Someone explain the Low Inventory Fee to me like I am 5

[ASV_Vites]

No different from the transfer fee.

Amazon can just decide your stuff is going to 1 place and will need to be transferred on your dime at will.

There are no guarantees. Something I am talking to SAS about on our call tomorrow. Not like she’s going to be able to answer any of my questions since she got notice on the increases the day before it was announced but I am curious on what the thinking is over there on this issue.

[lake]

I assume this fee is intended to keep products which are not mass market, provided by sellers who are not mass market sellers out of the FCs unless the seller pays a premium.

It is not just FC transfers. it is higher, on average, transportations costs which is likely to motivate this fee.

Product in 5 FCs will on the average cost Amazon less in transportation to a buyer than product in one FC.

I sensed I was no longer welcome as an Amazon seller due to what I offer. More sellers are going to feel unwelcome in the future.

Those who meet the mass market model can analyze whether to buy more for inventory or pay the fee.

Those of us who sell long tail, used or collectible are no longer desirable.

[ASV_Vites]

This writing has been sadly on the wall for the last couple of years. Amazon just wrote it with a thick black sharpie this time…

[lake]

I am assuming that you have been managing your inventory in the FCs.

In your case, it appears that any issue you face will be having Amazon set your inventory targets for you and having to meet them or be penalized.

Amazon’s number crunchers know what benefits them most, you will need to crunch your numbers and decide what benefits you.

I suspect you will survive so long as your partners/suppliers can adjust their production schedules to meet the goals and you have adequate working capital. Assuming that you can add another set of numbers to crunch to your schedule.

[ASV_Vites]

From where I sit at the moment, not actually experiencing reality yet, because let’s face it nobody really knows how this will or won’t work - I see no issues for us.

We can turn and burn production at will. Normal lead time for my industry is 90 days. We turn it around in a week or less (not including testing). That tags on another week but bulk can be sent out immediately out of the tablet press / encapsulation machine for assay and cut a couple days off. Bulk doesn’t go to packaging for a few days anyway based on scheduling.

We do our own micro testing in house on the FG’s.

We used to do our own Assaying too but it’s actually cheaper to send that out these days and more widely acceptable as it’s a 3P doing it.

Actual shot from our lab

[Sundance]

new details now posted on Amazon

Low-inventory-level fee further explained

https://sellercentral.amazon.com/seller-forums/discussions/t/aa9f98e5-fa91-4949-af8f-6cf918c86a77

[OttosMops]

Congrats on having established such a fine operation.

[VTR]

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.

[papy]

@Sundance

Low-inventory-level fee further explained

https://sellercentral.amazon.com/seller-forums/discussions/t/aa9f98e5-fa91-4949-af8f-6cf918c86a77

Full text

Low-inventory-level fee further explained

by Bryce_Amazon
47 minutes ago

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.

[ASV_Vites]

That’s a great point!

I’m going to bring that up on my call with SAS

“Will we be punished for Amazon’s ineptitude” Sounds like a great question to ask

During the October debacle this year, it took 7 weeks to just show LTL shipments as delivered, never mind the actual checking in / transferring. Those shipments have yet to be fully transferred as of this morning.

[GGX]

I like how their crappy example shows a SKU with over 365 days of inventory

[Sundance]

I posted your question to Bryce lets see if they respond.

[Muse]

I have a follow-up question.

Is “Days of Supply” calculated by how many units of an ASIN we, the individual seller typically stock and sell in any given time,

Or is Days of Supply based on how many units sell on Amazon as a whole?

If I only ever stock 1 copy of any given ASIN during the Days of Supply time period, will my Days of Supply be 1?

Will the Low Inventory Fee be applied to ever 1 unit ASIN seller?

I’ve already assumed yes, it will, but I want confirmation.

[VTR]

@Sundance

I posted your question to Bryce lets see if they respond.

HAHAHAHAH. Have a better chance of getting a useful response from my cat.

[Muse]

For most of 2023, half of my SPD shipments have taken 8 weeks to receive and finish all the FC transferring. I’ve had shipments sit in “Delivered” status for over 3 weeks.

[Muse]

It’s nice to be here and see you! This is such a great forum.

[Muse]

I manage my inventory really well; thank goodness I learned how to do that before now!

75% of what I ship in sells within 90 days of full receiving (post FC transfer).

85% of what I ship in sells within 6 months.

I’ve never used more than 40% of my standard Capacity Limit.

My ASPs are pretty high for both “types” of used book inventory I sell. I can afford both the new inbound fee structure and even the LIF on most of my inventory. About 25% of my (lower priced) inventory could equal or earn higher net on other venues once the inbound & LIF are in place, so I will explore moving that off Amazon and see if it makes sense.

I know this will take out a lot of low margin sellers, but that is always a danger, it’s why I stopped trafficking in that type of inventory.

Also, it’s nice to see you here.

[ASV_Vites]

@ASV_Vites

I’m going to bring that up on my call with SAS

So I just got off my call with SAS.

Specific points made on our side were these:

1. How is Amazon going to handle Low Inventory Fees when the inventory is in their hands but not truly available? Example given was the multiple pallets we sent in Oct that took 7 weeks to be delivered and still aren’t fully transferred. Nearly every one of our listings fell below 28 days because of that and we would have been hit with literally thousands of dollars in fines if this was April of 2024.

2. If the splits aren’t offered on inbound shipment creation, how can Amazon legally charge 27 cents a unit to move them around?

The response - Great points, the SAS team is going through a 3 day training later this month on the new programs to help guide sellers down the correct path and my specific questions will be asked and answered and she will get back to me. Blah Blah Blah

Translation - I learned nothing and don’t expect to learn anything valuable. Oh and Amazon probably doesn’t even know.

[Tried_Tested]

Why are sullying the name of the feline species by comparing?

[GGX]

I guess you could always cut them loose and spend the $1600 on unexpected FBA fees instead.