Amazon Seller alert: Revised FBA policies will be effective from 31 August 2016

Many ecommerce policies have changed this year. This is especially the case with online marketplaces.

Some of the main changes made are:

• Flipkart’s new commission and fees policy

• Snapdeal’s changed returns policy

• Amazon’s low commission policy

Change is constant is online retail and it is the only thing online sellers can be sure of. And the only thing to do is buck up and face the fact.

Upcoming changes in Amazon’s FBA

Amazon.in made sellers aware through email, of its plan to revise 2 FBA policies:

1 – FBA Reimbursements for Defective Products and Customer Damaged Products Policy

2 – FBA Lost and Damaged Inventory Reimbursement Policy

The changes to these policies will be made effective from 31st August 2016.

Determining the residual value of mobile phones

Residual value is the potential market value of a damaged or defective product. As a result of this change in the reimbursement policy, no additional claims for missing accessories will be entertained.

For example, if the sells a Samsung Onpro 5, then the residual value mentioned under the model wise residual value will apply. This means the value will be at 76%. On the other hand, in case a Lava phone is being sold and the units have not been graded, the default residual value will be applicable, which is 70%

The list of models and brands under the model wise residual value list will also be revised, by 31 August 2016.

Table 1: Criteria for determining the residual value of mobile phones

(Obtained from Amazon.in email to Online sellers)

Table 2: Residual value for specific mobile phone models and brands

Table 2.1: Model wise residual value

(Obtained from Amazon.in email to Online sellers)

Table 2.2: Brand wise residual value

(Obtained from Amazon.in email to Online sellers)

Terms and conditions of the renewed policies

According to Amazon, its FBA sellers need to note the following in light of its revised FBA policies:

• For all the above-mentioned brands, brand wise residual value will be applicable.

• After 31 August 2016, additional claims for missing accessories will not be entertained.

• If a mobile phone is covered under specific model residual value and brand wise residual value too, then the residual value will be applicable.

• Products covered under wireless accessories, wireless collateral, wireless plans and warranty and service will have a residual value of 55%. This means the effective reimbursement rate will be set at 45% of the products Fair Market Value.

• Reimbursements will be based on Amazon’s estimates of fair market value less FBA and selling on Amazon fees, applicable to the item, less residual value based on the model or the brand wise rate shown in Tables above.

Effective reimbursement value calculation formula:

Effective reimbursement value = (Effective Reimbursement rate) x [(Fair Market Value of unit) – (Amazon SOA and FBA Fees)]