What’s an FBA Audit, Anyway?
Wondering if you need to perform an FBA audit? Wondering what an FBA audit even is?
To help you stop wondering, let’s take a look at what an FBA audit is and how it can help improve your bottom line by identifying FBA reimbursements you are owed, but are only refunded if you submit the proper claims.
First off, as a seller in the Amazon FBA program, you agree to have Amazon perform order fulfillment on your behalf. That means not only fulfilling customer orders and handling customer returns but managing the inbound shipment and outbound shipment products, as well as the disposal and maintenance of your product inventory at one or more Amazon FBA warehouses. So there are a lot of moving parts in Amazon’s fulfillment center operations.
Amazon is only human. Well, Amazon itself isn’t human, but the humans who work in Amazon fulfillment centers are. And humans sometimes make mistakes. It’s only human. When mistakes occur in fulfilling customer orders and managing your inventory, you are owed Amazon FBA reimbursements for inventory adjustments and overcharged fees.
But Amazon typically doesn’t automatically reimburse you for these inventory mistakes and overcharged fees. It’s up to you, the Amazon Seller, to track the mistakes and submit the appropriate claims within certain deadlines to obtain the proper Amazon FBA reimbursement owed to you.
Which is the purpose of an FBA audit. To recover previously overcharged FBA fees to Amazon FBA Sellers such as yourself and get your money back.
You might think, well, how many errors in the fulfillment process might arise that make it worth the time and effort to perform an FBA audit? The fact is an FBA audit can potentially uncover a 1% to 3% discrepancy rate in FBA fees. This means if you are making $1 million in annual revenues, you could be leaving anywhere from $10,000 to $30,000 on the table. And if you don’t perform an FBA audit and claim these losses due to overcharged FBA fees within 18 months (and it is not unusual for Amazon to decline reimbursement claims beyond 9 months), it’s money you can never get back.
This is why it is so important to regularly perform an FBA audit. A few losses here and there due to some oversights in fulfillment center operations is maybe not a big deal. But as these losses accumulate, it can add up to the point where your business isn’t nearly as profitable as it actually is, had the proper inventory adjustments and FBA refunds been credited to your Amazon Seller account. Even worse is loss due to overcharged fees you don’t recover which renders your business to be unprofitable.
How can you ensure you receive your proper FBA reimbursement for overcharged fees and inventory miscues? Let’s first look at the Amazon FBA reimbursement categories an FBA audit can uncover:
- Missing, Lost, or Damaged inventory
- Customer Returns Discrepancies
- Destroyed Inventory
- PackageHandling Fees Overchages
With a better understanding of the multiple instances, Amazon owes you money that you are potentially unaware of. Next, we examine what options you have to perform an FBA audit and get your money back. We also recommend the best option, requiring the least effort on your part, to successfully claim FBA reimbursements that are rightfully yours.
Missing, Lost, or Damaged Inventory
A proper FBA audit identifies missing, lost, or damaged inventory held at the Amazon warehouse. Miscounts and other human errors can misrepresent your inventory and not properly credit it. This can happen during shipping, at the Amazon fulfillment center, or when a barcode is incorrect. One of the easiest ways inventory gets lost at Amazon FBA warehouses is when a warehouse picker accidentally places an item into an incorrect bin. If and when this happens, it can take months for this misplaced item to ever be found; sometimes it isn’t found at all. Another problem is when Amazon ships more items than the customer ordered, the customer doesn’t send the excess items back, and Amazon doesn’t refund you for the missing inventory.
The obvious problem here is that you can’t sell lost inventory. Amazon is obligated to provide FBA reimbursement for that missing, lost, or damaged inventory. If you don’t get that FBA inventory reimbursement back, you not only lose profit from potential sales of those inventory items, you’ve lost the refunds owed to you if you fail to request reimbursement. An FBA audit helps ensure your inventory is correctly represented in Amazon Seller Central and where and when you are owed reimbursements for these errors.
Customer Returns Discrepancies
An FBA audit also flags discrepancies in returns and refunds mishandled at the Amazon FBA warehouse. Potential errors include:
- Customer returns that are never paid out
- Customers receive refunds for returns but fail to return the product
- Damaged and incorrectly recorded returns
- Return overcharges
- Uncredited restocking fees (Amazon can charge customers a 20% restocking fee that is first deducted from their account and refunded after restocking the order; however, sometimes Amazon Sellers do not receive these refunds.)
Destroyed Inventory
Amazon can destroy and dispose of any unsaleable inventory without your approval and without notifying you. An FBA audit identifies instances when you are owed an adjustment when Amazon disposes of your inventory.
Package Discrepancies
FBA storage and shipping charges are based on product size and weight. Inaccurate dimensions assess higher fees based on inventory being larger or heavier than it actually is. An FBA audit can determine whether Amazon is charging you for packages based on incorrect size and weight.
This is one type of FBA reimbursement claim where you only have 90 days to submit a refund request.
How Amazon Sellers Can Perform an FBA Audit
If you want to try to perform an FBA audit yourself, here’s what you need to look at:
- Lost products: Review your inventory reconciliation reports in Amazon Seller Central to identify discrepancies where you think you have inventory, but actually don’t.
- Damaged products: The Damaged Inventory Report in Amazon Seller Central provides details about products lost or damaged at Amazon FBA warehouses, en route to or from the Amazon fulfillment centers, or missing at the fulfillment center for the past month.
- Returned products: Whew! This requires constant review of all your transactions to identify when refunds are not properly paid, resulting in FBA reimbursements owed to you. This includes when any of the following takes place:
- Customers receive refunds for products they don’t return
- Customers receive refunds for more than they are actually charged
- Amazon warehouse accepts incorrect returns or damaged returns that result in lost inventory
- Amazon warehouse accepts returns after the stated return date and you aren’t credited.
There’s a lot here to keep track of; like we said, Whew!
- Destroyed and disposed of products: Amazon does not notify you when your products are destroyed or disposed of at the warehouse. The only way to determine if that has happened is to continually track inventory and identify discrepancies between your inventory records and what Amazon reports in your Seller Account.
- Incorrect product measurements: Check product dimensions stated by supplier invoices against Amazon listings for size and weight to document if and when Amazon charged for higher product weight and size.
Whatever errors in Amazon Seller reimbursements you uncover, there’s still more work to do. Just because you found errors, doesn’t automatically mean Amazon is going to reimburse you for previously overcharged fees and inventory discrepancies. You have to file claims. In many cases, you can file claims to get your money back using the Contact Us page in Seller Central. Details you need to provide can include:
- Amazon shipment ID (found in the Shipping Que)
- Proof of inventory ownership (invoice from your supplier)
- Proof of delivery (the active tracking ID and documentation of the number of boxes shipped)
To avoid any invalid claims, first, go to Amazon Seller Central and check to see if the item in question was in fact refunded or replaced in your Manage FBA Returns report. Also, check the FBA customer returns report as well as the Reimbursement report to ensure you haven’t already been reimbursed.
The next step is to file the claim to the appropriate claims department; failing to file to the appropriate department automatically results in an invalid claim, regardless of the merits of the claim, requiring resubmission. In some cases, time lost by incorrectly submitting the claim may lead to closing the deadline window for the reimbursement request process and you can no longer get your money back.
Keep in mind that an FBA audit isn’t something you do whenever you can get around to it. There’s a window of 18 months from when a discrepancy occurs to file a claim. In some cases, the window is as little as 9 months. On top of this, different claims for different discrepancies must be submitted to the appropriate department. Incorrectly submitted claims are rejected as invalid claims and you must refile. But once the window closes, it stays shut.
FBA Audit Options
So if you’re trying to perform an FBA audit yourself, it requires continuous monitoring of your Amazon Seller Central account to review various inventory, shipping, and returns reports. The more SKUs you have, the more time-consuming and laborious this manual-intensive FBA audit becomes to get the FBA reimbursement owed to you.
Most Amazon business owners don’t have the time to do this. You’re busy sourcing products, promoting your brand, and growing your Amazon business. But if you don’t perform an FBA audit, you are losing money. So what are your options?
One potential solution is to hire a virtual assistant (VA) to perform an FBA audit. But that’s an added expense to your overhead. Another option is if you have an employee you could assign FBA audit responsibilities and act as your refunds manager. But, that means taking time and attention away from whatever tasks you originally hired the employee to perform. Neither option guarantees the FBA audit can recover enough in FBA reimbursement to justify the added expense.
Still, you don’t know whether an FBA audit is going to pay off for you unless you do an FBA audit.
Errors uncovered by an FBA audit can represent anywhere between 1% to 3% of your annual revenues. Remember, this isn’t found money. It’s money owed to you as part of your operating budget. If you don’t claim FBA reimbursement, you are in essence paying more for products in your inventory than you should. That’s a potentially significant amount of money that can easily affect your profitability. It also means you have fewer funds available to source new products and sustain your business. Funds you are fully entitled to.
Fortunately, there is a hassle-free, risk-free way to perform an FBA audit that is not only accurate but free to perform. That’s right. You can have an FBA audit done for your business for free.
GETIDA FBA Audit
GETIDA performs your FBA audit using innovative software it originally developed for its own Amazon FBA business. In addition, and only with your permission, GETIDA files the appropriate claims for FBA reimbursements on your behalf.
The software quickly examines the past 18 months of your Amazon FBA transactions to flag potential discrepancies eligible for FBA reimbursement. GETIDA provides you with an easy-to-read dashboard to assess whether there are sufficient instances to submit claims by an experienced team of former Amazon reimbursement employees to submit claims and follow up to ensure success. And there is no charge for any of this.
The only fee for this time-saving reimbursement tool and claims service is a percentage of whatever claims are successfully approved. You only pay for what refunds GETIDA actually recovers. And the first $400 in Amazon FBA reimbursement claims are free.
GETIDA’s software and dedicated case managers analyze your data, reconcile your Amazon FBA inventory, and file claims for FBA reimbursements on your behalf so you can focus on what is really important: growing your Amazon business.
There’s no obligation. Sign-up is free. It’s the best and easiest way to perform an FBA audit, claims FBA reimbursements, and get back your money.