"Reserved Inventory" Reduces "Units On Hand" Creates "Low Inventory", and "Low Inventory Fee"

Fulfillment by Amazon Deciphering Amazon’s inventory management
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1

As I have mentioned before, my actual sales (using zip codes from Amazon fulfillment reports) are heavily weighted to the East Coast and Midwest, with sales to states “West of the Rockies” only 17% of the total for the last 5 years or more.

Despite this, Amazon persists in making me pay UPS to ship 40% or so of my shipments from the East coast to the far West (California, Nevada, Arizona), only for them to ship those units back to the East coast again for sales. Its annoying, but there seems nothing I can do, other than experiment with AWS, and see what the lag is between shipping and getting those units into the “sellable” inventory.

BUT IT GETS WORSE

The units in “FC Transfer” used to be part of one’s “available for sale” inventory. But these units are apparently no longer considered “on hand”. The boilerplate response from the AI lack-of-support agent is:

Status: Pending FC Processing

We determined XXX unit(s) have been sidelined at the fulfillment center. These units have been sidelined at the fulfillment center for additional processing, such as transshipment, verification of item dimensions and weight or pending investigations. FC processing can take up to 3 days to complete.

…and of course, this reduces the “on hand” total just below the threshold to allow them to charge a “Low Inventory Fee”. The math to work this out is tricky, as one needs to work out the moving averages of weekly sales (and hence monthly averages thereof, as that’s how amazon calculates it) vs monthly average “on hand” units using this new way of counting, which is not under the seller’s control, but under Amazon’s.

I’m not sure how many months of inventory I need to cram down Amazon’s maw to avoid the “Low Inventory Fee”, but their sudden and unexpected change to the definition of “in stock units AVAILABLE FOR SALE” is frustrating this effort. This apparently happened while I was not looking, or their announcement of this change was buried under some other self-congratulatory BS that made my eyes cross, and prompted my spleen to jump up and strangle my optic nerve to cut off vision and protect my brain from exploding. (Or imploding. Either way, a messy thing.)

Does anyone have a handle on this nonsense? It looks like tracking what Amazon does with one’s inventory is now more important than it has ever been, as I could have 2,000 units at Amazon, and only 500 “on hand”. Its frustrating.

2

Is is possible to increase west coast sales and thereby decrease the need for movement of inventory back eastward? Or is this a product that is by its nature only desired on/near the east coast?

I’m thinking that you might spend some cash on west coast advertising, but end up spending less on low inventory fees. And even if the expenses were a wash, your net sales would go up.

PS: It sounds like you have a very useful spleen. Does it have a web page? I would like it to train mine.

3

If you send more, then you increase inventory storage fees, or is that their goal? Tracking FBA does not come easy to me. But I bet the unavailable reserved still counts toward storage fees.
Damned if you do, damned if you don’t.

This is the foolproof AI bots. :angry:

4

Storage fees are a LOT lower than the “low inventory fee”, so not a problem, but allocation of resources is insane. Last year, their algorithm prompted such large shipments that this very seasonal product peaked sales in August, and then needed no more shipments until the following February.

There is no part of the equation that factors in consideration for seasonal products, so one’s sales are decreasing in the USA on Amazon, while they are exploding at dealers in the southern hemisphere, which is where a prudent businessman would ship in August and September. But the “30 day average” goes down slowly when one has a large spike in sales.

5

There just aren’t as many customers west of the Rockies, and never will be. The product is very niche.

6

UPDATE:

A reply from Amazon seller support:

“…these XXXX units are reserved in “FC processing” status because they aren’t required to fulfill immediate customer demand at this time. However, the units are not sidelined and will be moved automatically to available status as needed, to ensure there is adequate available inventory to meet customer demand.”

So, they have, arbitrarily and capaciously classified some of what should be “on hand” inventory as “FC Processing” for no reason other than “they aren’t required”, yet that reclassification lowers my “on hand” total just low enough to make me pay a “low inventory fee” on each unit sold.

Thank cranking sound you hear in the background is the rangefinder on a howitzer being zeroed in on a certain spot in Seattle, readying to fire a cease and desist demand to Amazon legal.

Anyone selling FBA should look at this, as inventory in “FC processing” is clearly “on hand inventory”, it is not the seller’s fault that Amazon told the seller to send it to the wrong FC.

7

Sounds to me like a cash grab.

Create the issue
Charge for the issue
make the issue worse
Charge more for the issue.

Profit off the backs of the sellers.

8

We have noticed that this only happens when we select a single destination for a large shipment and not when we distribute to 5 receive centers for the same item. It is usually cheaper for us to ship from Los Angeles to San Bernadino and pay Amazon to distribute it, but each time ALL the inventory received goes into reserved and sits there for at least a week when it pops up at different FC’s.
When we ship to 5 different receive centers, the inventory is usually available in a day or two. I think Amazon is running break bulk facilities that do not have any storage or access to the rest of the outbound system which is why this only seems to happen to our large LTL or FTL shipments to one facility.

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Here we are over a month later…

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9

:grimacing:

A significant part of my sales are seasonal, 2 different product seasons. It is tough balancing them in FBA.

10

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UPDATE - YES, ITS EVEN WORSE THAN THAT

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Here is the latest missive from Amazon- I find their candor refreshing, but the situation is hopeless:

"After thorough investigation with our internal team, we have determined that the bound units are currently on the floor of a fulfillment center that is closed for processing due to a building upgrade. The units will be unbound and returned to available status once the construction is complete. Additionally, we have confirmed that no defects were found for these units and the item matches the detail page.

We understand your frustration regarding the Low Inventory Fee charges. However, units in “FC Processing” status are temporarily unavailable due to operational circumstances beyond seller control, such as facility upgrades. Once the building upgrade is completed, these units will automatically become available and will be counted toward your on-hand inventory for fee calculation purposes."

So, to summarize, Amazon did this themselves, and are charging me a low inventory fee because of their unilateral choices.

To summarize the summary, The Seller is held liable for Amazon’s inept planning.

11

Which Fulfilment Center is that?

12

My best guess would be LIT1, because reports keep surfacing in the NSFE & related discussion forums of similar situations.

It appears that massive amounts of goods are still sidelined more than 6 months later (the FC was closed 102225); the FMT-CMT’s KJ_ has stated publicly (link, 112325 NSFE post) that Amazon will refund any Storage Fees for such impacted products - but reports have also surfaced of 1P & 3P alike not finding that to be as automatic as KJ has implied (that linked post was hardly the only response s/he provided on the matter).

13

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UPDATE:

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They keep changing stories - now that inventory at issue is NOT being held anywhere, it is merely in “FC Transfer”. But if that were true, then the status would be “FC Transfer” not “FC Processing”.

So, they are overtly lying.

Anyone have any ideas on how to deal with liars when the only choices are “Chat” or opening a fresh case, referencing the prior case number? They are far to quick to mark a case “answered”, and thereby force one to waste one’s time on “chat” with helpless people who know little or nothing about the specifics.

14

And what is this mess? Is it almost saying that you won’t be charged (or will be reimbursed for) low fees “beyond seller control”?