Introduction to Amazon's New Policy on Lost Goods Compensation
On March 31, Pacific Time, Amazon's new policy on lost goods compensation officially took effect. Amazon announced a new policy on lost goods compensation in December 2024, which was originally scheduled to be implemented on March 10, 2025, and was later postponed to March 31.
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Main content of Amazon's new policy
The new policy stipulates that for goods lost or damaged before buyers place an order, Amazon will compensate according to the purchase cost of the goods, that is, the manufacturer's production cost or purchase cost, and does not cover other costs such as freight, handling fees, and tariffs.
Sellers have two options: one is to let Amazon estimate the purchase cost, and the other is to provide the purchase cost data themselves. If the seller does not provide data, Amazon will use the estimated value for compensation, and the subsequent seller has the right to change this option.
If the lost goods are found after compensation, Amazon has the right to dispose of them and may resell them at a high price, causing dissatisfaction among sellers.
Impact of Amazon's new policy on sellers
Decrease in compensation amount
Before the implementation of the new policy, Amazon compensated lost or damaged goods according to the retail price. After the implementation of the new policy, the compensation amount dropped significantly, covering only the manufacturing cost, and the seller's subsequent packaging, transportation, promotion and other expenses could not be compensated.
Data privacy and security
Sellers need to provide detailed manufacturing cost data to obtain more accurate compensation. However, this involves the disclosure of trade secrets and sensitive information, which may cause sellers to worry about data privacy and security.
Increased operational complexity
In order to comply with the requirements of the new policy, sellers need to prepare and submit more financial documents and data, which not only increases the complexity and workload of operations, but also may lead to an increase in management costs.
Profit loss
Since the compensation amount only covers the manufacturing cost, the profit loss suffered by sellers due to lost or damaged goods cannot be compensated, which directly affects the seller's income and profitability.
Sellers' response to the new policy
Supporters: Simplify the claims process
Some sellers believe that the new policy simplifies the claims process and reduces disputes caused by compensation issues. In addition, sellers can choose to let Amazon estimate the procurement cost or provide proof of cost themselves, which provides sellers with more flexibility.
Opponents: Profit margins are compressed
However, more sellers are dissatisfied with the new policy. The new policy only compensates according to the manufacturing cost, excluding additional costs such as packaging, transportation, and promotion, resulting in the compression of sellers' profit margins. It increases the risk of data privacy leakage and increases the complexity of operations. Some sellers reported that Amazon's estimated costs are more than 40% lower than the actual costs. In addition, if the lost goods are found after compensation, Amazon has the right to dispose of them and may resell them at a high price, which is accused of "secondary harvesting".
Impact of the new policy
High-value products and customized products are greatly affected
The average annual loss rate of Amazon FBA warehouses is about 2.4%, which has a huge impact on sellers of high-value products, collectibles, and customized products. For example, the manufacturing value of collectible dolls is low but the premium is high. According to the new policy, sellers will suffer heavy losses.
Adjustment of sellers' operating strategies
After the implementation of the new policy, sellers need to adjust their operating strategies, such as pressing prices to factories to reduce "costs that can be accounted for", retaining production contracts, invoices and other vouchers for customized products, and avoiding relying on platform estimates. In addition, high-profit goods are transferred to third-party overseas warehouses to retain the right to claim pricing.
Enlightenment of the new policy for B2B companies and Amazon sellers
Faced with Amazon's new policy on lost goods compensation, B2B companies and Amazon sellers need to respond proactively to reduce transportation costs and achieve efficient transportation. Here are some suggestions:
Choose a reliable logistics channel
By choosing a logistics channel with a good reputation and efficient service, you can reduce the risk of lost and damaged goods.
Strengthen cargo packaging
For high-value goods, adopt professional packaging solutions that are shockproof, waterproof, and anti-theft to reduce the probability of transportation damage and ensure the safety and integrity of goods during transportation.
Spread risks
Store high-value goods in multiple warehouses to avoid concentrated losses caused by a high loss rate in a single warehouse.
Optimize transportation methods
Choose the most suitable transportation method according to the type of goods, such as air, sea or multimodal transport, to balance cost and timeliness. ChinaDivision provides flexible transportation solutions to help sellers reduce logistics costs.
Improve logistics transparency
Use an intelligent logistics management system to monitor the transportation and storage status of goods in real time and reduce compensation disputes caused by poor information.
Consider using services like Chinadivision
Through services like Chinadivision, B2B companies and Amazon sellers can get better logistics solutions, reduce costs and improve transportation efficiency. Service providers such as Chinadivision usually have rich experience and resources, and can provide more professional and efficient logistics services, which can help reduce the risk of loss and damage of goods and reduce transportation costs.
As a professional international logistics fulfillment service provider, Chinadivision provides comprehensive logistics solutions to help sellers cope with the challenges brought by Amazon's new policy:
Global transportation network
Work with leading global logistics suppliers to ensure that goods are delivered quickly and safely to customers around the world.
Full logistics support
From warehousing, sorting to transportation, provide one-stop service to reduce sellers' operational pressure.
Efficient customs clearance and distribution
Professional team assists in quickly completing the customs clearance process in international transportation to ensure that goods are delivered on time.
Customized service
Provide customized logistics solutions according to seller needs, including packaging, labeling, customs clearance and other value-added services.
Real-time tracking and management
Monitor the status of goods through intelligent systems to improve logistics transparency and efficiency.
Professional Support
Our team provides professional logistics support to ensure the smooth operation of sellers' businesses.
The implementation of Amazon's new policy on lost goods compensation has put higher demands on sellers, but by optimizing logistics processes and choosing professional service providers, sellers can effectively reduce the risk of lost goods, reduce compensation losses, and focus on business growth. If you need more help, please contact Chinadivision. We will provide you with professional logistics fulfillment services to ensure the smooth operation of your business.
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About the Author: Limi
Limi is a content marketing expert at ChinaDivision, helping businesses and e-commerce sellers navigate the complexities of international shipping by providing actionable tips and comprehensive guides on logistics, shipping, and cargo transportation.