Fulfillment by Amazon
Amazon FBA (Fulfillment by Amazon) fees are the charges that Amazon appoints on
sellers to store their inventory in Amazon’s fulfillment centers and handle the
warehousing, storage, picking, packing, and overall fulfillment, as well as customer
service, and management of returns for any inventory.
There are two main FBA fees: Inventory storage fees and Fulfillment fees.
Monthly InventoryStorage
Monthly inventory storage fees are charged on a monthly basis for the amount of space your products take up in Amazon’s fulfillment centers.
Long-termStorage
Long-term storage fees are in addition to the monthly inventory storage fee and apply to units that have been stored in an Amazon fulfillment center for more than 365 days.
If you submit a removal order for items before the next inventory cleanup date, those
items won’t be subject to long-term storage fees. Fulfillment fees are charged per
inventory unit when a product is sold and shipped to a customer.
Table of Contents
Amazon FBA
The amount that a seller is charged per inventory unit varies on the weight and dimensions of the product, the season in which the product is fulfilled (the fourth quarter is peak shopping season, which is more costly), and how long your product is stored at FBA.
There are additional variables that contribute to increases in fees as well. Does your product have lithium batteries? This carries an additional fee as well, for example.
Amazon evaluates and changes its FBA fees on an annual basis (typically in the fourth quarter of the previous year to take effect soon after the New Year). However, Amazon has the discretion to adjust fees at any time if they determine it to be necessary.
In 2023, Amazon provides regular updates and notifications on their fee structure through the Amazon Seller Central platform and email communication.
It’s important for sellers to stay up-to-date on FBA fee changes, as they can significantly impact how they maximize the profitability of their business. Amazon made several new updates to their fees.
What kind of FBA discrepancies are reimbursable?
While there are several FBA discrepancy types that could potentially be reimbursed by Amazon, a large majority of the discrepancies come from four specific types.
Warehouse Lost
This discrepancy type is when inventory units are lost in Amazon’s fulfillment centers after they were already received but before a customer purchased the item.
Disposed
These inventory units were reported to be in perfectly good condition but have been disposed of, either by accident or because the Fulfillment Center had run out of space.
FBA Pick & Pack Fees
Amazon FBA sellers are charged by Amazon for managing the picking & packing of their inventory units when the Amazon orders take place in order to be sent to a customer. These fees are determined by the weight and dimensions of your product’s packaging, and when the size or weight of your product is not aligned with the measurements Amazon has in its database.
Inbound Shipments
This discrepancy type is surfaced when there have been issues with inventory inbound shipments to Amazon Fulfillment Center (FC). Typically, all or part of the inventory in an FBA shipment has been lost by Amazon or the carrier before the inventory was received by Amazon’s fulfillment center team.
FBA auditing may uncover additional discrepancy types for which you could be eligible for further reimbursements. Each type of discrepancy could have different levels of success due to the complexity of the data set.
In our experience, it’s more than worthwhile for FBA sellers to stay on top of Amazon’s changing fees and evolving discrepancy types to maximize the recovery opportunities
available.
Amazon Account Audit Types
Returns Audit
Returns Reimbursement: A reimbursement was never actually paid out.
Wrong Item Returned: A customer sent the wrong item back and Amazon accepted it.
Returned Not Refunded after 45 Days: The customer received a refund but they The product was returned and they never returned the item.
Damaged Returns: The product was returned and then damaged.
Return Overcharge: The customer was refunded more than they originally charged.
Return after 60 Days: A customer was granted a special after the usual policy window.
Accounting Audit: Credited more than Charged. The account was billed more than initial order amount.
Chargeback not Refunded: A consumer received a chargeback but the seller was not reimbursed.
Reimbursement Error: Reimbursement was issued but the seller never received the money.
Seller Fee: The Seller was wrongfully charged for the weight or dimension of inventory.
Unfair Reimbursement: The reimbursement the seller received was nor correlative to lost value.
Adjusting Balance Sheet: Results of our auditing data and financial recovery services are then applied to the balance sheet and profit and loss statement adjustments for maximum accuracy.
Amazon Account Audit Types
Warehouse Audit
Receiving Discrepancy: Inventory was improperly received or miscounted from inbound shipments in the past g months.
Lost Inventory: Inventory was lost in the warehouse.
Damaged Inventory: A customer sent the wrong item back and Amazon accepted it.
Destroyed Inventory: Inventory was destroyed without the seller’s permission.
Receiving Discrepancy: Inventory was improperly received or miscounted from inbound shipments in the past g months.
Lost Inventory: Inventory was lost in the warehouse.
Damaged Inventory: A customer sent the wrong item back and Amazon accepted it.
Destroyed Inventory: Inventory was destroyed without the seller’s permission.
Shipping Audit
Inbound Shipping Damaged by Carrier: While shipping FBA, the carrier damaged incoming inventory.
Multi Channel: Item sold on different marketplaces were said to be delivered that consumer never received product.
Damaged Return by Carrier: Inventory was returned by the consumer
and damaged during the return by the
carrier.
Removal Order Damaged or Lost: The removal order was damaged or lost
in transit.
Where should you start?
The best place for FBA sellers to start auditing their FBA transactions is their inbound shipments. Nearly 40% of reimbursements that GETIDA identifies come from inbound shipping discrepancies.
Upon logging into Amazon Seller Central, you should hover over “Inventory” in the top menu bar, and select “Manage FBA Shipments” from the dropdown options.
You will be brought to their FBA Shipping Queue, where you will see all FBA inbound shipments including shipment name, creation date, last date updated, the fulfillment center the inventory is being shipped to, number of SKUs in the shipment, Units Expected vs Units Received, and each shipment’s current status.
These final two columns, Units Expected vs Units Received and Status are where you should pay close attention.
For shipments that are closed and there is a discrepancy between the units expected and the units received, it’s time to file a claim!
Fulfillment (Pick & Pack) Fees
Amazon fulfillment fees are charges that Amazon collects for picking, packing, and shipping an individual inventory unit sold through the platform and vary based on the weight and dimension of the item you are selling.
Fulfillment fees are separate from FBA storage fees, though both are based on the weight and dimensions of an item in order to calculate the fee and size tier of the product.
The fulfillment fee can cost anywhere from about $3, to hundreds of dollars based on the weight and dimension of the item.
For small and lightweight items, there is a specific program called where eligible items receive a much lower fee, from $2 and up. When selling in Europe, shipping destinations can also impact the amount of the fee.
FBA Small and Light
Smaller packages, as you might imagine, cost less to ship than larger ones, so making your
packaging as small and light as possible (without sacrificing product integrity or customer
experience) can help you save tremendously on fulfillment costs.
These fees can add up, especially for units that are sold in high volume, so it’s important to factor them into your overall pricing strategy when selling on Amazon as fulfillment costs can
quickly chip away at your profit.
Category Fees / Referral Fees
As an Amazon seller, you are subject to “category fees” or “referral fees”, which are fees that Amazon charges for selling products on their platform regardless of whether you use FBA or fulfill your own Amazon marketplace orders.
Referral Fees are a percentage of the sale price and vary depending on the category of the item being sold. For all intents and purposes, these fees should be considered as part of the cost of customer acquisition for any online seller. The reason being, this is common across any marketplace and is a great way for any entrepreneur to benefit from built-in demand for their products to sell online.
Sellers should be aware of these fees and carefully factor them into their pricing strategy.
Category fees are eligible for reimbursement if there’s a clear mistake and a seller gets unnecessarily overcharged with fees. For example, if you sell an item in the electronics category for 8% and suddenly it was incorrectly categorized within the kitchen category which is 15%, you may be eligible for a category fee reimbursement from Amazon for such a discrepancy.
Category Fees / Referral Fees
Category fees for Amazon sellers are calculated as a percentage of the sale price of each item.
The exact percentage varies by product category, with some categories having a higher fee than others.
There is an opportunity to optimize around these fees within the primary category in which you are selling. For example, a dishwasher could be listed in the Kitchen Category or the Full-Size Appliance Category.
The Kitchen Category on Amazon has a 15% referral fee charge of the order price, while the fee for selling in the Major Appliances Category is only 8%. If your product could fit in either category, you may want to optimize your primary category to the lower fee option in order to maximize your profit.
When calculating the category fee, the order sale price is determined by the total amount the customer pays. The category fee is then deducted from the sale price, and the remaining amount is the net revenue received by the seller. Of course, advertising costs and FBA fees are additional costs that might be incurred by doing business on the Amazon marketplace, further reducing the net revenue for the seller.
FBA Reimbursement Methods
After opening a case with Amazon and successfully reconciling a discrepancy which was eligible for reimbursement, an FBA reimbursement method can take two forms:
- An FBA cash reimbursement
- An FBA inventory reimbursement
An Amazon seller would receive an FBA cash reimbursement after a case for an eligible FBA reimbursement has been approved and a reimbursement ID has been provided. A cash reimbursement will appear in your Seller Central account alongside the FBA reimbursement ID in the following section Reports > Fulfillment > Reimbursements.
An inventory reimbursement occurs when Amazon replaces or restocks an item due to lost, damaged, or disposed units, or when a refund is issued but the customer did not return the item.
Inventory credits will only be reimbursed if the same inventory is already available in the Amazon system. In this case, the seller would receive a credit for the cost of the item to their Amazon account.
At GETIDA, we have seen that 90% of all reimbursements are of the cash variety and 10% in inventory.
How can sellers manage FBA reimbursements?
With an in-house associate or virtual assistant
A dedicated resource such as a full-time employee or virtual assistant can manage your FBA reimbursements by regularly checking your Seller Central accounts to identify any discrepancies, damages, or lost inventory units that might lead to reimbursements.
They must be able to identify overpaid fees or missed reimbursements, and it is best practice to be organized in order to track reimbursements in real-time.
Preparing and submitting reimbursement requests for damages, lost, or missing inventory units, and other discrepancies that are eligible for reimbursement will be the biggest lift.
Satisfying a claim requires communicating with Amazon to resolve the case, providing documentation, and following up on pending reimbursements. Some opened cases may be rejected by Amazon and will require your associate or VA to re-open the case and provide additional documentation or proof to see it through to resolution.
The most important way for you to maximize your profitability is to be proactive in staying informed about Amazon’s policies and procedures. Regularly reviewing your account will
ensure that no discrepancies are missed.
With a third-party solution provider
The above tasks become easier when you are supported by technology to audit the discovery of FBA discrepancies on a constant basis so that no potential cases expire.
success rate of reimbursements from Amazon.
Get a $400 Credit for FBA Reimbursements Today!
GETIDA will help you maximize your FBA refunds. We find and secure more eligible claims for you, so you get more refunds more quickly
More from GETIDA's Amazon FBA Reimbursement Series
