Seller Central Tip #2 – How to Get Reimbursed for Unfulfillable Inventory

This post comes from Stephen’s wife, Rebecca, who helps him make full-time selling on FBA a reality.

Screen Shot 2014-01-30 at 3.27.16 PMThe further you get into selling through FBA, the more you’ll see that Amazon’s inventory system doesn’t always, um, work just like expected. When I started working with Stephen on his FBA business, I would look at our inventory from time to time and wonder why there were items flagged as inactive, incomplete, or unfulfillable — and why Amazon didn’t do something to fix those inventory items. When those items are flagged, they’re not available for purchase, and that’s just not good for business!

So, I started learning the process of doing a few simple tasks to correct these flags, get reimbursement for damaged or lost items, or have items returned to us, whichever the case may be. I came to realize that these problems with inventory items are our responsibility to remedy, not Amazon’s responsibility. I became determined to get our inventory list under control and in order — and stop losing money on items that are just sitting there in a warehouse but unavailable to purchase.

Over time, we settled into a routine where I regularly check for certain flags or errors in the system. When I first got started, it took me a few hours over the course of a few days to wade through the mess that our inventory had become. For so long we had been operating under a habit of buy, buy, buy, pack, pack, pack, ship, ship, ship, and then go buy, buy, buy again. We weren’t making time to keep up with the endless paperwork (or screenwork, as the case may be) that comes with maintaining a large inventory. As a result, let’s just say we had a mess on our hands, and it took some serious effort on our part to get it straightened out with Amazon. The result of those hours was many items reimbursed by Amazon and many items relisted and finally sold, so it was totally worth it. But I don’t recommend waiting as long as we did to start working on these issues!

Now I spend a few minutes every two or three days checking for common flags or errors in Amazon’s system, and I’m able to keep on top of our inventory discrepancies without getting overwhelmed. I’ll share several of these inventory issues with you in upcoming blog posts, but today I’ll tell you about the first thing I do when I log into Seller Central to check on our inventory: I check for any items that have been damaged by the warehouse or distributor and can be reimbursed to our account.

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When you log into Seller Central, under the Inventory tab, click on Manage FBA Inventory. This pulls up your entire FBA inventory list. Towards the right of your list, there’s a column heading called Unfulfillable — click on this heading to sort your items so that the unfulfillable items come to the top.

If you have any unfulfillable items, there will be a red number in the Unfulfillable column indicating how many of that inventory item are actually unfulfillable. Click on that red number to bring up a box showing why that item is being listed as unfulfillable. There are several options available to the warehouse workers when they mark your inventory as unfulfillable. I will list these options below, along with the actions you can take to remedy the problems.

Screen Shot 2014-01-30 at 3.11.56 PM1) Customer Damaged — This flag is used when a customer returns an item, and the item has either been merely opened or actually damaged. Either way, you’ll want to follow the steps on the pop-up box to create a removal order, have the item returned to you, and decide from there what to do with the item. If it’s an item that’s only been opened and isn’t damaged, you can either relist it as Used – Like New, or you can put it in the garage sale box in your attic to be sold at a later date.

2) Defective — This flag is used when the customer returns an item and says it is defective. Again, you’ll want to create a removal order to have the item returned to you. The item may be truly defective, or the customer may have told Amazon it was defective in order to get free shipping on their return, when in fact they just changed their mind or didn’t like it. There’s no way to know until you have the item returned to you.

Amazon.com-worker-David-B-0013) Warehouse Damaged — This flag is used when an item has been damaged at the FBA warehouse. You could choose to have the item returned to you and decide if it’s worth trying to sell by another method — or you could request a reimbursement from Amazon. 100% of the time, we choose this second option for warehouse damaged unfulfillable items. It’s just not worth the time, money, or effort to have the item returned. To request the reimbursement, on the Help page of Seller Central click on Contact Seller Support. Under the Inventory tab on the left side of the page, click on Other Inventory Issues to open a case letting Amazon know you’re requesting a reimbursement for the item in question.

4) Distributor Damaged — Similar to Warehouse Damaged, this flag is used when an item is damaged en route to the warehouse. Sometimes UPS is to blame for this damage. If so, follow the same steps in (3) above to request reimbursement from Amazon. Other times, distributor damaged items are your fault, and of course, you don’t get reimbursed for items you did not properly protect during packing and shipping.

5) Expired — If you have any grocery, health, or beauty items with expiration dates, the item will be listed as unfulfillable once the expiration is less than 50 days away. You will need to create a removal order to have the item returned to you. We’ve learned the hard way that it helps to keep a spreadsheet of expiration dates for these items and set up reminders to lower your prices so items sell quicker when they get close to Amazon’s expiration cut-off.

It takes a matter of seconds to check on these unfulfillable items every two or three days. Now that I’ve made it part of my work routine, we’ve received reimbursements much quicker and kept our inventory list clean of items that are damaged or expired. I hope you’re able to use this info to work on your own inventory list and get some reimbursements! Look for more inventory clean-up tips in the future.

Update: I also want to add, any reimbursements you get from Amazon for warehouse or distributor damaged items will be minus the FBA fees for that item.

For more Seller Central Tips, just click here!

29 responses to “Seller Central Tip #2 – How to Get Reimbursed for Unfulfillable Inventory

  1. I enjoyed your blog post. I have been selling on Amazon FBA for a few months now & learned some things that I did not know about managing FBA inventory. Thank you for sharing your experiences!

  2. Thank you for your experience with this!

  3. Thanks for the tips! I have one question in regards to requesting refunds from amazon for distributor damaged products. Do you generally get reimbursed for items that are marked as unfulfillable due to being distributor damaged? as I thought that was indicating that it was basically my fault if I have an item that is marked as distributor damaged.

  4. I have been reimbursed for every item that has been labeled by Amazon as distributor damaged. Apparently, distributor damaged means that it was either our fault in how we shipped it to Amazon, or the fault lies with the UPS shipping process. I’m assuming Amazon grants us the refund because they don’t want the hassle of dealing with a UPS shipping investigation. That’s just my theory. Either way, I’ve been granted a refund 100% of the time.

  5. Is it possible to get reimbursed for an item listed as damaged by the customer? I had the unfulfillable toy returned to me & all that was in the amazon box was the toy in a Ziploc bag. The original package & instruction manuals were missing. The toy works fine. Is it possible to get reimbursement for this?

    • Jess,
      Great question! I’ve tried to get Amazon to reimburse me for “customer damaged” items, but they’ve declined every request. They tell me that “customer damaged items don’t necessarily mean that the customer damaged the item, but merely opened up the item and decided they wanted to return it.” Amazon’s overly customer-centric return policy allows the costumer to do this, and we have to just work the loss into our business model. If the toy labeled as “customer damaged” is still in good working order, then I’d try to see if selling it as “collectable like new” or “collectable very good” would be better than not making any money off of it. Some people complain about Amazon’s overly customer-centric return policy, but I don’t. I know that this policy increases sales exponentially, and I’m ok with the occasional “damaged” return. Hope this helps! ~Stephen

  6. Pingback: Seller Central Tip #4 – How to Check for Reimbursable Lost Items | Full-Time FBA

  7. Andrew Cassinelli

    Thanks for the tips! My first shipment of products to Amazon had three items marked as Distributer Damaged. It is super unclear on the Seller Central site that you can ask for a refund on those. If you were just figuring this out on your own, it would seem like your only options were to get it shipped back or have it destroyed.

    Does Amazon issue you the sale price add the refund or how do they determine the reimbursement amount?

    • Great question, Andy. When Amazon takes responsibility for an item that is lost or damaged, they reimburse you what they call the “Replacement Value of a Unit” as set forth in the FBA Service Terms. They reimburse you based on their determination of the Unit’s value less applicable FBA and Selling on Amazon fees. They consider several factors in determining a Unit’s value, including your sales history and the price you and other sellers list the product for. I had an item listed for sale at $60 that Amazon damaged. They reimbursed me about $35 for the item. The main reasons were that the current low competitive prices were around $45-$50, and then Amazon had to take out what would have been their fees for this item. I was ok with the reimbursement of $35 since I bought the item for only $12. Most of the time, Amazon will give you a fair reimbursement. The times they don’t (which are very rare), I just let it go. Overall, I’m very happy with their reimbursement system.

  8. Pingback: Seller Central Tip #5 – Fixing Stranded Inventory | Full-Time FBA

  9. Hi
    It seems that there is one more class that amazon can assingine
    Carrier Damaged and amazon has the policy as
    Amazon determines that the carrier has damaged the unit and takes responsibility for the damage. Ownership of the unit is transferred to Amazon. Amazon compensates you based on the FBA Lost and Damaged Inventory Reimbursement Policy.

    but there is a class Distributor Damaged and there is no reimbursement there
    Amazon determines that the unit was received from the seller (the distributor in this case) in damaged condition. The unit is set aside as unsellable.

    Is this something new?

  10. hi Stephen, I have a question related with topic .
    I think currently , amazon will automatically reimburse me for warehouse damaged / distributor damaged. In this case, can I still have my items returned? Thank you.

    Waiting for your Q&A new series 🙂

    • Sandra, if Amazon reimburses you for the damaged items, then it’s basically them “buying” the product from you… so now the item is theirs and cannot be returned to you.

  11. I have my first unfulfillable product from amazon saying distributor damaged. I am gonna request a refund and was just wondering if you could help me on what exactly to say to them. Not sure how to word it to Amazon. Thanks

    • I would say something like,

      “Hello. I’d like to request a reimbursement for this item that was distributor damaged. It was not damaged when it left my house, and was damaged during shipment or at the FBA warehouse. Thank you for your time.”

      Hope this helps!

  12. I received my first unfulfillable notification from Amazon saying “defective”. I created a removal order to have the item returned to me. Upon receipt, I was shocked to find that the item was completely scratched up, clearly used, and in a plastic bag. When I sent this item to Amazon Fulfillment it was brand new in the box. Is there anything at all I can do to be reimbursed?

    • Brittany,
      I’ve had the exact same experience happen to me. It looked like someone was using Amazon to trade their broken item for a brand new one. This is especially true with toys. I always open up a ticket with Amazon and tell them what happened. I also include pictures of the obviously used item. About half the time, I’ll get a full reimbursement. Hope it works for you. Let me know how it goes.

  13. Thank you for this great information. This has been a great help to me, and I recommend this post to other sellers involved with the FBA business.

  14. Stephen, This was a useful article. We had several items that were unfulfillable but marked “customer damaged”. I guess the only choice is to return or dispose. Your article was much easier to understand than Amazon’s own help pages as a matter of fact. Keep up the great work! Gary

  15. Once we have created an unfulfilled item return to us(seller), do we did to pay for the shipping cost ( Amazon ship it to us)? The only information what i can find online is service fee for create a FBA removal order based on the size. Is it true for seller to pay service fee($0.6) only to have the unfulfilled item returned to seller.

  16. I have a question I’m hoping you can help me with. I sold an item for $25.00 and after fees was paid $16.84. Customer returned it and $17.00 was deducted from my account. Warehouse lost it and AZ reimbursed me $10.25. I only paid $7.86 for it but since I had sold it for $25.00 shouldn’t AZ have paid me based on the sale amount of $25.00?

  17. Great Article, I was able to get a reimbursement very quickly. I am curious though do we still need to process a removal request after the reimbursement or does the inventory become property of Amazon and they remove it? Its still sitting there but Ive already received my reimbursement.

    Thanks
    C

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