Since Amazon started the inventory performance index score years ago, I have to keep some of my inventory in a private warehouse in Pennsylvania and slowly shipping cartons to FBA. I would normally create a shipment in Seller Central and email UPS shipping labels to the warehouse. They put labels on the cartons and have UPS pick them up daily. It’s been working well for a while until when we’re out of stock. The last batch was for 6 cartons. The picked up happened 3 weeks ago. Amazon only showed 5 cartons received. UPS also showed only 5 cartons were picked up. I checked the warehouse. They were certain that UPS picked up all 6 cartons and even took the pallet with them. However the warehouse doesn’t have any receipt for paperwork to prove that 6 cartons were picked up. They tried to search the warehouse yesterday but couldn’t find that 1 missing carton. I believe it’s the responsibility of the warehouse (not UPS) to compensate for the missing carton. That one carton has 75 units at the retail price of $20 each. So, roughly $1500 of loss revenue. However the COG is much lower; at around $4 each. Should the warehouse pay the COG? $4*75 = $300? I plan to continue using this warehouse. Therefore I don’t want to rock the boat but it’s only fair the they pay for what they lost. Please advise. Thanks.
Asking to be reimbursed for the actual product they misplaced is a legitimate request.
Asking to be reimbursed for the product and any potential profits you may have made in the future on that product will get you laughed at. Or possibly cursed at.
You might have better luck asking for the losses to be deducted from your next payment rather than a cash disbursal.
I would just write an email asking them to take responsibility for the loss. I would ask for the replacement value (which would be COGS).
Nobody, anywhere, would pay anybody full retail for losing a company’s inventory. (I guess Amazon technically does, but they screw people so hard on reimbursements so not really).
I am curious if there is anything in your contract or written agreement about lost inventory. While I may be wrong, I would assume that should be covered somewhere in writing.
I sure hope so. They are 100% responsible for cost of goods lost and that would be in any standard 3PL contract. If the OP did some sort of deal with a friend of a friend, that could be a problem. No contract = no recovery unless the warehouse does the right thing, which of course they should.
A quick request for reimbursement of COG followed by a lawyers letter within a week would be the way to go. But for $300 I might skip the lawyer’s letter, if I wished to continue doing business with the warehouse.
Is this a public warehouse or a contract warehouse?
If they won’t reimburse you for this small thing, I would honestly just say lesson learned, and find a new warehouse to work with for your next shipment. You don’t want to spend 2 years in court suing them if they lose a meaningful amount of inventory next time if they don’t handle this situation properly.
The warehouse just emailed me some updates minutes ago that they contacted the UPS driver who picked up those cartons. The driver admitted that he did picked up 6 cartons, not 5. So he searched the terminal but still couldn’t find that 1 missing carton. Since it’s the UPS false, they should be the one who reimburse me, right? Here are my questions:
Even though UPS admitted misplacing the carton, they never given any documents as proof that they picked it up. What document should we ask this driver for proof of pick up, so we could use it for the reimbursement.
The warehouse should be the one who starts the reimbursement because they were there when the carton was picked up, right? I don’t mind doing it myself but I don’t know the proper steps.
Ok, for the warehouse to reimburse (which is not the case here), we use COGS. Now it sounds like UPS is going to be the one who does it. Do we still use COGS or something else?
How difficult is it to get an reimbursement from UPS?
This is an FBA inbound shipment right? Normally if there’s a problem with that you have to ask Amazon for reimbursement since it was shipped with Amazon’s UPS account. In my experience there, if there’s no pickup scan and something goes missing, any claim will be denied. From what you’ve said so far, it sounds like there’s no tracking information at all for the missing package.
If you try to initiate a claim with UPS, I think they’re just going to say that the shipper (Amazon) has to file the claim.
You could try calling UPS and talk to their claims department to see how or if you can proceed with filing a claim. If successful, COGS doesn’t matter here. By default a UPS package is only covered for $100 unless additional insurance was purchased and that’s the maximum you’ll receive if UPS is the one that pays for it.
I would say that in the future you should ask the warehouse to ensure all packages picked up have a pick up scan, but this might be a waste of time as I recently had a case where a package had some in-transit scans, but no delivery scan. I filed a reimbursement with Amazon and it was denied unless I could show proof of delivery.
Also, when was this shipped? Sometimes missing packages will show up after a few weeks.
I have an odd feeling that your 3rd party warehouse employee is pushing the fault to UPS because there is no way for yourself to verify the above statement with that particular UPS driver who picked up the packages. And, no way to provide proof to Amazon or UPS.
No scan = not picked up, or for better words, not insured.
Unless the package is randomly found somewhere inside UPS sorting and a UPS employee scans the label in the future.
Based on the information above, it seems your 3rd party warehouse does not want to reimburse since they stated the driver picked up the box.
Every case is different with UPS. Fairly easy when it is obviously UPS’s fault. Very difficult to impossible if there is no scans on the package.
Very good point. If the 3rd party warehouse actually gave 6 boxes to UPS and the driver missed scanning one of them, it is possible for another UPS employee to scan the box and move it through the UPS network.
Side note: I have been wondering why sellers post that Amazon FBA received an empty box with no contents. I am now wondering if 3rd party warehouses will ship empty boxes to avoid mentioning they lost the inventory. How would the seller actually know since they are not located in the warehouse to see the boxes.
Probably more common than you’d think. It’s not necessarily warehouse management involved either. Just like how retail store employees steal, warehouse employees steal too. Or someone could’ve been responsible for losing/breaking something and they covered it up because they don’t want to get in trouble. Every business that involves inventory involves shrink unless you personally are the only one who has access to the inventory.
In this situation, I believe UPS picked it up and it was lost somewhere in their system prior to it being scanned, as this situation has happened to me multiple times. This would be a good time for OP to have a discussion with the warehouse, and put things in writing, as to the warehouse’s responsibility for getting a pickup scan, and to set some guidelines for reimbursement in the future if anything else goes missing.
Wow, you’re smart. I completely didn’t think of this and believed the warehouse manager when I read her email. Hmm… I’m thinking about asking her to ask the UPS driver to scan the shipping label today. So I could wait a few weeks and later claim the loss from UPS. If the UPS driver actually admitted fault like she said, it’s only fair that he does this, right? If he refuses to do it, you could be right that the warehouse just pushed the fault to UPS and made up the story.
It’s really a common sense to make sure that the driver scan labels during the pickup. Unfortunately I’ve heard from many people that most drivers don’t do that. Yes, I should ask for the reimbursement guideline from this warehouse, even though I don’t think they would have any. They’re so unorganized and change employees frequently. I guess that’s the price I pay for low storage cost; $8.50 per pallet per month and $2 in and out for each carton.
