How to Avoid the Amazon Low-inventory-level Fee

Amazon made several changes to FBA fees in 2024. It introduced a low-inventory-level fee for FBA inventory that falls below 28 days of supply. The FBA Minimum Inventory Level metric was added to Seller Central to help sellers plan inventory levels more effectively to avoid the Amazon low inventory fee.

Keep reading to learn more about how this may impact your Amazon inventory management processes. Plus, discover how RestockPro by eComEngine can help you manage your inventory effectively to avoid this fee!

What is the Minimum Inventory Level Metric?

The FBA Minimum Inventory Level metric uses machine learning to recommend the minimum number of units per product you should have available in Amazon’s fulfillment centers. It analyzes demand forecasts and replenishment settings when calculating your minimum inventory level.

Keeping your available inventory above the Minimum Inventory Level makes it easier to meet customer demand and offer faster delivery speeds since products can be distributed throughout Amazon’s fulfillment network to be closer to customers. In the announcement about this new metric, Amazon noted that sellers who maintain units above this level see an average of a 15% increase in sales over four weeks.

You can see your FBA Minimum Inventory Level metric on your FBA Inventory page in Seller Central. Watch the video below to learn how RestockPro includes this metric and the historical days of supply metric to inform your restocking decisions.

Amazon Low-Inventory-Level Fee

The Amazon low-inventory-level fee applies to standard-sized products with consistently low inventory compared to customer demand.

This fee is charged when Amazon estimates that there are less than 28 days of supply left for the product. The 28 days of supply is calculated based on long-term (last 90 days) and short-term (last 30 days) historical sales. The fee will only be charged if inventory falls below 28 historical days of supply according to both long-term and short-term historical sales. The historical days of supply metric is calculated at the parent-product level.

Because the fee is only charged when supply fails to meet estimated demand based on long-term and short-term historical supply, seasonal changes in demand and products with promotions such as Lightning Deals shouldn’t be subject to the fee. A short-term increase and subsequent drop in demand will impact the short-term historical days of supply metric. However, the long-term metric should prevent sellers from being charged due to short-term changes in demand.

For Prime Day 2024, Amazon is providing a time-bound exception on low-inventory-level fees for products included in Prime-exclusive Lightning Deals and Best Deals. This will apply for the four weeks following Prime Day, as inventory levels could be more unpredictable due to increased sales during the event.

The Amazon low inventory fee doesn’t apply to:

• Products that have sold fewer than 20 units in the past seven days
• 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 must be enrolled in FBA New Selection to get this benefit.)
• Products that are automatically replenished by Amazon Warehousing & Distribution (AWD)

You'll receive credit by the 15th of the following month for fees incurred because of excessive inbounding and processing times caused by Amazon or Amazon-managed services.

Amazon low-inventory-level fees are not charged when a product is out of stock. The low-inventory-level fee will be added to the FBA fulfillment fee for all shipped units of eligible products. Fees are determined by a product’s size tier and shipping weight. See low-inventory level fee rates for specific cost details.

SellerPulse by eComEngine includes a low-inventory-level fee alert, which is sent when any of your SKUs falls below 28 days of supply.

Amazon Inventory Management

Managing your inventory effectively is a constant balancing act. You don’t want too much inventory at FBA, because it will cost you storage fees and possibly removal/disposal fees. Too little inventory means you’re at risk of stocking out and missing out on sales – and subject to the Amazon low-inventory-level fee.

AWD offers an auto-replenishment feature that allows you to send inventory to FBA warehouses automatically. However, Amazon inventory management still requires careful attention and a thorough understanding of the demand for your products. Seasonality, trending TikTok videos, and supplier changes can all significantly impact your sales.

Discontinuing a Product and Seasonality Considerations

If you plan to discontinue a product, sell through your inventory within six weeks to reduce or avoid the low-inventory-level fee. Amazon announced in May 2024 that the fee will not apply to products that have sold fewer than 20 units in the past seven days, meaning you have a lower risk of being charged for end-of-life inventory as the sales volume decreases.

Plan for seasonal items by ensuring you have enough inventory at FBA at least four weeks before your peak season begins to increase your historical days of supply metric. If you sell a seasonal product year-round, consistently send inventory to Amazon to maintain more than 28 days of inventory supply for sales after peak season. If you don't want to sell your product after your peak season, sell through the inventory within six weeks after it to avoid the low-inventory-level fee.

Related reading: Minimize FBA Fees with SellerPulse Inventory Planning

The Minimum Inventory Level metric should be considered along with your other inventory tools and metrics, including:

• Inventory Performance Index (IPI) score: Your IPI score shows how efficient your Amazon inventory management processes are, considering your in-stock inventory, excess inventory, stranded listing, and sell-through rate. Amazon is updating the IPI score to include the new Minimum Inventory Level metric; maintaining this level will reflect positively in your IPI score. Your current IPI score is on the FBA Inventory or Inventory Performance dashboards in Seller Central.
• FBA capacity limits: Your IPI score influences your FBA capacity limits. Your FBA storage capacity limits should allow you to carry enough inventory to avoid the low-inventory-level fee, as long as you aren’t using your storage capacity to hold excess inventory.
• Historical days of supply: Beginning on April 1, 2024, the low-inventory-level fee will apply when both long-term (last 90 days) and short-term (last 30 days) historical days of supply are below 28 days. See your historical days of supply on the FBA Inventory page in Seller Central.
• Restock recommendations: Amazon’s restock recommendations include recommendations for ship-by dates and replenishment quantities for your next inbound shipments to help you maintain the recommended Minimum Inventory Level.

Download our free IPI checklist to learn more about your IPI score and what you can do to improve it.

Find Your Inventory Balance

You can also use software designed for FBA sellers to maintain the appropriate inventory levels without overstocking. RestockPro offers accurate forecasting and restock suggestions based on hundreds of data points to maximize profits. You can manage suppliers, set product-specific reordering parameters, and much more.

You can see your historical days of supply and Amazon's recommended minimum inventory level in Restock Suggestions to facilitate inventory decisions. Amazon calculates the historical days of supply at the parent ASIN level, so you'll want to look at each child ASIN carefully when determining reorder quantities.

RestockPro helps you make smarter FBA inventory decisions by providing the details you need in one place. Try it today!