5 min read

How to Dodge Amazon's Low Inventory Level Fee and Stay Ahead in 2024

Written by
Vanessa Hung
Published on
January 25, 2024

April 1, 2024, marks a significant shift for Amazon sellers with the rollout of the Low Inventory Level Fee, a strategic initiative aimed squarely at sellers stocking standard-sized items. This isn't just another fee; it's a wake-up call to optimize your inventory or face the financial consequences. 

Amazon's latest move is predicted to reshape the landscape of fulfillment, penalizing understocking that's out of sync with buyer trends based on historical sales data spanning the last 30 to 90 days. 

Dive into our guide for an in-depth analysis of the fee's structure and actionable strategies to sidestep unnecessary charges. Adapt swiftly, transform your inventory management, and thrive in Amazon's ultra-competitive ecosystem.

What is the Amazon Low Inventory Level Fee?

The Low Inventory Level Fee will be assessed when both the long-term and short-term historical days of supply metrics for a product fall below 28 days. Historical days of supply is a measure based on the ratio of average daily inventory on hand to the average daily units shipped. If either the long-term (90-day) or short-term (30-day) historical days of supply exceeds the 28-day threshold, the fee won't apply.

Fee Assessment

The fee is added to the standard FBA fulfillment fee and varies based on both the size tier of the product and its shipping weight. The calculation method considers the longer of the unit or dimensional weight for large standard-size products. 

Here is a simplified breakdown of the fee structure:

Strategies to Avoid or Minimize the Low Inventory Level Fee

To avoid the Low Inventory Level Fee, sellers should focus on maintaining inventory levels above the 28-day threshold. Regularly monitoring the FBA Inventory page will allow you to view your historical days of supply metric and make informed restocking decisions. Consider enrolling in auto-replenishment through Amazon Warehousing and Distribution to potentially waive the fee.

Exemptions and Waivers

Amazon has outlined specific exemptions for the fee, including grace periods for new professional sellers and new-to-FBA products. Additionally, products that are auto-replenished by Amazon Warehousing and Distribution will not be subject to the fee.

Impact on Different Types of Products

The impact of the Low Inventory Level Fee will vary depending on the product type and sales volume. For products with consistent or predictable sales, maintaining a higher days of supply metric can help steer clear of the fee. Conversely, seasonal products and those with fluctuating demand may require more tactical inventory management to navigate the fee structure successfully.

Embrace Technology: Simplify Your Inventory Strategy

Say goodbye to guesswork and hello to effortless stock control. Utilizing tools that predict how much you need to keep on hand can save you from over or underordering. These tools look at your past sales and consider seasonal trends to guide you toward the right inventory levels, all tailored to dodge Amazon's impending Low Inventory Level Fee.

Real-Time Inventory Updates 

With user-friendly systems that send updates straight to your phone or computer, you'll never be caught off guard by low stock levels. These alerts can help you take quick action to reorder before fees kick in.

Effortless Amazon Compatibility

Opt for inventory tools that work hand-in-hand with Amazon. This means you won't have to juggle between different systems—it's all synced up to help you manage your stock smoothly on Amazon's platform.

Protect Your Profits with the Right Tools

The upcoming Amazon fee doesn't have to be a worry. With simple-to-use tech tools, keeping the right amount of stock becomes second nature, allowing you to focus on growing your business without the headache of potential penalties.

Final Thoughts

As Amazon continues to evolve its platform to ensure a seamless customer experience, the introduction of the Low Inventory Level Fee is a pivotal moment for sellers. It's a clear indicator that managing inventory is not just a routine task, but a critical strategy that can make or break your success in this global marketplace. With the right foresight and inventory management practices, you can turn what seems like a challenge into a competitive advantage. 

Stay ahead of the curve by keeping your stock levels healthy and your business robust against added fees. Ready to revolutionize your approach to inventory management? Act now, optimize your stock, and continue to excel in Amazon's dynamic selling environment. Start evaluating your inventory today and set the course for a more profitable tomorrow.

Frequently Asked Questions

1 - How can I check if my products are subject to the Low Inventory Level Fee?

To view your historical days of supply, navigate to your FBA Inventory page on Amazon Seller Central. This metric is calculated at the parent-product level, affecting all related child products.

2 - Are new sellers and products exempt from this fee?

Yes, new professional sellers are exempt for the first 365 days post first inventory-received date, while new-to-FBA parent products enjoy a 180-day exemption. Eligible products can be enrolled in the FBA New Selection for this benefit.

3 - What products are eligible for the Low Inventory Level Fee?

The fee applies only to standard-sized products whose historical days of supply is less than 28 days. Products meeting specific criteria, such as those under auto-replenishment by Amazon Warehousing and Distribution, are exempt.

4 - If my product goes out of stock, will I be charged the fee?

No, sellers will not incur the Low Inventory Level Fee if the product is completely out of stock in Amazon’s network.

5 - How can I minimize or avoid the fee?

Minimize or avoid the fee by maintaining inventory levels that exceed the 28-day short-term historical days of supply threshold. Additionally, consider enrolling in auto-replenishment programs.

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