBA requirements and are applied properly.

Amazon FBA reimbursement categories

Amazon reimburses FBA inventory for multiple reasons, including:

• Lost inventory: If inventory received into an FBA fulfillment center has been confirmed lost by Amazon’s tracking system, you’ll receive a refund automatically, which you can track through the Reimbursement report.
• Damaged inventory: If inventory is damaged in FBA, Amazon will reimburse you. They should automatically process it after listing items as damaged.
• Overcharged fees: If Amazon overcharges you for fees or return costs, you’ll receive reimbursement. This covers fulfillment, storage, and removal expenses. If you believe Amazon has billed you more than they should have, you can request a review and potentially receive a refund. That also applies to incorrect measurements (e.g., Amazon bills you for a larger product than you sent). In most cases though, you’ll have to submit a manual claim for this category.
• Inaccurate refunds: Amazon reimburses sellers when they refund a customer incorrectly or without receiving a claim from the buyer.
• Inbound shipment problems: If your products are lost, damaged, or scanned into a warehouse improperly during receiving and processing, you’re eligible for a refund. Amazon should process this automatically, but you may have to file a manual claim if it doesn’t show up in your Reimbursements report.
• Missing returns: If customers return items that are then lost or improperly received and returned to you, Amazon will reimburse you. This also should happen automatically.

Lost goods and damaged inventory are the most frequent reasons for reimbursement. Inbound shipment problems are also common but may be harder to track since they occur under Amazon’s jurisdiction (unless you ship to Amazon with an Amazon freight service). Therefore, you’ll want to ensure proof of delivery and tracking are in place for all inbound shipments.

Do all FBA reimbursements happen automatically?

As of November 1, 2024, Amazon automatically processes and proactively refunds sellers for lost and damaged inventory. However, you’ll still have to submit manual claims for inaccurate refunds, when you believe a reimbursement is the wrong amount, or when Amazon misses a repayment. You also need to submit manual removal claims for lost and damaged stock, or those items will stay logged in your inventory.

Claims have deadlines as well that you need to be mindful of:

• A removal claim for items lost in transit can be submitted 15-75 days after the shipment creation date.
• Removal claims must be submitted within 60 days of an item being shipped back to you.
• Customer return claims must be submitted 60-120 days after the buyer refund or replacement date. This is to ensure customers have time to return items first.

How long do I have to file an FBA reimbursement claim manually?

If your inventory reconciliation reports don’t match your reimbursements, you can file a manual claim. However, the window to do so opens 60 days after the inventory went missing or was damaged. Amazon takes that long to process reimbursements, which is why you can’t file a claim until two months have passed. Once you cross that point, check Amazon’s Reimbursements report, and if you haven’t received a reimbursement, file a claim manually.

You can file a reimbursement claim within 18 months of items being lost. So, conducting a yearly audit and refund request is enough to catch any reimbursements Amazon may have missed if you don’t need the cash flow sooner. Smaller businesses with less cash flow should check once per quarter.

To keep track of your repayments, check Amazon’s free Reimbursement report in Seller Central. You can easily see all pending FBA inventory reimbursements, file manual claims, and track their progress from the dashboard.

Best practices to secure Amazon FBA inventory reimbursements

Amazon proactively processes reimbursements due to loss and damage. However, you’ll still want to follow best practices so you can smoothly request and win claims when necessary. Be sure to:

• Maintain careful records of inventory shipments with itemized lists, cost invoices, tracking numbers, and proof of delivery. Documenting shipments with photos and itemized lists should be standard.
• Reconcile stock on a yearly or quarterly basis to make sure you notice any discrepancies between your projected and actual Amazon inventory. That also means monitoring what happens to products when Amazon accepts a return.
• Periodically audit FBA fees to ensure they align with your fee schedule. Filing an overcharge claim requires you to provide a lot of data, including which specific fees are incorrect and how, so be prepared to put in significant effort to manage this claim if you pursue it.

Ideally, most of your FBA inventory reimbursements will happen automatically. However, you should be prepared to file manual claims when necessary.

Wrapping up — Equip yourself to tackle FBA reimbursements

Amazon handles millions of products every day, with several thousand items shipping out of FBA fulfillment centers every minute, so it’s inevitable they’ll make mistakes sometimes. When those errors occur, Amazon is responsible and will reimburse you for lost or damaged products. While you won’t receive a refund for shipping or product prep expenses, you will recoup the wholesale cost of the item.

Amazon does their best to repay sellers proactively for items lost in their care. You can track those refunds via the Reimbursement report. However, follow up with inventory reconciliation and keep track of Amazon FBA fees to gain insight into any issues that aren’t automatically reimbursed. With this knowledge, you’ll ensure you receive the money you’re owed every time.