Update to Amazon's Sourcing Cost Policy for Reimbursements

Amazon's approach to reimbursing sellers for lost or damaged inventory is changing significantly. Following our January announcement about Amazon's new "Sourcing Cost" policy, we've been testing the system extensively to understand how it works in practice. This update shares our findings and provides strategic guidance to help you navigate these changes with minimal disruption to your business. The information below reflects our hands-on experience with the new system and highlights important deadlines, tools, and best practices.

Important Dates & Background

• New effective date: March 31, 2025 (postponed from March 10)

• 30-day waiting period: Required between denied requests and resubmission

• Policy announced: January 2025, with subsequent modifications

What's Changing

Amazon is replacing previous reimbursement values with "Manufacturing Cost" (or "Sourcing Cost") for inventory lost or damaged in their possession. This affects all pre-customer order reimbursements, including inventory damaged in warehouses and items lost during the fulfillment process.

New Tools & Resources

• Inventory Defect and Reimbursement portal: Review reimbursement status by type and value

• Manage Your Sourcing Cost page: Update and review sourcing costs for your catalog

• Bulk Update functionality: Available in the upper right corner of the Sourcing Cost page

Our Testing Results

Prioritization Strategy

Focus first on SKUs in these reimbursement categories:

• Eligible for Claim

• In Progress

• Warehouse Operations

• Review any open seller support cases for missing inbound units (Lost Inbound)

Documentation Requirements

• Be prepared to submit supporting documentation for most requests

• Ensure invoices are less than one year old

• Follow Amazon's specific requirements for acceptable documentation

• Expect approximately 1-day processing time for documentation review

Approval Patterns

• Requests significantly higher than Amazon's estimate are more likely to be denied

• Requests exceeding 100% of Amazon's estimate were all denied

• Lower percentage increases have higher approval rates

• Invoices over one year old were consistently rejected

• No clear threshold exists for percentage increases (except the 100% ceiling)

Ongoing Monitoring & Best Practices

• Amazon will periodically "refresh" sourcing cost estimates (status: "Scheduled Update")

• Regular review of your Sourcing Cost page is recommended

• Consider coordinating with manufacturers to document actual sourcing costs

• Keep recent invoices organized and readily available for verification

• Develop a systematic approach for high-value or frequently reimbursed items

Financial Impact

This policy change could significantly impact reimbursement values, especially for sellers with higher manufacturing costs than Amazon's estimates. Proactive management of your sourcing cost data will be essential to maximize reimbursement amounts.