Amazon Inventory Management: Minimum Inventory Level Metric

Amazon is making several changes to FBA fees that go into effect throughout 2024. One of those changes is the introduction of a low-inventory-level fee. The Minimum Inventory Level metric is designed to help sellers plan inventory levels more effectively to avoid the low-inventory-level fee.

Keep reading to learn more about the metric and the low-inventory-level fee and how it may impact your Amazon inventory management processes.

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 located 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.

Amazon Low-Inventory-Level Fee

The low-inventory-level fee went into effect on April 1, 2024. This fee applies to standard-sized products with consistently low inventory compared to customer demand.

Editor's note: Amazon announced that this fee will be charged for April but it will credit your account for April charges during a brief transition period. Learn more in this announcement.

The low-inventory-level fee applies 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 both 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.

This fee won’t apply to:

• 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)

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.

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 recently announced 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.

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 levels of inventory without overstocking. RestockPro by eComEngine offers accurate forecasting and restock suggestions based on over 70 data points to maximize your profits. You can manage suppliers, set product-specific reordering parameters, and much more with this flexible tool.

RestockPro also helps you avoid Amazon's low-inventory-level fee by maintaining minimum inventory levels. Try it today!