If you’ve been selling through Amazon FBA for a while, you may have noticed some loss in your balance sheet that FBA Reimbursement Services could solve. The losses may be from damaged or missing items, customers returning the wrong item or even not returning it at all, being refunded the wrong amount, and so many other little things that hurt your profit margins.
That’s normal.
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Every retail business should expect 1-2% of revenue lost from shrinkage. But wait. You’re selling through FBA. Amazon is the one handling your fulfillment, so they should be covering the costs of these common losses. And they do… Kinda.
You see, they only really act like they’re doing their job. They have to, or they’d be in breach of contract, but there is no incentive for Amazon to invest in fully auditing billions and billions of reports and properly refunding all their sellers. Why would they do that? I mean, every dollar they don’t correctly reimburse is an extra dollar in THEIR pocket.
So the responsibility falls on you, kind Amazon Seller, to audit your own reports and keep Amazon in line.
Otherwise, you risk losing A LOT of money. And trust me, it really adds up over time. You’d think such a small percentage is insignificant, but we’ve seen periods where our partners have had to recover over 17% of their gross sales because of Amazon’s mismanagement. That’s over 13x your industry average! Insane!
Over those couple of months, we’ve helped them recover almost all of the money Amazon failed to reimburse. Those gains increased their profit margins by an unbelievable 27.8% – which enables them to stay competitive and continue growing their business.
So it’s very important to go through this reimbursement process, even if it’s tedious.
Because if you don’t do it, your competitors surely will. And they’ll be the ones with higher margins and more room for ads, improving their products, better service, and other investments.
Now let’s look at 4 different ways of keeping Amazon accountable. With one, or a mix of FBA Reimbursement Services, you can make sure your shrinkage is minimal and your profits are maxed out.
1. Doing it yourself
Obviously, the most sensible option to start off with. Don’t use any FBA Reimbursement Service. Just do it yourself. I mean, how hard can it be?
You figure out that there is a problem, you search online for a bunch of guides, and you find something that takes you step-by-step through the reimbursement process. They show you how to identify discrepancies,
verify that they’re legit and Amazon has failed to reimburse them already… they even go as far as tell you exactly how to message Amazon Support and you can just copy-paste some stuff, and bam! You’ve got a case open.
You’ve done the job. A few days later you get an email saying “we have initiated a reimbursement request on your behalf” and soon you’ll get sent some extra money to your account.
“Wow!” you think. “That was easy! I only had to work for… an hour… and I’m about to get… $12.79 reimbursed“
Yeah…
But that’s fine. You’ll get better at it. You’ll spend less time and get more units reimbursed. Eventually, you might even make, like… $25/hr. But then you realize… it’s the same boring operations again and again. Good luck keeping track of everything when you have thousands of products, each selling thousands of units every month.
You’ve got tedium paired with a great need for attention.
Sure, it can be therapeutic. Like meditation. You get in a groove and just… do accounting. Hell, I even know some crazy people who enjoy this kind of stuff. But, as a business owner, I know that I’ve got better things to do. And you probably do, too. And I don’t want to risk messing something up and making things worse than before I started… Like, say, by getting my listings or even the entire store suspended…
That’s why I hire an expert to handle my accounting.
But, still, this is a perfectly viable option. And if you’re just starting out, have quite a bit of free time, and want to squeeze out eeeeeevery little bit of your margins that you can… This is the way to go.
So we’ve written a guide to help you do it yourself and take the Amazon FBA Reimbursement process into your very own hands. It covers all the different ways in which Amazon is “unintentionally” stealing from you and exactly how you can go about servicing your own justice and revenue sheet.
Strengths
Costs no money
High Versatility
You’ve got full control
You already trust yourself
Weaknesses
Costs time
Learning curve
Risk for errors
Impossible to scale
This is quite an industry. Ecommerce is booming. Amazon is the 3rd largest business in the world. Jeff Bezos the wealthiest man. You’ve got a lot of sellers using Amazon’s services and plenty of them want to maximize their profits. Not all of them have the means, opportunity, or interest to do it themselves, though… so they look for ways to make it easier.
And there sure are plenty of them, so let’s take a look.
2. Semi-automated SaaS Solutions
These solutions are great!
Taking the tedious work and turning it into a delight by… highlighting discrepancies, or creating shortcuts for key areas of the process, or… giving you the right message to copy-paste into the contact form. Some even go as far as analyze your reports automatically and tell you exactly which SKUs you need to look at and how you need to fix them.
The really advanced ones are so good… they find the discrepancies, grab the transaction code or order id or whatever they need, take you to the right pages so you can go through the reimbursement process, and then even generate the right support message for you. Pretty good for a piece of software.
But, you see… These solutions don’t really do much for you but quality of life improvements. As a result, you still must learn how the process works. You’ve still got to make sure what you’re doing is correct. You still need to stay up to date with changes. And worry about risk. And you still can’t scale it suuuper high… You’re simply paying a sizeable subscription fee, and possibly commissions as well, just to have someone hold your hand.
Which is great, I guess.
But you’re still the one doing it. And you also have to give these pieces of software access to your account so they can hack into Amazon’s frontend and backend and show you the right stuff, take you to the right places, have you do the right things. Are the solutions open-source? Can you tell what they’re doing in the background with your data?
Hey, maybe that’s not a big deal. Surely a small price to pay for the convenience of simplifying the Amazon FBA reimbursement process. They’re just businessmen, doing business. Totally trustworthy.
Strengths:
Good Scalability
Pleasant user experience
They teach you the process
You have the final say when acting
Weaknesses:
Still takes time and knowledge
Trusting software with back-end access
Process doesn’t run without your input
They don’t eliminate the risk for errors
In the end, I’d say they’re great for those who want to take it a step further. Medium sellers with a diverse set of products they need to keep track of who simply want to be efficient and get easier returns. Perfectly sound choices out there for many businesses.
Now… if only this process could be fully-automated, maybe things would be even better.
3. Automated Reimbursement Systems
That’s what the big guys want. Automation!
You’ve got these really sophisticated algorithms that automatically extract all the necessary reports, compare them, identify potential issues, take the necessary data, and then file the proper case with Amazon. You don’t have to do anything and, magically, your account balance goes up. When it comes to FBA Reimbursement Services… They do it all.
But here’s the thing… With any automatic system, whether it’s an advanced scientific computer model or a simple scriptkiddy program, the outputs are only as good as the inputs. And if you’re not the one controlling the inputs… Let’s just say there have been plenty of storefronts temporarily (and even permanently) suspended for using automated reconciliation systems. They just… unknowingly filed too many wrongful claims, which were deemed abusive or “required investigation”.
And just like that, all the upside vanished, like a leprechaun you’ve taken your eyes off of.
Sure, they’ve all been approved by Amazon as devs or whatever to use their API. But, even so, what happens sometimes is that they fail to accurately do the little things. Like, verify if Amazon already reimbursed a qualifying discrepancy, which Amazon sometimes does in fact do. Wrongful claim. Or check if the amounts match correctly. Or they miss errors that occur because Amazon changed something in their own system, which they do all the time…
So you end up having to trust some faceless entity you can’t see, and pay them a big commission (usually 25% of aaaall the reimbursements) for an incomplete service that always hangs above your neck like the Sword of Damocles. I like to call them the Algorithms of Damocles.
Some of them get around this by splitting the auditing and the fulfillment, so they’ve got a hybrid reimbursement service. Does that even qualify as automated anymore? Anyway… this is good because now they double-check things and minimize potential errors, while still considerably increasing profits. But, again, inputs -> outputs. The experts filing the cases necessarily trust the automated auditor, so the problem isn’t fully avoided.
And, finally, you’re probably just a drop in the bucket for them. That’s why the stuff is automated, so things can scale… including for themselves. When you have specific needs or issues that need resolving, how much attention do you think they’ll give you? Oftentimes they skip steps that would require your input, to make it seem like the process is more hands-off than in reality.
How does the algorithm know to nicely ask you for an invoice so it can confirm the validity of a claim before filing it? How does it know to insist on your behalf when you’re 100% in the right and Amazon Support are being dummyheads? They can’t.
Strengths:
Great scalability
Very time-efficient
Pleasant user experience
You start reimbursing right away
Weaknesses:
High service fees
Significant risk of errors
Trusting algorithms with back-end access
Incomplete service for the sake of efficiency
Still, all of these services are perfectly viable for a large FBA seller who wants to solve shrinkage at scale. Maybe they have multiple businesses, lots of products, and they want varying degrees of hands-on-iness. Great solutions for all of that.
Now… if only there were people you could trust to handle everything for you, with transparency and a complete, personalized service…
4. Personalized Expert Service
Working with people. People who’ve done this for quite a while, and for some reason unknown to me, are passionate about recovering every last little penny for FBA sellers on Amazon. Maybe they get a justice boner from sticking it to the man. Who knows? What I know is that they actually care and make sure everything is tight and sound.
So you’ve got something like a concierge service, done by experts who, somehow, before going to University, thought to themselves: “You know what the best degree for me would be? Accounting!” and now eagerly text each other about “the latest changes in the Seller Central back-end”.
Right? Beats me.
But these people are offering a great service unlike any other. A personal service. With attention, and transparency, and support. A service tailor-made for you. They still charge a sizeable commission, sure, but it’s less than the big Algorithms of Damocles. You still have to trust that they’ll do a good job and keep track of the right numbers. But at least you know who you’re working with, and who is responsible for your reimbursements.
It’s almost like you are doing it yourself, but better. As actual people with their reputation on the line will care about your account just about as much as you do, yet they come with years of expertise already in their minds.
You get the best of both worlds.
On the one hand, there’s the quality-assurance of the individual work, while on the other hand you’re completely detached from the workflow, like with the automated services. And there is no hidden back-end access necessary that can enable whatever in the background, without your knowledge. Win-win-win.
Sadly, this option is a nightmare for introverts. Because before you can get started recovering your lost revenue, you have to actually talk to other human beings, and reach a common understanding… an agreement. Sign contracts and stuff. Or you could just click a sign-up button and automatically give away all your control in exchange for some vague promises. Or maybe not.
Strengths
Personal and custom service
Transparency and direct support
High attention and accountability
Maximum profit margins with minimum risk
Weaknesses
Medium costs
Still requires some input from you
Trusting people with front-end access
You have to interact with human beings
Regardless, these personalized services are completely viable for every FBA seller out there, large or small, who wants the best of both worlds. Quality service, the best results, with low risk and overhead. What more can you want?
And there we have it.
4 totally different ways of accomplishing 3 things: minimal shrinkage, maximum profit margins… and Justice!
Which option is best for you?
Once you’ve figured it out, go out there and start recovering your lost revenue! And if you think you could use a personalized service, or you’ve got any questions that need additional answers…
You can get in touch with me or one of our experts by clicking the button below and scheduling a call.
