The 6 biggest Amazon FBA mistakes and how sellers can successfully seek compensation

The advantages of the Fulfillment by Amazon (FBA) service have been mentioned many times, and experienced FBA sellers know how to benefit from the nearly endless customer base of the online giant. However, every year, thousands of new marketplace sellers start an Amazon business – and the majority of them will not survive their first year. The Amazon universe mercilessly punishes FBA sellers for mistakes, as the competitive pressure is immense. The good news is that most newcomers make the same mistakes in their first year of selling, and these can be easily avoided. Today, we will show you what to pay attention to in order to avoid as many FBA mistakes as possible.

The Top 6 Biggest Amazon FBA Mistakes

FBA Mistake No. 1: Little knowledge, little strategy, little plan

For a long time, it was considered a quick way to make money by entering the “online retail” business through Amazon FBA. It has now become widely known that selling on Amazon is anything but easy and requires the same business skills as any other company. Additionally, aspiring sellers should have a basic understanding of e-commerce. How does Amazon work? How do I find successful products? What is market analysis? How do I run online ads?

Amazon FBA is not inherently suitable for beginners. Instead of jumping in recklessly, it is advisable to first expand your knowledge. Of course, no one can have everything figured out at the beginning. However, the basics should be in place so that you can assess which tasks you can handle on your own and where you need support, such as from external service providers. Additionally, you should create a plan and act strategically. This guide may help you: The ultimate Amazon FBA guide: Step by step to your own business!

FBA Mistake No. 2: Lack of market analysis and research

Here too, the rule applies: Keep a cool head. What good is it if you have acquired all that knowledge and developed a strategy, but then fail because you did not invest enough time and care into a detailed market analysis, or in the heat of the moment, you order a cheap product in large quantities that no one wants to buy?

You need to know the market and your target audience inside and out. Only then will you be able to launch the right product in the optimal way. Which product has a good chance of selling (spoiler: usually not the one you personally like the most)? What should the product images look like? What is the competition doing in the niche? How is a sales-psychological product description structured? These are all questions that you will face.

FBA Mistake No. 3: No investments, no products, no advertising

Admittedly, the timing is not exactly optimal at the beginning: the business is not generating revenue yet, but expenses are certainly increasing. Nevertheless, investments are necessary – in new products, in advertising, in product images, and in product listings. The list is long.

At the same time, you should not blindly throw money out the window. First, heed mistakes No. 1 and 2, and then focus on investing money in the important things. You can save in other areas.

FBA Mistake No. 4: Help not welcome

Don’t fall into the trap that many marketplace sellers find themselves in at the beginning. You want to get started, are highly motivated, and everything interests you intensely. The truth is, however, that your day does not have enough hours to handle everything on your own. You need help, and you cannot familiarize yourself with all areas at the same time.

Therefore, actively consider where your efforts will bring the greatest benefit and which tasks you want to outsource, whether to an agency, a freelancer, or software. Sometimes it is also helpful to exchange ideas with other Amazon FBA sellers. While you will need to gather your own experiences, at trade shows and meet-ups, you will meet like-minded individuals who face similar challenges as you.

FBA Mistake No. 5: Inadequate price calculation

Price plays a crucial role on Amazon. Surprisingly, you can often set a higher product price on the marketplace than on other platforms, but within the system, the algorithm assesses, among other factors, how well your product listings rank based on price and whether you win the Buy Box with your offer.

Competitive prices therefore directly determine success and failure. You need to keep an eye on the market situation at all times and adjust your product prices accordingly. For this, there are so-called repricers that take this tedious work off your hands. The SELLERLOGIC repricer for Amazon automatically optimizes your prices around the clock and ensures that you sell your goods not at the lowest price, but at the highest possible price. Additionally, the repricer handles the entire price calculation based on your product costs and desired margin.

FBA Mistake No. 6: Ignoring Amazon’s mistakes

Surprise, even the e-commerce giant makes mistakes. Sellers who use Fulfillment by Amazon have their goods delivered to an Amazon warehouse, where they are stored until an order is placed. The trading platform then takes care of picking and packing, shipping, customer service, and returns management. This process is diverse and complicated. For this reason, it can happen that products are damaged, go missing, or the seller incurs other types of damage.

As the owner of the product, you are entitled to compensation for this. Unfortunately, Amazon does not automatically reimburse most FBA errors. Since analyzing the many different FBA reports is a daunting task, many marketplace sellers simply ignore the fact that they are losing quite a bit of money as a result. Therefore, we would like to take a closer look at this problem and the relatively simple solution that neither diminishes your profitability nor allows you to essentially give away the money that is rightfully yours to Amazon.

What FBA mistakes does Amazon make during the FBA process?

Broadly speaking, the most important and relevant mistakes for sellers in the Amazon FBA process have three different origins:

Origins No. 1 and No. 2 result in goods and thus a material value being lost under Amazon’s supervision. Origin No. 3 leads to the seller being charged an incorrect amount.

Item becomes unsellable due to inventory movements

Whether due to a movement in the warehouse or by the buyer, it often happens that an item gets damaged. When this occurs, the goods can no longer be sold, and Amazon disposes of the item. It is removed from the inventory.

Amid all the complexity and hustle in the fulfillment centers, it can happen that goods are mistakenly disposed of. In this case, the item is also removed from the inventory.

Additionally, items can simply go missing. This is, of course, frustrating for the seller, as they will not be able to sell the goods. During the next inventory check, it will then be determined that there is a stock discrepancy, and it will be recorded accordingly.

So far, everything is correct. The existing errors will appear in the various FBA reports. However, if the affected seller does not analyze these reports, they will be unaware of their loss. This is because Amazon rarely provides proactive refunds.

FBA Mistakes in Returns

Amazon’s leniency towards its customers is well-known. After all, Jeff Bezos built his company strictly based on the motto “Start with the customer and work backwards.” Customers now also know that the marketplace’s customer orientation knows (almost) no bounds and do not take the return of items very seriously. It often happens that buyers initiate a return and the money is refunded by Amazon even before the product has actually been sent back. Amazon generally waits 45 days for the return. And after that… nothing happens.

In these two cases, a refund of the replacement value of the goods should normally be automatically processed to the seller. However, this happens only in rare instances. As a result, the seller is left with the loss of the goods after an FBA error instead of receiving a refund for the replacement value.

Calculation Errors of FBA Fees

Both the storage fees and the shipping fees for the FBA service are calculated based on the dimensions and weight of the stored items. If Amazon assumes incorrect dimensions as the basis for calculation, inflated FBA fees will be charged.

In addition, there are several other types of cases, such as errors during the delivery of goods to the warehouse. The likelihood that you will not be aware of the FBA error is quite high, as Amazon usually does not provide proactive refunds.

Which items are eligible for reimbursement of FBA errors?

The following conditions must be met for an item to be eligible for reimbursement:

Which reports need to be reviewed for an FBA error reimbursement?

In total, you need data from around 12 different reports to check your entire inventory to ensure that all items, returns, and refunds have been recorded. Only in this way can you identify errors related to orders, such as refunds that have not been credited back to you as a seller because the goods were not recorded by the customer after 45 days. We will only touch on a few scenarios as examples here.

Reimbursement for unsellable items due to Amazon’s fault

All returns received by Amazon can be viewed in the “Returns” report (Reports > Fulfilled by Amazon > Returns) in Seller Central. If the status in the “Item Condition” column is “Damaged” or “Damaged in Transit,” you are entitled to compensation.

Now you need to check whether the case reported by Amazon has already been refunded. To do this, search for the Amazon order number associated with the identified compensation case in the “Refunds” report (Reports > Fulfilled by Amazon > Refunds) and check if a refund has already been issued.

If no refund is recorded, you need to submit the data for the identified case to Amazon via Seller Central. However, make sure to submit the requests in a timely manner. Some of them have an “expiration date” of 90 days.

Reimbursement for items not returned

The “expired” return requests, meaning those older than 45 days for which the customer has already received a refund but has not returned the item, can be found in the report on Amazon VAT transactions. To access this, go to Reports > Fulfilled by Amazon and open the “Amazon VAT Transactions Report” and download it. Orders shipped via FBA can be found in the SALES_CHANNEL column under AFN.

In the list, you can now filter for the refunds that do not have a return (only REFUND, but no RETURN under TRANSACTION_TYPE).

Now check the filtered Transaction Event IDs (order numbers) for the refund. You can find this information under Reports > Fulfilled by Amazon > Refunds. If there is still no refund after 50 days, you can report the case through Seller Central and request a refund.

How does Amazon calculate the reimbursement for FBA errors?

To estimate a selling price for the item to be refunded, Amazon compares various indicators due to significant price fluctuations. These include:

If there is still not enough information available, Amazon assigns an estimated selling price of a comparable product.

What steps do you take if Amazon denies a refund request?

If Amazon denies a case, you have the option to appeal. Take a closer look at the basis for the denial and check whether you provided all the necessary information to Amazon. What additional information can you provide, and does the reason for the denial align with your original request?

For example, it may happen that Amazon denies a reassessment of an item, even though you did not request one, and instead charges you the correct FBA fees based on the provided dimensions. In such cases, there is not much more you can do than remain persistent but polite.

All-in-one package: SELLERLOGIC Lost & Found Full-Service

The time required to compile the reports and open the cases is usually not economically viable. Remember to invest your time where it benefits you the most. And that is certainly not in painstakingly comparing FBA reports.

To ensure you still receive your hard-earned money, SELLERLOGIC has developed an automated solution that takes care of the work for you: SELLERLOGIC Lost & Found Full-Service.

This software automatically analyzes the data from your FBA reports in the background and detects the aforementioned FBA errors. Each notable transaction is created as a separate case, allowing you to track all information if needed. The individual cases are presented in an easily understandable manner, so that every seller can always understand which type of error generated which reimbursement amount.

SELLERLOGIC also takes care of the application process and communication with Amazon, as well as any follow-up questions if there are issues with a refund. You don’t have to do anything and can use your time more effectively in the meantime.

This way, thanks to SELLERLOGIC Lost & Found Full-Service, you won’t miss any of your refund claims. Sign up for free now and receive your first refunds today.

Frequently Asked Questions

Image credits in the order of the images: © 2rogan – stock.adobe.com / © Jan – stock.adobe.com