Amazon FBA Reimbursements: Why Amazon Pays Your Sourcing Cost, Not Your Sale Price

If Amazon loses or damages one of your FBA units, it is natural to assume the reimbursement puts you back where you would have been if the unit had sold. Amazon's FBA inventory reimbursement policy for the US store says something different. For units lost or damaged before a customer ordered them, Amazon says: "we will reimburse you the sourcing cost of the item."

That single phrase decides how much money comes back to you. It is not your sale price, and as you will see below, it is not your full landed cost either. If you have never told Amazon what your products cost, the number it uses is its own estimate.

With Q4 inventory flowing into Amazon's network, now is a good time to check what you are actually being paid. Here is how the policy works, which deadlines apply, and what to check.

Two kinds of loss, two ways of calculating the payout

Amazon's policy splits lost and damaged inventory into two groups, depending on whether the item was lost or damaged before or after a customer ordered it.

Before a customer orders: sourcing cost

This covers what Amazon calls shipment to Amazon claims, removal claims and fulfillment center operations claims. In plain terms: units that go missing or get damaged on the way in, while stored, or during a removal. Amazon's policy says it will either "replace that item with a new item of the same product or reimburse you for it." When it pays you in cash for one of these losses, the payout is the sourcing cost of the item. For items that were already unsellable when they were lost, damaged or removed, the policy says Amazon "will reimburse at a reduced estimated cost of the unit, and we may request additional information or documentation to help us determine this adjusted value."

After a customer orders: the refund, minus fees

For customer return claims, the policy says: "If Amazon refunded or replaced an item on your FBA order, we calculate the reimbursement value as the refund amount or the price of the replacement item on the original order minus applicable fees."

There is also a ceiling on everything: "The maximum reimbursement amount for a single unit of any FBA eligible item is $5,000." Amazon suggests third-party insurance for anything worth more.

What "sourcing cost" leaves out

This is the part most sellers miss. Amazon defines sourcing cost as "your cost to source a product from a manufacturer, wholesaler, reseller, or produce the item if you are the manufacturer. It excludes costs such as shipping, handling, customs duties, or other costs."

So if you import, the reimbursement for a pre-order loss is based on something closer to your factory or supplier price than to what the unit really cost you by the time it reached Amazon. Freight, duties and handling are on you.

Here is a simple illustration with made-up numbers. Say a unit costs you $5.00 from your supplier, $2.00 in freight and $1.00 in duties, so $8.00 landed. If Amazon accepts your $5.00 sourcing cost, a lost unit returns $5.00 and the other $3.00 is a loss you absorb. If your books carry the $8.00 figure, every lost unit quietly costs you money even when the reimbursement looks "correct".

That is not a reason to argue every claim. Amazon's definition is clear and applies to everyone. It is a reason to know the gap, because it belongs in your profit numbers.

If you never gave Amazon your cost, it guessed

Amazon lets you enter your sourcing cost on the Manage Your Sourcing Cost page in the Inventory Defect & Reimbursement portal. The policy is direct about what happens if you do not: "If you don't provide your sourcing cost, we'll use our own cost estimate for reimbursement calculations, which will be displayed on the same page."

To build that estimate, Amazon says it evaluates "the sourcing cost of comparable products sold by Amazon, by other sellers, and through other wholesale channels." Your product may cost more or less than the comparable items Amazon picks. If it costs more, you are being underpaid on every lost unit and you may not know it.

A few more details from the policy are worth knowing before you submit numbers:

• Amazon can ask for proof. "If you provide your sourcing cost, we may ask you to provide additional information to validate the amount." The Manage Your Sourcing Cost page lists the proof-of-value documents it accepts.
• Submissions can be declined. The reasons Amazon gives include a submission that "is an outlier compared to similar products or our cost estimate," documents that are forged, tampered with or illegible, and a repeat request for the same item within 30 days of a decision that brings no new information. The Manage Your Sourcing Cost help page goes further: it allows "two cost updates once every 30 days" and can decline a request once you have received two decisions on cost updates or reimbursement disputes for the same item in the last 30 days. Get the number and the documents right the first time.
• A decline does not mean a zero. If Amazon declines your figure, it reimburses "based on a previously approved amount that you submitted or our estimate of your sourcing cost for the item."
• Estimates get refreshed. Amazon says it will "periodically refresh" its cost estimates and will notify you if a refresh affects a cost you previously provided, giving you time to review it.
• Your cost is not shown to other sellers. Amazon says your cost data "is not shared with any other seller in Amazon's store, including Amazon Retail." It also says the data is used to calculate your reimbursements and to improve its services.

The deadlines that apply

Amazon resolves some lost and damaged events without you filing anything. Its fulfillment center operations claim page describes a Resolved tab in the Inventory Defect and Reimbursement portal showing the defects "that Amazon has resolved for you, with the resolution reason and reimbursement amount (if applicable)." When Amazon has not resolved something, or you disagree with how it did, the clock matters. Each claim type has its own page and its own rules. The windows for the ones covered here are:

• Fulfillment center operations: "You must submit your claim no later than 60 days after the date the item was reported as lost or damaged in your Inventory Defect and Reimbursement portal or Inventory Ledger report." Claims outside that window are not eligible.
• Shipments to Amazon: per the shipment to Amazon claims page, "You must submit your claim no later than nine months after the verified date of a shipment delivery to an Amazon fulfillment center or to a third-party facility operated on Amazon's behalf." You can only file once the shipment shows as eligible for investigation in the Status column on the Contents tab of your shipping workflow. You will need the Amazon shipment ID, proof of ownership such as a supplier invoice (showing the date of purchase, product names matching the lost or damaged items, and quantity), and proof of delivery: an Amazon-stamped delivery document for less-than-truckload or full-truckload shipments, or active tracking IDs for small parcels. Most important, Amazon says: "You may file only one claim per shipment. Additional claims for the same shipment will be declined." Reconcile the whole shipment before you submit.
• Disputing a valuation: for customer return reimbursements, if you disagree with Amazon's valuation of a unit, you can file a claim "within 60 days after we have issued the reimbursement."
• Re-evaluating a pre-order reimbursement: if Amazon already paid you for a lost or damaged unit using the wrong sourcing cost, fixing your cost on the Manage Your Sourcing Cost page does not change that payment. Amazon says approved costs apply to "future reimbursements." For a past payment, you submit a reimbursement claim dispute, one FNSKU at a time, through Get help and resources or Seller Assistant, entering the full unit value from your proof-of-value document rather than the difference. If Amazon approved a sourcing cost for that FNSKU in the last 30 days, the value you enter must exactly match it, or the claim is denied. In a Seller Forums reply, Amazon staff set out the conditions: "within 60 days of original reimbursement, units reimbursed in "sellable" condition, and it applies to pre-order lost or damaged events (which includes missing from inbound)." Amazon's help page also says every re-evaluation claim counts as one of your cost-update attempts.

Removals and customer return claims each have their own page in the policy, so check the relevant one before filing.

Two more rules are worth knowing. Amazon can claw money back: "if a reimbursed item is later found and returned to your inventory, we reserve the right to reverse the reimbursement credit." And quality beats volume. The policy warns that sellers who repeatedly engage in "submitting insufficiently researched or premature requests, or submitting a large number of requests in a short time" may get delayed support or face monitoring, investigation and account action. Check before you file.

What to do this week

1. Open Manage Your Sourcing Cost. Look at the figure Amazon is using for your top-selling and highest-cost ASINs. Where it is Amazon's estimate and your real sourcing cost is higher, submit your figure with supporting documents.
2. Check recent payouts too. If a pre-order reimbursement from the last 60 days used the wrong sourcing cost and the units were reimbursed in sellable condition, it may be worth a re-evaluation. Get your sourcing cost documented on Manage Your Sourcing Cost first: in a Seller Forums reply, Amazon staff tell sellers to "Ensure your sourcing costs are properly documented in Manage Sourcing Costs BEFORE submitting any re-evaluation request." Leave time for that review, but do not let the 60 days run out. Updating your cost on its own only fixes future payouts.
3. Use the right number. Submit sourcing cost as Amazon defines it, without freight or duties. Inflating it with landed costs invites a decline as an outlier.
4. Keep your own cost records accurate and dated. Supplier prices change. If your cost records are out of date, you cannot tell whether a reimbursement is fair.
5. Work the Eligible for claim tab inside the window. For fulfillment center losses, you have 60 days from the date the item was reported lost or damaged. Put a recurring reminder on it.
6. Price the gap into your margins. Freight and duties on lost units are a real cost of using FBA. Treat them like any other fee rather than a surprise.

Checking reimbursements against your real costs

The hard part of all this is comparing what Amazon paid with what the unit actually cost you, SKU by SKU, across hundreds of events, quickly enough to stay inside a 60-day window. In SellerLegend, the reimbursements view lists each reimbursement with its reason, case ID, units reimbursed in cash or in inventory, and the amount per unit. For customer refunds, the refunds manager puts the amount Amazon reimbursed next to your SKU's cost of goods, with a reimbursement-to-COGS ratio and the resulting profit or loss on each row, plus a count of claimable units. Because your cost of goods is stored by date, that comparison uses the cost recorded for the original order, not today's price.

Key takeaways

• For FBA units lost or damaged before a customer orders, Amazon's US policy reimburses your sourcing cost, not your sale price.
• Sourcing cost excludes shipping, handling and customs duties, so importers absorb those costs on every lost unit.
• If you have not entered your sourcing cost on the Manage Your Sourcing Cost page, Amazon uses its own estimate based on comparable products.
• Fulfillment center loss claims must be filed within 60 days of the item being reported lost or damaged. Shipments to Amazon have a nine-month window from verified delivery.
• Shipment-to-Amazon claims allow only one claim per shipment, so reconcile everything before you file.
• Updating your sourcing cost only affects future payouts. Eligible past reimbursements (pre-order losses, units reimbursed in sellable condition) need a re-evaluation request within 60 days of the original reimbursement.
• Customer return reimbursements are based on the refund or replacement amount minus applicable fees, with 60 days to dispute a valuation.
• The $5,000 per-unit ceiling means high-value items may need separate insurance.

Want to see whether your reimbursements cover what your inventory actually cost? Start a 21-day free trial of SellerLegend and review your reimbursements alongside your recorded cost of goods.

Sources

• Amazon Seller Central: FBA inventory reimbursement policy (US)
• Amazon Seller Central: FBA inventory reimbursement policy, Fulfillment center operations claim
• Amazon Seller Central: FBA inventory reimbursement policy, Shipment to Amazon claims
• Amazon Seller Central: Manage Your Sourcing Cost
• Amazon Seller Forums: Amazon staff on re-evaluation eligibility for past reimbursements
• Amazon Seller Forums: Amazon staff on documenting sourcing cost before a re-evaluation