Low-Inventory-Level Fees

In addition to the recently added Inbound Placement Fee, Amazon is taking further steps to minimize their internal costs related to order fulfillment, by implementing Low-Inventory-Level fees starting on April 1st.

Why is this change happening?

When there aren’t enough units in fulfillment centers to maintain inventory level across a variety of fulfillment centers, Amazon ends up spending more money to move inventory further, which can result in customers receiving orders slower. To encourage more substantial inventory levels, additional fees will be assessed per unit sold if your Historical Days of Supply is under 28 days.  This fee scales with product size and weight, as well as your Historical Days of Supply level.

What is ‘Historical Days of Supply’?

In short, Historical Days of Supply is simply your days of coverage:  At the current sales pace, the number of days of inventory you have at a given time.

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Amazon will use two Historical Days of Supply Metrics to determine eligibility of your products for additional fees, a 90-day (Long Term) and 30-day (Short Term) metric. If your product is below 28 days of coverage on BOTH metrics, you will be charged the additional fee, with the scaling based on the greater of the Long and Short term metrics.  If you are above 28 days of coverage on either the 90-day or 30-day window, the fee is waived.

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These metrics are not measured by ASIN, but rather by Parent ASIN.

Viewing Historical Days of Supply:

On the FBA Inventory Tab, there is now a column for Historical Days of Supply, which shows the value for the Parent ASIN. Here, you can see that despite the current inventory level showing as ‘Healthy’, this product will still be assessed the additional Low-Inventory-Level fee due to the short term and long term Historical Days of Supply both being below 28 days. This product will be assessed additional fees until the Short Term level increases above 28 days average.

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Here’s another example for a product, currently out of stock, but that would not be assessed the Low-Inventory-Level Fee despite having a low Short Term Historical Days of Supply, because the Long Term level is above 28 days.

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How to best avoid this fee:

We typically recommend between 45 and 60 days of inventory coverage.  This is still our recommendation, though we’d lean more towards the 60 day level, especially if you have delays in acquiring inventory from suppliers or frequently experience delays in shipping or inbounding.

If you currently have products that are below 28 days of Short Term Historical Days of Supply, we’d highly recommend sending in sufficient inventory as soon as possible to start alleviating the issue and remove the additional fees.

Additional Questions?
Low-Inventory-Level Fee Page from Amazon

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