Dive Brief:
- Amazon will credit third-party sellers using its fulfillment services for any fee tied to low inventory levels during the month of April, the first month the new charge is in effect, according to a company announcement.
- The Fulfillment by Amazon fee applies to standard-sized products with less than 28 days of inventory relative to historical demand. Inventory above that level allows Amazon to more effectively distribute goods across its network and improve shipping speeds.
- Sellers can expect to see the credit on their account in May for the fees on units shipped between April 1 and April 30. Starting May 1, Amazon will charge the fee without a credit back.
Amazon's low inventory level fee, based on days of supply relative to historical demand
| Size | 0-14 days | 14-21 days | 21-28 days |
|---|---|---|---|
| Small standard | $0.89 | $0.63 | $0.32 |
| Large standard (Up to 3 lbs.) | $0.97 | $0.70 | $0.36 |
| Large standard (3 lbs. to 20 lbs.) | $1.11 | $0.87 | $0.47 |
Source: Amazon. Effective April 1, 2024. Fee is added for all shipped units of eligible products.
Dive Insight:
Amazon framed April as a transition period so sellers can see in real time if their inventory management actions will mitigate the fee, or if further adjustments are needed. The credit allows sellers to understand its impact on their businesses without a financial penalty.
"Our goal is for you to see the end-to-end experience, and understand how this may affect your business so you can further update your inventory management to maintain sufficient inventory levels, drive greater sales, and avoid the fee in the future," Amazon said.
Amazon first announced the low-inventory-level fee in December, after it shifted its fulfillment network from a national to a regional model. The transition has improved Amazon's delivery speeds and in-stock levels. However, the company is also looking to cover costs associated with distributing sellers' inventory to the right locations in amounts that match demand.
"If you are a small business owner using FBA, this means that you need to really stay on top of what’s happening with your stock levels," said Jagath Narayan, CEO of e-commerce logistics platform Ordoro, in a LinkedIn post about the fee. "Make sure you have real time visibility into your stock level and your shipping history. And make sure you restock your FBA warehouses on time to avoid these fees."
The fee doesn't apply to new sellers, products new to Fulfillment by Amazon or products auto-replenished by Amazon Warehousing and Distribution.
