In March 2025, Amazon changed how it reimburses FBA sellers for inventory that’s lost or damaged in its warehouses. Amazon’s updated FBA reimbursement policy, effective March 2025, now calculates reimbursements based on your sourcing or manufacturing cost instead of your average selling price. This change means the reimbursement amount is often much lower – even if the mistake was on Amazon’s end. What does this mean for sellers? You might receive far less compensation than before. And if your cost records aren’t well maintained, it could become harder to get paid the full amount you’re owed. That’s why it’s important to understand how this change affects your bottom line – and what steps you can take to reduce the risk of underpayment. In this blog, we’ll break down the policy update, explore its impact, and show how forward-thinking sellers are adjusting using smarter systems. What’s Changed in 2025? In March 2025, Amazon changed how it handles reimbursements for FBA sellers when products are lost or damaged in their warehouses. Before You were reimbursed based on the item’s selling price. If a product sold for $50, that’s roughly what you’d get back if Amazon lost it. Now Your reimbursement is determined by the cost of production or sourcing. So, if that same product cost you $12 to make or buy, you’d now receive only $12. Example Let’s say your monthly FBA sales total $100,000, and you lose 2% of inventory due to warehouse issues. That’s $2,000 worth of lost stock under the old system. With the new cost-based model, if the average sourcing cost is 25% of your selling price, you might only be reimbursed $500–$600 instead of $2,000. That’s a loss of $1,400+ every single month. How This Affects Your Business For many Amazon FBA sellers, this policy shift might not seem like a big deal at first glance – but over time, it could take a real toll on your profits and your team’s workload. Lower reimbursements could shrink your margins When lost inventory is reimbursed at cost rather than the sale price, you’re recovering far less than you used to. Even a small gap between those numbers – say, $10 vs. $40 – adds up quickly. If you’re already working with tight profit margins, this change can make a noticeable dent. You’ll need accurate cost data on hand Amazon won’t take your word for it. If you want to get reimbursed correctly, you need to back up your numbers with documentation – things like purchase orders, supplier invoices, and internal cost records. If this information isn’t stored and accessible, it’s easy to lose money. Errors or missing info could cost you When it comes to proving your costs, if you forget to attach a PO or your cost estimate is too vague, Amazon might decide the cost for you – and their figure could be much lower than what you actually paid. That means less money back, even when Amazon is at fault. Managing it all adds to your workload If you’re selling hundreds or thousands of items, keeping track of all this data manually takes time. And time spent on paperwork or reimbursement claims is time taken away from growing your business. What Sellers Should Do Next With the new reimbursement rules in place, sellers can’t afford to be reactive. Staying ahead means tightening up internal processes – especially when it comes to how you track and validate your product costs. Keep your cost data updated Your sourcing or manufacturing costs should be reviewed regularly. If a price changes, make sure that update is reflected in your system. This is the number Amazon uses to determine your reimbursement, so keeping it accurate matters more than ever. Link your ASINs to POs and invoices Each product should be traceable – from listing to purchase order to invoice. If Amazon asks you to prove your cost, you’ll need to show clear documentation. Having ASINs properly linked to purchase records avoids last-minute scrambling. Prepare for bulk claim submissions If you manage a large catalog, dealing with reimbursements one product at a time isn’t scalable. Start thinking in terms of bulk validation – having clean data ready for many SKUs at once will save time and reduce stress. Automate where possible Manually pulling costs, matching them to POs, and preparing files for submission can be tedious and error-prone. Automating this workflow allows you to respond faster, avoid mistakes, and recover more money with less effort. Example: Automating Cost Validation To see how this policy update can affect a seller’s bottom line – and how automation can help – let’s walk through a realistic scenario. Suppose you sell a product on Amazon for $30, and it costs you $8 to manufacture. Under the old reimbursement policy, if Amazon lost that item, you’d be reimbursed close to the $30 selling price. Now, with the new cost-based system, you’re only getting back $8. If your business averages 2% inventory loss each month – which is common for FBA – and your monthly revenue is around $150,000, that change could lead to nearly $2,500 in lost reimbursements every month. Over a year, you’re looking at $30,000 in unrecovered costs, simply because of how the reimbursement is calculated. That’s why we built a feature to make this process more manageable. Here’s how it works: The seller uploads an Excel file exported from Amazon, listing all affected ASINs The system automatically pulls the latest sourcing cost for each item It links each ASIN to its original purchase order and supporting invoice A final file is generated, ready for submission to Amazon for cost-based reimbursement Conclusion Amazon’s 2025 reimbursement policy update may seem like a small adjustment, but for FBA sellers, it has real financial consequences. Shifting from sale price to sourcing cost means you’re recovering less for every item Amazon loses or damages – even when it’s not your fault. Sellers who adapt quickly by improving cost tracking and automating their workflows will be better positioned to protect their margins. The more accurate your records, the easier it is to respond when Amazon asks for proof – and the more likely you are to get reimbursed properly. This isn’t just about staying compliant – it’s about staying profitable. In today’s FBA environment, validating your cost data isn’t optional anymore. It’s a necessary part of doing business.