The first time a retailer on Amazon may realize there are inaccuracies in charges and inventory is when their numbers don’t add up.
If you aren’t paying close enough attention, you may not realize that there are problems with reimbursing Amazon fees at all! How is potential revenue falling through the cracks? What are you missing as an Amazon FBA Seller?
When signing up to become a part of the Amazon FBA program, you are agreeing to turn over management of your inventory, orders, refunds, returns, and customer service to Amazon.
There are two types of discrepancies that can occur vis-a-vis Amazon FBA fees. The first type is transactional, i.e. discrepancies with charging. The second type is physical, i.e. something relating to an actual unit.
Amazon will identify and reimburse for discrepancies on their own about a third of the time. They created a system of detailed reports, a claims department, and an 18-month look back period, in order for retailers to identify and claim the remaining~66% of the discrepancies on their own.
These may be the reasons you feel like the money is vanishing!
The Reporting Can Be Confusing
The reports Amazon supplies FBA Sellers with can be difficult to read and digest. Many times, reports must be downloaded in order to locate the reasoning and details as to why the item has been returned. Amazon supplies many definitions within the reimbursement report, ranging from Merchant SKU to the product’s condition, or the “Reason” for the return, and more. At times, seller’s struggle with the reasons Amazon provides as to why a customer is returning an item. Sellers need to actually go into Seller Central and ensure that (via Reports – – Fulfilment) refunds are being returned to the seller – sometimes before the item is returned, but many times at the initial point of customer return (which will show up immediately).
There are certainly many variables both within these reimbursement reports, as well as with the responsibility Amazon holds in managing customer service. At times, an item can be returned to the seller, and if it is damaged, the seller can potentially eat the cost. In the case of the item being damaged in transit, the seller then has the ability to be reimbursed by Amazon. If the product appears to be in sendable condition, Amazon will enter it back into the seller’s inventory. Other factors that can confuse sellers about their refunds and fees returned are that no matter which way the refund goes, sellers will lose several bucks (that will ultimately add up!) because Amazon keeps the cost of the original outbound shipping to the customer.
Even when an item is lost or damaged and under Amazon’s control, the refund is not always guaranteed or clear as to how or when it is returning to the seller’s account. Concerning damaged items, Amazon determines the status of the product, and if the damage is the customer’s fault or the sellers. These small determinations on Amazon’s part can result in a tremendous amount of lost fees and inventory for the FBA Seller.
Fees, Fees, and More Fees
With the number of fees sellers can be charged from Amazon, such as restocking fees, return processing fees, FBA fees, and more, it is critical to remain aware of missed fulfillment promises made by Amazon. At times, FBA Sellers won’t receive a product returned to their inventory, and then claiming for a refund for that lost product is on the seller.
As Amazon evolves, so do its processes, and what they charge for. Since September 2018, long-term storage fees have been adjusted. Long-term storage fees are hefty, and Amazon typically utilizes them to increase space in their existing fulfillment centers. For instance, during busy seasons like the holidays, Amazon hopes to have more space with quicker-moving inventory. With long-term storage fees currently at $3.45 per cubic foot per month, any discrepancy in the dimensions of your products can cost you thousands of dollars.
In some cases, sellers will receive a product returned from the customer that is completely damaged or cannot be entered back into fulfillment, resulting in the seller sometimes believing they are not able to retrieve a refund. Those are a lot of fees and potentially many missed opportunities for receiving a reimbursement!
What Should I Do About Those Amazon Fees?
The Amazon FBA Seller is challenged to keep track of packaging and paperwork to find discrepancies. They are also required to prove to Amazon why a refund is necessary. There are many pain points and obstacles sellers can face when not only trying to ensure that operations are running smoothly, but that all refunds are recovered when filing claims.
Finding a third-party auditing service can assist the FBA Seller in having the ability to maintain everything related to sales. GETIDA offers inventory reconciliation, while also opening cases for reimbursement and refund purposes. GETIDA also has the ability to monitor returns, remove unfulfilled inventory, and track your shipments.
It is imperative as an Amazon FBA Seller to track any errors and reach maximum profitability. Mistakes happen, but that does not mean your account should suffer because of lost funds that would otherwise be recovered with the right assistance.