Low-inventory-level fee further explained
With the recently announced updates to US referral and Fulfillment by Amazon fees, we wanted to share additional details on how the low-inventory-level fee is calculated, and where you can go within Seller Central to review your historical days of supply.
Why have a low-inventory-level fee?
When sellers don’t carry enough inventory, we are unable to distribute products as effectively and efficiently across our network, which slows delivery speed to customers and increases shipping costs.
How is the low-inventory-level fee calculated?
The low-inventory-level fee is based on historical days of supply, which is the product’s inventory levels relative to actual historical sales.
Amazon will only charge the low-inventory-level fee when the historical days of supply metric are below 28 days. We will calculate the historical days of supply metric over the short-term (last 30 days) and long-term (last 90 days) and only assess the fee if both are below 28 days. This provides flexibility, as you can avoid the fee through short-term improvements in inventory positions or through long-term management of inventory levels.
The historical days of supply metric is calculated at the parent-product level. For parent-products with less than 28 days of historical supply, the low level inventory fee will be added to the FBA fulfillment fees.
Here is an example of how the historical days of supply formula is calculated for a sample product:
In this example, this product would not incur the low-inventory-level fee, because the long-term historical days of supply is greater than 28 days (in the example above it’s calculated out to 42.0), despite the short-term historical days of supply being less than 28 days.
How do I find a product’s historical days of supply on the FBA Inventory page?
To view the historical days of supply at the product level for your inventory, first go to the FBA Inventory page within Seller Central. There, you will find a column titled “Historical days of supply ” with the number automatically calculated for each individual product. This column will display the greater of the short-term (past 30 days) and long-term (90 days) metric as described in table above:
For every product where the historical days of supply is greater than 28, the low-inventory-level fee will not be applied. Hover over the details link to preview the calculation of the historical days of supply for a given product:
From the FBA Inventory page, search your inventory for specific SKUs or ASINs to see the historical days of supply for any given item. Using the historical days of supply column, sort your inventory in ascending or descending order to easily identify products where the fee will be applied.
Hover over the information icon at the top of a page for a reminder of how the fee is calculated:
Frequently Asked Questions:
Which products are eligible for the low-inventory-level fee?
The low-inventory-level fee only applies to standard-sized products if the historical days of supply (both long term and short term) is less than 28 days.
The low-inventory-level fee won’t apply to the following:
• New professional sellers, for the first 365 days after the first inventory-received date.
• New-to-FBA parent-products for the first 180 days after the first inventory-received date. Sellers need to be enrolled in FBA New Selection to get this benefit. For more information, including seller and product eligibility, go to FBA New Selection.
• Products that are auto-replenished by Amazon Warehousing and Distribution.
How can I minimize or avoid the low-inventory-level fee?
For products where inventory is manually replenished by sellers, you will have the opportunity to minimize or avoid the low-inventory-level fee by making recent improvements in inventory levels. You can do so by sending in additional units such that the product’s short-term (last 30 days) historical days of supply exceeds 28 days. If a product’s short-term historical days of supply is above 28 days, the low-inventory-level fee won’t apply. Go to FBA Inventory to identify products with low inventory and recommended number of units to send to Amazon.
Alternatively, you may enroll your products in auto-replenishment by Amazon Warehousing and Distribution. Products that are auto-replenished by Amazon Warehousing and Distribution are eligible for a low-inventory-level fee waiver.
For further reading, and additional FAQs, go to Low-inventory-level fee.
Seller_2LQMd7u0WyTlL
How does Amazon's engine handle division by zero? Let's assume that the average daily inventory level is 1 in 30 days, and the average daily shipped number of units is zero, because nothing has shipped, wouldn't that lead to division by zero and crash the system?
Seller_AXC06kcsKI1qG
I read this question from a TOP site for sellers...
The other concern is being hit with low inventory fee because Amazon FC receiving is broken. I have had LTL shipments sit for almost 30 days before.
I can see taking a hit on this when FC performance goes into the toilet.
______________________________________________
So by slowing down receiving Amazon could technically force sellers into more fees.
So how does Amazon address this concern?
Or is this LOW INV FEE just another big wig's idea that wasn't thought through enough?
@Bryce_Amazon
Seller_nRFmxiQg4EGrw
Gee, when I saw the title "further explained", I was really hoping for some actual further explanation; this seems to be nothing more than a copy-paste of the news item that everyone has already been talking about.
I see nothing in here addressing things such as seasonal items (will someone selling Halloween decorations get hit with the fee in November if they don't send in more stock?) or items that will likely never be replenished (selling out end of inventory, single or low qty items such as used books, etc.)
A "worst-case" reading of this might imply that anything other than high volume items, regularly replenished, are no longer suitable for FBA.
Seller_Qvkq0XIyYVeNa
What about ASIN's with multiple sellers? Will the minimum inventory requirement be seperated equally?
For example:
If there's an ASIN with 50 sellers and the Minimum Inventory requirement is 500 units, are all 50 sellers required to have 500 units available to avoid the fee?
Seller_6fkdd0PqOCH4B
"further explained"
Cool, I think we're all waiting with bated breath for you to offer this "further" explanation rather than just copy-paste the already published information as you have here?
For example, you'd be more than welcome to address the conflict with Sell-Through I pointed out here:
https://sellercentral.amazon.com/seller-forums/discussions/t/04665c84-8ab5-4bb9-9212-ae0b68055d22
Are you really going to punish "Excellent" performance or did I misunderstand something?
Seller_PgPO1RrhvIiPA
Seller_PgPO1RrhvIiPA
Ridiculous operant conditioning and data mining across multiple levels at the cost to Amazon sellers and other mega-to-small businesses, on an Amazon marketplace-level scale.
If we can't maintain the correct level of sales volume for high-volume products, Amazon will punish us with the low-inventory-level fee until the formula readjusts itself to under 28 days. It protects your own costs, but not ours In times of supply chain uncertainty,
Sellers are already providing invaluable IPI, logistics, and storage data across all categories, but you're capitalizing on it and dinging us if products' inventory levels aren't maintained "perfectly" - have you considered paying us for selling well instead? This could've just stayed in our IPI, which is hard enough to maintain for most sellers and almost all seasonal sellers.
There's already high-inventory-level fees the last 4-5 months of the year, with the additional make-or-break risk of lost shipments due to Q4 inbound overflow (especially for new sellers). I can see lower fulfillment costs for some changes, with benefits to sustainability, but this low-inventory-level fee is just a way to skim any and every SKU available to sales. Like a thin layer of impending tar.
Seller_Sram36TnVt73c
i am constantly amazed at the concocted fees we get charged.
And now this.
what's next? plastic density fee for plastic products?
Color fees for red items?
Lithium Battery Fees for items with batteries? Oh, wait, you got that one already....how about a fee for items that DON'T have batteries? No one has dont THAT before...
I have to wonder how complicated all of these fees and policies have become to the point of non-comprehension for someone new trying to sell here...even the RETURNS process has become unnecessarily complicated!!!
Seller_iobipI6xASRkh
@Bryce_AmazonCan you explain this, then? I have a lot of these. They are our products. A few are slower sellers and we need to pull inventory back after the holidays, but it makes no sense why they want 13 when we sold 1 in the last 3 months.
Seller_kP2ObpiacrM8G
I had to have ChatGPT explain it to me:
Based on the information provided, if you have over 28 days of supply, the low-inventory-level fee will not be charged. The fee structure is specifically designed to apply only when inventory levels are below the 28-day threshold. Here's a brief overview:
0-14 Days of Supply: Highest fee charged.
14-21 Days of Supply: Moderate fee charged.
21-28 Days of Supply: Lowest fee charged.
Over 28 Days of Supply: No low-inventory-level fee applied.
The fee is intended to encourage sellers to maintain sufficient inventory levels, as low inventory can impact the ability to distribute products efficiently, leading to slower delivery times and higher shipping costs. By maintaining more than 28 days of supply, you align with Amazon's goal of efficient distribution and customer service, and thus, avoid this specific fee.
Small Standard Size Products (Up to 16 oz)
0-14 historical days of supply: $0.89 per unit
14-21 historical days of supply: $0.63 per unit
21-28 historical days of supply: $0.32 per unit
Large Standard Size Products (Up to 3 lb)
0-14 historical days of supply: $0.97 per unit
14-21 historical days of supply: $0.70 per unit
21-28 historical days of supply: $0.36 per unit
Large Standard Size Products (3+ lb to 20 lb)
0-14 historical days of supply: $1.11 per unit
14-21 historical days of supply: $0.87 per unit
21-28 historical days of supply: $0.47 per unit
Understanding the Fee Structure:
The fee is tiered based on the historical days of supply. The fewer days of supply you have, the higher the fee per unit.
"Historical days of supply" refers to the average number of days your inventory levels can meet customer demand based on past sales data.
The fee is also dependent on the size and weight of the product, with different rates for small standard size items (up to 16 oz), large standard size items up to 3 lb, and large standard size items between 3 lb and 20 lb.
Implications for Sellers:
Sellers with inventory levels that fall within the 0-14 days range will incur the highest fees.
Maintaining inventory levels that fall within the 21-28 days range results in the lowest fees.
This fee structure incentivizes sellers to maintain higher inventory levels to avoid higher fees and ensure better availability for customer orders.
