Amazon Low-Inventory Fees Policy: Everything You Need to Know

FBA seller fee structures and policies from Amazon often revolve around encouraging seller behavior that benefits the company. Amazon's low-inventory fees policy is a prime example. From the company's perspective, FBA seller inventory occupies finite company real estate. Amazon doesn't want sellers to take up precious warehouse space with products that aren't selling. The company also wants sellers to maintain inventory for high-demand products to avoid fulfillment delays that might annoy shoppers.

Amazon wants to incentivize behavior that doesn't just benefit Amazon, but benefits sellers and customers as well. However, sellers have expressed concern that major events such as Amazon Prime Day or unexpected seasonal demand shifts can make it difficult to avoid low-inventory fees.

Amazon listened, and the company's recently implemented policies and guidance are meant to help FBA sellers maintain optimal inventory while avoiding Amazon fees. 

Read on for a full breakdown of what you need to know about these most recent changes.

New Amazon Low-Inventory Fees Policy Changes in 2024

Every year sellers can count on Amazon to release an updated list of seller fees. The new Amazon low-inventory fee policy changes for 2024 went into effect in April, with the full roll-out coming into effect in mid-May. Beyond an extension for the low-inventory fees transition period that has now passed, the changes covered three main areas.

• Fee Application Changes: Low-volume products make inventory management difficult. Amazon understands that a policy that is too broad could unintentionally hurt sellers who are doing their best to manage inventory and not simply falling behind demand. In response, the low-inventory fee will not apply to any products that have sold fewer than 20 units in the preceding week.
• Inbounding Delays and Credited Fees: What about when there is a delay in Amazon's inventory processing? The company will credit sellers any low-inventory fees that they incur due to excessive inbound and processing times caused by Amazon or Amazon-managed services. While sellers are expected to pay attention to seasonal slow-downs and other predictable patterns in how inventory is inbounded, they will not be penalized if an issue comes up that they can't control or account for.
• Prime Day Exceptions: In 2024, Amazon also provided an exception for the four weeks following Prime Day, when increased sales can create unpredictable inventory situations. For seller products included in Prime-exclusive Lightning Deals and Best Deals, the company provided a time-bound exception on low-inventory-level fees that applies for the four weeks following Prime Day.

Inside Amazon's Inventory Management Fees

Regardless of whether you are a veteran FBA seller or relatively new to the game, you can never know too much about Amazon's fee structures. Carefully navigating the company's fees and policies will not just keep your costs down, but can help you optimize your product strategies.

How does Amazon determine when you have low inventory?

Amazon determines low inventory based on its days of supply (DoS) metric. This isn't a hard number that never changes. The DoS metric predicts how long the current inventory will last based on recent sales velocity. If that velocity increases suddenly, the DoS can drop dramatically. To avoid fees, sellers should have at least 28 days of inventory supply at all times. To avoid being caught off guard, sellers can plan to maintain a higher inventory in the weeks preceding major sales events.

How does Amazon calculate low inventory fees?

Amazon calculates low inventory fees per unit, which can vary depending on the product size tier. The fees are assessed monthly and are based on the average daily inventory level of your products during that month.

How to Avoid Low-Inventory Fees

FBA sellers may not be able to completely avoid ever paying low-inventory fees while still optimizing inventory for their needs. However, with proper planning and careful attention, it is possible to avoid excessive low-inventory fees.

Inventory Forecasting and Demand Planning

Experienced sellers pay as much attention to their inventory stock as a broker on Wall Street does to movements in the stock market. Forecasting starts with collecting and analyzing all the data you can get your hands on. Most sellers use third-party or Amazon-supplied tools to help with this task and minimize the time they have to invest.

Keep a Buffer

Particularly preceding major sales events, like Prime Day or Black Friday an inventory buffer can both ensure you have sufficient supply to avoid fees, and that your customers are never kept waiting for an order to be fulfilled. There will never be a hard number that applies across the board, but you should include some kind of buffer in any inventory forecasting that provides a few days of extra supply to help you respond to spikes in demand.

Pay Attention to Inventory

Monitoring your inventory is a daily task. The more products and categories you expand into, the more difficult this becomes, and just as with forecasting there are inventory management tools that can help. Even with a good inventory buffer, you need to stay on top of fluctuations so that you can respond before stocks get too low.

Use the Best Tools for the Best Outcomes

Your inventory is a resource that you need to manage effectively as an FBA seller, but the most precious resource you have is your time. With everything that there is to keep track of, an FBA seller can quickly become overwhelmed. There's advertising, inventory, accounting, customer feedback, and the constant flow of different holidays and special sales events that need to be followed.

No matter how savvy you are with spreadsheets and calculations, trying to do all of that by yourself can be difficult even just starting out. The more your business grows, the more daunting the tasks. However, the right tools can not only help you manage as your business grows but help to ensure you see that growth.

As the only inventory and PPC optimization solution designed by MIT data scientists and former Amazon sellers, Mayan provides best-in-class tools to keep you ahead in the FBA game. With Mayan, you can streamline your inventory management, optimize your advertising campaigns, and boost your sales without getting buried in fees or excess inventory.

Ready to take your FBA business to the next level? Sign up today to discover how Mayan's data-driven approach can elevate your SEO strategy and take your FBA business to new heights.