Amazon FBA Issues : Problems and Opportunities Every Seller Must Know
Updated on: 24/09/25 | Reading Time: 8 mins | Author : Alankrita Bajpai @Rekonsile
Fulfilment by Amazon (FBA) is one of the biggest growth drivers for e-commerce sellers in India. By handling storage, packaging, and shipping, Amazon FBA offers sellers the opportunity to scale quickly while providing customers with Prime-level service.
But here’s the catch: Amazon FBA isn’t always smooth sailing. Sellers in India often face hidden costs, inventory challenges, reconciliation headaches, and cash flow crunches. If you’re selling on Amazon or planning to use Amazon FBA in 2025, this blog breaks down how FBA works, the common FBA issues sellers face, and how to stay profitable despite the hurdles.
TL;DR for FBA Issues
FBA = storage, packing, and delivery by Amazon in exchange for fees.
Key Benefits: faster Prime delivery, wider reach, better customer trust.
Top Issues Sellers Face in Amazon FBA:
High & complex fee structure (storage, pick-pack, weight handling).
Inventory damages, lost units, and poor reimbursement.
Delayed payments, cash flow lockups.
Return abuse & high return handling charges.
Limited control over branding and customer communication.
What Sellers Should Do:
Monitor fees closely and reconcile Amazon FBA payments.
Use multi-channel fulfilment strategies.
Keep safety stock outside Amazon FCs.
Track reimbursements, SAFE-T claims, and return patterns.
Regularly reprice, optimise listings, and plan festive sales around fee hikes.
Quick Reference – What We’ll Cover
What is Amazon FBA?
How FBA works in India – Step by Step
Why Sellers Choose Amazon FBA
The Complete Fee Structure in 2025
Major FBA Issues Faced by Sellers in Amazon
Hidden Fees & Cost Escalations
Inventory Mismanagement & Lost Units
Return Abuse & Reverse Logistics
Delayed Payments & Reconciliation Gaps
Lack of Control Over Branding
Merits vs Demerits of Amazon FBA for Sellers
Practical Strategies to Reduce FBA Pain Points
What Sellers Should Do in 2025
The Bottomline
1. What is Amazon FBA?
Fulfilment by Amazon (FBA) is a service where Amazon stores your inventory in its fulfilment centres (FCs). Once a customer orders your product, Amazon FBA handles:
Picking and packing.
Shipping to the customer (often Prime delivery).
Customer service and returns.
For sellers, this means fewer headaches in logistics, but a greater dependency on Amazon, which can lead to certain FBA issues if not closely monitored.
2. How Amazon FBA Works
You send products to an Amazon Fulfilment Centre.
Amazon FBA stores them in their warehouses.
Customer places an order.
Amazon FBA packs & ships the order directly.
Amazon FBA manages returns and refunds if customers send products back.
You get paid after deducting FBA fees, storage charges, and commissions.
3. Why Sellers Choose Amazon FBA
Prime Badge Advantage: Products fulfilled by Amazon FBA automatically get the Prime logo, boosting conversion rates.
Pan-India Reach: Sellers can reach customers in Tier-2/3 cities where delivery networks are strong.
Operational Ease: No need to manage your own warehouse or delivery partners.
Customer Trust: Faster delivery + hassle-free returns increase repeat orders.
4. The Complete Fee Structure in 2025
Using Amazon FBA isn’t free — sellers pay multiple fees, such as:
Storage Fees: Monthly fee per cubic foot of space used.
Pick & Pack Fees: Charged per unit packed.
Weight Handling Fees: Based on weight slabs (recently revised).
Referral Fees: Amazon’s commission on each sale.
Removal / Disposal Fees: Charged when you want to pull stock back.
Returns Processing Fee: Charged on customer returns.
Hidden costs like long-term storage fees and mislabeled product penalties can silently eat into margins, a common FBA issue for Indian sellers.
Data Snapshot to understand FBA and avoid FBA Issues :
Average pick & pack fee: ₹17 for standard size.
Weight handling slabs: ₹5 per additional kg after 1 kg, ₹2 per additional 5 kg after 5 kg (capped at 20 kg).
Storage charges spike during Q4 festive months by 1.5–2x due to high demand at FCs.
A seller moving 10,000 units monthly could spend over ₹2 lakh just in Amazon FBA handling and storage — making reconciliation critical to avoid unnoticed revenue leakage.
5. FBA Issues Faced by Amazon Sellers
Amazon FBA offers sellers several strong advantages, but also comes with notable challenges. On the positive side, the coveted Prime badge significantly boosts sales, while Amazon’s faster delivery network and pan-India reach expand market access. Sellers benefit from not needing to maintain their own warehouses, enjoy stronger customer trust due to Amazon’s credibility, and can rely on Amazon’s customer service to handle buyer queries. However, these merits are balanced by critical drawbacks. FBA fees remain high and continue to rise, eating into margins. Inventory risks such as damages or missing stock are common, and sellers often face return abuse along with extra handling charges. Payments are also deducted upfront, creating cash flow lock-ins that strain working capital. Finally, while FBA ensures scale, it limits branding opportunities and long-term customer retention, making sellers dependent on Amazon’s ecosystem rather than their own.
a) Hidden Fees & Cost Escalations - FBA Issue
Amazon revises FBA fee structures frequently. Sellers discover rising storage fees during festive seasons or sudden weight-handling hikes. These unpredictable costs can shrink margins overnight, one of the biggest Amazon FBA issues.
b) Inventory Mismanagement & Lost Units - FBA Issue
Cases of damaged, misplaced, or unaccounted inventory are common. While Amazon FBA reimburses some losses, claims are complex and often rejected without proper documentation.
This is where tools like Rekonsile help sellers by showing shipped vs received inventory and highlighting stock mismatches quickly — reducing the chances of losing money due to Amazon FBA inventory issues.
c) Return Abuse & Reverse Logistics - FBA Issue
High returns (especially in fashion, electronics, and accessories) burden sellers with:
Return handling charges.
Non-sellable damaged products.
Customers are abusing “free return” policies.
According to seller community reports, Amazon's FBA return rate in apparel can exceed 25%, and each return can cost sellers ₹50–₹200 in hidden fees and lost value.
d) Delayed Payments & Reconciliation Gaps - FBA Issue
Even though Amazon FBA pays sellers every 7–14 days, deductions for fees, TCS, penalties, and returns often lead to payment mismatches. Sellers frequently report discrepancies that require detailed Amazon FBA reconciliation.
A seller moving ₹1 crore in monthly sales may face ₹5–10 lakh worth of mismatches unless payments are systematically tracked. Rekonsile simplifies this by automating reconciliation, helping sellers spot gaps instantly.
e) Lack of Control Over Branding - FBA Issue
Since Amazon FBA handles packaging, sellers can’t personalise unboxing experiences. Customer relationships belong to Amazon, not the seller, making it harder to build long-term loyalty.
6. Merits vs Demerits of Amazon FBA
Amazon FBA offers sellers several strong advantages but also comes with notable challenges. On the positive side, the coveted Prime badge significantly boosts sales, while Amazon’s faster delivery network and pan-India reach expand market access. Sellers benefit from not needing to maintain their own warehouses, enjoy stronger customer trust due to Amazon’s credibility, and can rely on Amazon’s customer service to handle buyer queries. However, these merits are balanced by critical drawbacks. FBA fees remain high and continue to rise, eating into margins. Inventory risks such as damages or missing stock are common, and sellers often face return abuse along with extra handling charges. Payments are also deducted upfront, creating cash flow lock-ins that strain working capital. Finally, while FBA ensures scale, it limits branding opportunities and long-term customer retention, making sellers dependent on Amazon’s ecosystem rather than their own.
7. Practical Strategies to Reduce FBA Issues
Reconcile Every Payout: Regularly check invoices, TCS, and fee deductions in Amazon FBA statements.
Maintain Backup Stock: Keep some inventory in your own warehouse to avoid over-dependence.
Optimise Product Selection: Avoid low-margin items in FBA; focus on high-volume, fast-moving SKUs.
Track Returns & File SAFE-T Claims: Always document damages and raise claims promptly.
Multi-Channel Fulfilment (MCF): Use Amazon FBA + third-party logistics for other channels.
Leverage Packaging Savings: Pass reduced logistics costs to customers as offers like “Free Shipping.”
Review Listings Frequently: Update pricing and keywords to stay competitive.
Use Tech Tools: Platforms like Rekonsile provide real-time FBA inventory health, helping sellers know exactly which SKUs are at risk of ageing fees, damages, or low stock.
8. What Sellers Should Do in 2025 to avoid FBA Issues
Recalculate Margins: Factor in revised Amazon FBA fees for 2025.
Automate Reconciliation: Use tools (like Rekonsile) to spot fee mismatches quickly.
Plan for Festive Spikes: Stock up early but avoid over-stocking to escape long-term storage fees.
Improve Product Quality: Reduce returns by focusing on better QC and detailed product descriptions.
Keep Flexible Pricing: Use coupons and time-bound discounts instead of permanent markdowns.
Explore Hybrid Models: Balance Amazon FBA with FBM (Fulfilment by Merchant) for control and cost savings.
9. The Bottomline
Amazon FBA remains a powerful growth lever for e-commerce sellers. The Prime badge, operational convenience, and customer trust it brings are unmatched. But the system comes with challenges: rising fees, inventory issues, return abuse, and payment mismatches — all common FBA issues in India.
For 2025, the smartest sellers on Amazon will:
Stay vigilant with reconciliation.
Diversify fulfilment methods.
Anticipate festive season demand while managing costs.
Ultimately, Amazon FBA is not a “set and forget” solution. It can multiply your sales, but only if you keep a close eye on profitability. With tools like Rekonsile, tracking your shipped/received inventory and highlighting FBA inventory health, sellers can protect their margins and make smarter decisions.
Sellers who track their numbers, adapt quickly, and build resilient systems will continue to thrive on Amazon despite the hurdles.
