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your item has been lost in our
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fulfillment center these nine words used
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to be annoying but manageable for Amazon
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FBA sellers but because of Amazon's
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latest announcement it's now become a
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potential death sentence for your profit
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margins and what might be the most
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important policy change in e-commerce
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this year Amazon just overhauled how
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they compensate sellers for lost or
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damaged inventory and the implications
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are staggering while Amazon's presenting
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this as a simple policy update the
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reality is far more sinister I've
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crunched the numbers and what I've
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discovered will make you question
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whether selling on Amazon is even worth
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it anymore from potential conflicts of
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interest to Hidden costs that could
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bankrupt smaller sellers I guarantee
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that this change will transform the
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entire Amazon Marketplace so in this
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video I'm pulling back the curtain on
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what might be Amazon's most calculated
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move yet against its own Sellers and why
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their fee freeze announcement for 2025
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is just another lie so what exactly did
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Amazon just announce in their own words
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they are updating their FBA inventory
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reimbursement policy to help provide you
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with greater transparency and more
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predictability in how reimbursements are
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calculated for items that are lost or
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damaged and this will help drive a more
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consistent approach that works so first
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off I just love how they phrase things
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to suggest that they're doing you a
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favor what a Croc here are the guts of
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the announcement effective March 10th
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2025 Amazon will reimburse you based on
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the product manufacturing cost of the
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affected inventory instead of the
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selling price now for those of you who
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are new to Amazon FBA let me explain
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according to gatita every year Amazon
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sellers lose approximately 1 to 3% of
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their annual revenue due to inventory
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discrepancies including mishandling lost
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or damaged items these discrepancies can
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arise from various issues such as
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products that incurred damage within
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Amazon's fulfillment center
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discrepancies between the number of
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units recorded in Amazon's warehouse and
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the seller's records items that go
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missing during transit to or from
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Amazon's facilities and when a customer
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requests a return gets refunded
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immediately but doesn't send back the
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item now prior to this policy change
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Amazon will reimburse you the full
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retail price of your goods for example
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if I sell a handkerchief for $10 and
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Amazon loses 100 units of my inventory
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Amazon will pay me $1,000 even though it
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only cost me $2 per hanky to manufacture
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but with this new change Amazon will now
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only reimburse you the manufacturing
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cost of your goods
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now the real question here is how Amazon
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determines what the manufacturing cost
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is according to Amazon manufacturing
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cost is defined as your cost to Source a
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product from a manufacturer wholesaler
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reseller or produce the item if you are
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the manufacturer it excludes costs such
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as shipping handling customs duties or
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other costs and here's where the
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language gets super sketchy to help
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provide you with greater control and
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accuracy you can choose how Amazon
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determines the manufacturing cost for
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your products one Amazon can provide a
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manufacturing cost estimate for you this
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estimate is based on a comprehensive
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evaluation of comparable products sold
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by Amazon by other Sellers and through
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wholesale channels or two you can
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provide your manufacturing cost directly
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and basically give away all your
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supplier information and financials to
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Amazon what also sucks is that your
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reimbursed amount is just your cost of
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goods which does not include shipping
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handling or custom duties which is
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actually a huge part of your overall
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cost of goods for example with my store
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shipping and Customs can make up about
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30% of the cost of the product so even
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though my cost of goods is $2 per hanky
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Amazon will only reimburse me $11.40 for
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something that isn't even my fault let's
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break down the implications of this new
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policy change even though it's Amazon's
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mistake that they lost your inventory
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you now have to take a loss on your
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inventory because you will not get your
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shipping cost back you will will not get
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your import taxes back and you will not
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get your prep fees back I've been
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selling on Amazon for 10 years now and
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I've had cases where Amazon literally
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lost an entire shipment of 500 units by
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the way if you're tired of Amazon's
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abusive policies and want to start your
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own profitable online store make sure
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you sign up for my free 6-day e-commerce
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mini course below 100% free and I
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guarantee you'll learn a lot now what's
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worse is that this issue hasn't improved
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over the years in fact it's only gotten
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worse if you ask any Amazon Seller who's
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been using Amazon warehousing and
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distribution or AWD this year it has
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been a total dumpster fire when Q4
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shipment started happening Amazon's
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capacity went through the roof and they
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simply could not handle the sheer volume
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of deliveries so basically Amazon ran
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out of warehouse space and they didn't
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have the logistics in place to manage
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pickups and they weren't getting
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inventory from AWD into their
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fulfillment centers on a timely basis as
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a result I have many friends that got
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totally screwed with delayed pickups
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canceled pickups delayed deliveries
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stalled inventory and lost inventory so
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bottom line they couldn't get their
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products into Amazon and ended up
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running out of stock during the biggest
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shopping season of the year and now
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things are about to get worse Amazon's
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new policy essentially shifts all the
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blame and financial burden for their
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warehouse mistakes onto sellers they've
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completely abandoned all responsibility
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for their own Services if this policy
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had been in place during the AWD debacle
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thousands of sellers would have lost a
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fortune and to make matters worse Amazon
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had the G to announce a price hike for
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AWD Services starting in
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2025 and here's the kicker this price
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hike was announced right after Amazon
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claimed that they wouldn't raise fees in
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2025 they flat out lied to us now
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they're charging more for a service
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that's been an absolute disaster this
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holiday season while taking zero
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accountability for their failures now
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you might be thinking to yourself your s
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at least Amazon will still reimburse you
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for the cost of your goods right but
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here's the problem how does Amazon
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determine your True Manufacturing cost
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I'll bet you a million bucks that
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Amazon's estimate will be less than what
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you actually paid for your products and
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don't forget Amazon won't reimburse you
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for transportation Logistics or import
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duties either if you want an accurate
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reimbursement your only option is to
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submit the actual invoices for your
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inventory to Amazon which basically
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means telling Amazon who your suppliers
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are and your financials now over the
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years I've had so many friends that have
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had their products knocked off by
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Amazon's own private label Brands take
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one friend of mine for example she was
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making hundreds of thousand dollars per
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year selling emu oil on Amazon but then
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Amazon launched their own private label
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version of her product at 30% cheaper if
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that wasn't bad enough Amazon had the
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audacity to advertise their own branded
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emu oil directly on her product listing
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in the result her sales tanked overnight
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all because Amazon decide to compete
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directly against her one of my close
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friends Mike jacknis used to sell gel
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packs on Amazon and he was making
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millions of dollars per year but then
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Amazon decided to knock off his product
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charged 30% less and even copied his
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packaging and photo layouts now do you
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see why handing over your supplier and
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cost of goods information to Amazon is a
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recipe for disaster with this data
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Amazon can easily undercut you they can
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go straight to your manufacturer
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negotiate a better deal than you ever
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could and use their sales data and clout
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to knock you off entirely and let's not
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forget the hassle of actually providing
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this information to Amazon dealing with
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Amazon customer support is already a
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nightmare every time I've had to contact
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them I feel like banging my head against
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the table you're always stuck with reps
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and foreign call centers who give can
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responses that never solve your issue
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now imagine having to deal with that
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level of incompetence for every single
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one of your products it's a massive time
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suck total headache and just not working
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it now let's take a step back and look
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at this new policy from 50,000 ft Amazon
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already controls the entire shipping and
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Logistics process giving them complete
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authority over your products from the
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moment they enter their system by
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refusing to compensate sellers for lost
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or mishandled inventory they've created
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a serious conflict of interest think
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about it if Amazon loses 10,000 units of
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your product what is stopping them from
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turning around and selling those same
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items as their own they wouldn't have to
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pay import costs or taxes on those
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products and no one would be the wiser
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now you might think that sounds
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far-fetched but in my 10 years of
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selling on Amazon I've Seen It All I've
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had my products shipped under the wrong
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listing and I've had customers order
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from us only to receive products we
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don't even sell just this Christmas
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someone returned what was supposed to be
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our linen towels and we got shipped back
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a weighted vest instead and it gets even
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crazier I've had hundreds of units that
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Amazon claim were lost suddenly reappear
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for sale on my own listing but from
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other sellers this level of
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mismanagement and lack of accountability
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is exactly why this new policy is so
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dangerous for sellers Amazon holds all
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the power and when things go wrong
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you're the one left to pick up the
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pieces just think about it there is
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absolutely nothing stopping Amazon from
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mysteriously losing your inventory and
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then turning it around to sell it under
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your own listing at a lower price
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winning the buy box in the process this
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isn't just a hypothetical it's happened
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before and it will happen again but now
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with this new policy Amazon stands to
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profit from these mistakes creating a
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dangerous incentive to do a bad job the
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harsh reality is that it's in Amazon's
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best interest to lose your inventory now
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when they control every part of the
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process and face zero accountability it
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is a recipe for disaster and sellers are
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the ones who pay the price and here's
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the thing things were already bad
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Amazon's advertising costs have been
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skyrocketing increasing by 20%
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year-over-year they penalize you with
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excessive FBA fees if you have too much
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inventory in stock but if you have too
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little inventory you're also hit with
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more fees this year they added an
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inbound placement fee charging you on a
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perun basis just for the privilege of
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letting your products into their
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warehouses oh but don't worry you can
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avoid this fee by using Amazon's
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warehouse and distribution service which
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has been a complete disaster for sellers
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mismanaged unreliable and downright
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horrific do you see the the pattern here
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Amazon keeps stacking the dick against
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sellers making it harder and more
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expensive to succeed on their platform
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Amazon controls everything and every
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single policy change is designed to
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extract more money from sellers while
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offering Less in return meanwhile their
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Amazon Prime service for Shoppers has
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gone downhill too this holiday season
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I've only received about 50% of my
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orders within the promis delivery window
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and as for sellers Amazon promised no
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new FBA fees for 2025 but now it's clear
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why the financial impact of this
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inventory reimbursement policy change
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will easily outweigh years worth of FBA
00:11:07
fee hikes Amazon's playing the long game
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and unfortunately it's at our expense
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right now Amazon sellers are being
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squeezed from every direction direct
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from China marketplaces like timu and
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shien are cutting out the middleman
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selling directly to us Shoppers at rock
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bottom prices without paying taxes or
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import duties to make matters worse and
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Amazon has doubled down on the
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competition by launching its own Teemu
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style Drop Shipping service Amazon Hall
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which directly undercuts their own FBA
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sellers at the same time Amazon keeps
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increasing fees for sellers while
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reducing the quality of service for
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Shoppers and now with this new policy
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they're passing the cost of inventory
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losses directly to sellers the sentiment
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in the Amazon Seller Community is clear
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Amazon is no longer the land of
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opportunity it once was sellers feel the
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company is a abusing its Monopoly power
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and this inventory reimbursement change
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could very well be the last straw many
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top sellers are already scaling back
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their Reliance on the platform and with
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this new policy and the potential for
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abuse it's likely that only high margin
00:12:13
sellers will be able to survive in the
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long run now that you understand
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Amazon's new inventory reimbursement
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policy make sure you watch this video
00:12:21
here about all the ways Amazon is
00:12:23
screwing both sellers and buyers alike
