Amazon Warehouse Errors – Which FBA Mistakes Cost You the Most

How to Get Reimbursed on a Daily Basis

With the majority of sellers using Fulfillment by Amazon (FBA) for their Amazon business in 2023, knowing your way around the processes within an Amazon warehouse is more important than ever. And why shouldn’t it be? At the end of the day, sellers that leverage FBA transfer a lot of work (and faith) into the processes of the delivery giant. Not only does Amazon take care of your inventory and storage, shipping and returns, FBA also includes picking and packing of your products as well as your full customer service. So far so good.

Why you should take a closer look

However, you would be naïve to think that all these processes just function flawlessly off the bat. Even a company known for its vast delivery network and well-oiled, robotics-supported processes such as Amazon is not capable of maintaining a comprehensive all-round fulfillment service without making mistakes. Mistakes that cost you money. The truth is that sellers lose an average of around $6800 each year to Amazon due to mistakes made by the online giant during FBA processes.

How do we know this?

Because we have been reimbursing sellers like you for many years and doing so successfully, retrieving amounts of up to $700,000 for our clients in one go.

In our experience, the bigger the Amazon warehouse, the more common the mistakes and the higher the amount that Amazon owes you. Here’s another fact for you: getting your money back is not as easy as it should be. In all honesty, it’s actually quite a tedious process which is nonetheless extremely important. Because after all, which company can afford to give away money to a multinational corporation?

What you can expect in here

When we decided to write this article for you, we had three goals in mind that we wanted to achieve:

Ensuring that you know more about the Amazon FBA process – and its errors – after reading this post than you did before.
Providing you with an instruction on how to get the money back that Amazon owes you due to above mentioned errors.
Offering you a solution which renders the two issues above obsolete.

In the first part of this post, we have listed the most common FBA error cases for you and how they happen. The second part is a manual we have put together based on the years of experience we have gathered in reimbursing sellers such as yourself with tips and tricks on how to get your money back faster. The third part will focus on how to use SELLERLOGIC’s tool Lost & Found to get the reimbursement from Amazon as quickly as possible.

What Errors Happen in an Amazon FBA Warehouse?

Let’s take a look at the general process first before we dive deep into what can go wrong.

What Happens with Your Product?

Reception: The first step is when the products arrive at the warehouse from the supplier or manufacturer. The products are checked for any damages, quantity, and quality.
Storing: After receiving, the products are then assigned a location in the warehouse and stored accordingly. The location is tracked through the barcode and the inventory management system.
Picking: When a customer places an order, the product(s) they ordered are picked from the inventory. At Amazon, there are two main types of picking methods: person-to-goods (PTG) and goods-to-person (GTP). In PTG, a picker moves around the warehouse to locate the items and pick them manually. In GTP, items are brought to the picker using automated systems like robots.
Packing: After the items are picked, they are packed into a box or envelope. The packaging is done based on the size and fragility of the item(s).
Shipping: The packaged items are then labeled with a shipping label and sent to the shipping area. Here, the packages are scanned and sorted based on the shipping address.
Delivery: The packages are sent out for delivery to the customer. Amazon uses a variety of delivery methods, as well as their own delivery trucks.
Return: In some cases, the customers choose to return the item which then gets sent back to the warehouse, inspected, and processed (refurbished, recycled or disposed of).

The Most Common Error Types When Leveraging Amazon FBA

Amazon makes mistakes in the framework of their FBA processes. It is not unusual for products to get lost, damaged, or for returns to be booked incorrectly in FBA warehouses. When looking at the process above, it’s not hard to imagine how many things can go wrong in this multifaceted process. Listing all the errors that can occur in an Amazon FBA warehouse setting would also go beyond the scope of what we are trying to achieve with this post, which is why we will only list the most important and common errors here.

Inbound Shipment Errors

As the name suggests, these are errors that can occur while the item is being shipped to the Amazon warehouse.

The most common mistake that happens here is that you ship your product to the warehouse and it simply does not arrive, either at the warehouse or generally anywhere. What happens in this case is that Amazon deducts that item from your stock once the shipment is closed, leaving you with a detriment and a corresponding reimbursement claim.

Inventory / Stock Errors

One of the most common mistakes is that inventory is simply missing because someone forgot to update the inventory or updated it incorrectly. Another option is that a product went “missing,” an unpleasant thought but not one we wouldn’t mention here if it would not happen regularly.

Another option is that your items get damaged within your warehouse due to negligence on Amazon’s part. Moreover, it can happen that Amazon destroys a sellable item of yours before the 30-day time period has passed. Although this is rather seldom, there are instances where Amazon is known to do this, for example, if they suspect the item to be defective or unsafe, even though this is not necessarily the case.

Missing Returns

Customer centricity is interwoven into Amazon’s core DNA. An area where this becomes very clear is their return policy. Once a customer has initiated a return, he/she gets reimbursed directly while you are credited back the corresponding amount by Amazon. If this does not happen in the next 60 days after the customer has been refunded, you have a valid reimbursement claim against Amazon that you can make use of to get your money back.

Lost in Warehouse

Occasionally, a return made by a customer may be scanned at the entrance but fails to reach your inventory due to being misplaced in transit. As a result, your inventory record becomes inaccurate, because it displays that you possess an item that is actually missing. In such cases, Amazon is liable to compensate you for the loss.

Another type of error arises when your items are not included in the appropriate inventory list because they were not scanned upon their return to the warehouse.

FBA Fees

The most valuable service that a seasoned Amazon seller can use is Fulfillment by Amazon. Nonetheless, Amazon frequently makes errors in the fees charged for their FBA service. Sometimes the online giant overcharges you due to wrong measurements in regard to the size and weight of your package, entitling you to a reimbursement claim.

One of the main challenges for sellers is that Amazon seldomly reimburses you proactively for these errors, meaning that you not only have to identify these errors yourselves, you also have to make your reimbursement claim on your own. Otherwise, you donate your money to Amazon.

Getting Your Money Back from Amazon

Amazon is legally obliged to reimburse for errors in the fulfillment process. However, the effort of analyzing all FBA reports is not worth the benefit for many sellers, which is why they never assert their claims. For you as an FBA user, this means lost money – on average several thousand dollars per year. Making mistakes is human, this also rings true for multinational corporations like Amazon. However, having the sellers foot the bill for FBA errors is unfair. And since Amazon often refrains from identifying and reimbursing sellers proactively, sellers have to see for themselves how to take care of their interests.

Item Eligibility

First things first, you will have to see if your item is eligible for reimbursement. To determine which types of refunds qualify for Amazon’s FBA reimbursement policy, you will have to take a closer look if your product fulfills the given requirements. These include:

Being registered in FBA at the time it was lost or damaged.
Meeting FBA product requirements and inventory restrictions, and having the exact items and quantities stated in the shipping plan submitted.
Additionally, the item must not be pending disposal or have been disposed of at the seller’s request or by Amazon FBA.
Nor should it be defective or damaged by a customer.
Finally, the seller’s account must be in normal status when filing a claim for a lost or damaged item.

Correct Department

Once these criteria are met and it is confirmed that reimbursement has not already been received, the claim can be sent to the appropriate department, ranging from Shipment to Amazon, Fulfillment Center Operations, FBA Customer Returns, to Removals, depending on where and when the detriment took place. It is important to note that each department has its own submission process and requirements, so careful review of the guidelines as well as providing accurate and complete information.

Relevant Reports

Let’s look at how inventory audits for products that have been lost or damaged by Amazon are handled. As previously mentioned, missing inventory is a common cause for compensation, but how can you obtain reimbursement for Amazon FBA inventory that has been lost or damaged?

First you have to download the Inventory Adjustments report from Seller Central. This report shows you the history of adjustments made to your inventory in response to issues like disposition changes, misplaced inventory, found inventory, and ownership corrections. You can get a file with up to 18 months of inventory data in either .csv or .txt format.

To download this report, follow these steps:

Log in to your Seller Central account.
Navigate to Reports → Fulfillment → Inventory Adjustments.
Request either a .csv or .txt download.
Save the file to your computer.
Open the file with MS Excel or another program.

Once you have the report, take a closer look at the note included in the “Reason” column. Amazon uses a combination of letters and numbers to provide adjustment reason codes, which help you comprehend the exact details of what happened to your inventory. Additionally, the codes also specify if the adjustment resulted in an increase or decrease in your inventory levels.

When it comes to FBA reimbursements, it’s crucial to keep in mind the codes “E” and “M”. These specific codes indicate that Amazon has either lost or damaged your inventory, meaning that you can request reimbursement for these losses.

Reimbursement for Lost Inventory

To claim your FBA reimbursement, the next step is to open a case in Amazon Seller Central. It’s very important to mention at this point that you will not be doing yourself any favors by simply gathering all the data from your report, sending it to Amazon and hoping for the best. This will just lead to a very clear rejection of your case.

To heighten your chances of success, it’s best to sort the data before sending it. However, determining what Amazon has reimbursed you for can be challenging. Fortunately, Amazon provides an Inventory Adjustments Report that you can view online and filter the data by reason group.

Once you have found the relevant information, go to the “Contact us” page on Seller Central and create an FBA issue with the lost and damaged item data attached. After submitting the case, Amazon will typically respond within 12 hours and reimburse the amount within 5 to 10 business days.

Reimbursements for Customer Returns

Amazon usually refunds customers immediately upon their return request, regardless of whether they actually send back the item. You will receive a refund confirmation and a second confirmation once the item is received at the Amazon warehouse.

By reviewing the FBA returns report, you can track the status of customer returns. If the report shows that the return process has started, it means that Amazon has issued a refund, but the items have not yet been returned to the warehouse.

However, there are instances where your inventory may not be returned to the Amazon warehouse. If it has been over 45 days since the customer initiated the return and Amazon has not refunded your items, you will need to file an FBA reimbursement claim.

The Reimbursement Process for Professionals

If you have gotten this far in the text you are now definitely aware of two things: FBA errors happen on a regular basis and they can cost your business a lot of money. Taking into account that no business can afford to give away money for mistakes they’re not responsible for, there are two options you can take into consideration to get your money back from the delivery giant.

The first is to identify and file your reimbursement claims yourself. You can do this by using the method we have described for you above. Will this solve your problem? Absolutely. Is it the most promising outlook? Not really. The reason for this is that the task is tedious and the reports you have to research for every case are plentiful. If you choose to do this task yourself, you will either have to take a big chunk out of your daily routine in order to accommodate this task, or employ someone – or even more than one – to do this, which will cost you money. The question is, are the reimbursements you will claim enough to compensate for the work hours your employee has poured into this task?

The second option is to make use of a tool which not only automates this whole process, thereby saving you copious amounts of time, but also only charges you when a reimbursement is successful, meaning that you won’t be spending money pointlessly. Here’s how it works:

Registration

With just a few clicks, you can create your user account by providing your company details. Once you’re in the tool itself, you can choose your home marketplace and on which marketplaces you sell.

Identification

Once you are set up, Lost & Found gets to work in a sense that it starts looking for cases. This all happens in the background, allowing you to go on with your regular day-to-day. Whenever the tool finds a transaction that has FBA error potential, a new case is opened. The current status of identified cases are then shown in four stages: New Cases, In Progress (awaiting response from Amazon), In Review (awaiting response from SELLERLOGIC), and Closed. You can conveniently locate the information you need using a variety of filtering options.

Case Submission

Once a case has been notified to you through Lost & Found, you have a time window of 30 days to submit them to Amazon. All you have to do is:

Copy the case title and the case description we prepared for you into Seller Central and press “send”.
Copy the Case-ID that Amazon assigned to you into the corresponding field in Lost & Found so we can continue tracking the case correctly.

Once the cases are submitted, Amazon evaluates them and subsequently contacts you. They will either inform you that your claim has been accepted and the reimbursement is being processed or that your claim is insufficient and the reimbursement has been denied.

What Happens If Amazon Declines?

In case of a rejection, this doesn’t mean the case is lost. You always have the option to send us a message containing Amazon’s answer to you. From then on, our Amazon experts will check this case manually and in case of an unjustified rejection, they will prepare a further case description which you can then forward to Amazon. In most cases, this will solve the problem.

Your Benefits With SELLERLOGIC Lost & Found

All FBA errors found – up to 18 month retrospectively
Works in the background
Saves the seller time that can be invested in business grow
Can be paused at any time – adapts to your life and business, not the opposite
Free support that helps communicate with Amazon
Denied cases are manually checked by experts

Find out more about this highly useful tool here: SELLERLOGIC Lost & Found.

Final Thoughts

We are not in the business of helping people sell things, we are in the business of helping people buy things.
Jeff Bezos

As a seller on Amazon you will have to constantly remind yourself of one thing: Amazon’s perspective is always directed more towards the customer than towards you. This means that there are certain processes where you will have to undertake extra measures in order to facilitate steps that are necessary for your business to flourish and grow in the Amazon environment. Getting the money back that Amazon owes you is one of those steps. You can do this by either investing a lot of time and money into these processes, or by embracing the technology that is out there which was created to alleviate this challenge for you.