Podcast: Play in new window | Download
Subscribe: TuneIn | RSS | More
Introduction
Welcome to the E Business Online blog! In this post, we will be discussing the new Amazon FBA low inventory level fees and how they could potentially impact your business. As an agency specializing in helping businesses sell their products online, we understand the challenges and frustrations that can arise when dealing with fees and policies set by e-commerce giants like Amazon. In this article, we will break down the details of the low inventory level fees, explain how they are calculated, and provide some tips on how to navigate this new policy. So, let’s dive in!
Understanding the Low Inventory Level Fees
The low inventory level fee is a charge implemented by Amazon for sellers who do not have enough inventory of their products in the Amazon FBA warehouse. FBA stands for “fulfillment by Amazon,” which means that Amazon handles the storage, packaging, and shipping of the products for sellers. If a seller’s inventory falls below a certain threshold, Amazon will apply a fee on each unit sold until the inventory is replenished to an acceptable level.
Many sellers have expressed their frustration with this fee, as Amazon already charges fees for storing excess inventory. Now, they are adding an additional charge for low inventory levels. Additionally, Amazon has increased the cost of sending inventory to their warehouses by requiring sellers to send products to multiple locations.
However, there is some good news for sellers. Amazon has decided to listen to the feedback and outrage from sellers and has made a rare move to backtrack on this fee. For the month of April, Amazon will charge the low inventory level fees as planned, but they will rebate these fees back to sellers in May. This gives sellers a 30-day test period to understand how the fee works and adjust their inventory management accordingly.
How the Low Inventory Level Fees are Calculated
To determine if a seller will be charged the low inventory level fee, Amazon calculates the sales velocity of a product and estimates the necessary inventory based on two time segments: a running 30-day period and a running 90-day period. Amazon wants the inventory to cover 28 days, or four weeks, for both time frames.
If a seller’s inventory can cover more than 28 days based on the 30-day and 90-day averages, no low inventory level fees will be charged. However, if the inventory falls below the 28-day coverage threshold on both time frames, the low inventory level fee will be applied.
It’s important to note that the fee is calculated at the parent level, not the individual child level. This means that if a product has variations, such as different colors, Amazon will aggregate the sales and inventory data for all variations under the parent product. This can sometimes lead to inaccurate calculations and fees being charged even when there is enough inventory of certain variations.
Checking Your Inventory Status
To check if your inventory is at risk of incurring the low inventory level fee, you can navigate to your FBA inventory page on Amazon. There, you will find a filter for low inventory level fee, which allows you to see which products are exempted or will have the fee applied. By reviewing this information, you can identify which products may require additional inventory to avoid the fee.
Understanding the details of the low inventory level fee is crucial for sellers to effectively manage their inventory and avoid unnecessary fees. By regularly monitoring your inventory status and taking action to replenish low stock, you can minimize the impact of these fees on your business.
Ways to Mitigate the Impact
While the low inventory level fees may seem burdensome, there are some strategies you can employ to mitigate their impact on your business. Here are a few tips:
1. Utilize Amazon Warehousing and Distribution (AWD)
If you are utilizing Amazon’s warehousing and distribution service, where your products are shipped in bulk storage to Amazon, you may be exempt from the low inventory level fee. This can be a helpful solution for sellers who regularly replenish their inventory and have automatic replenishment set up.
2. Take Advantage of the “New to FBA” Program
For sellers who are introducing a new product to fulfillment by Amazon for the first time, there is a temporary exemption from the low inventory level fees. This can provide some relief for sellers who are just starting out or adding new products to their catalog.
3. Stay Proactive with Inventory Management
Keeping a close eye on your inventory levels and regularly replenishing stock can help you avoid falling into the low inventory threshold. By staying proactive and anticipating the demand for your products, you can ensure that you have enough inventory to meet customer orders and avoid incurring additional fees.
Conclusion
The new Amazon FBA low inventory level fees may initially seem like a burden for sellers, but with careful inventory management and proactive strategies, you can navigate this policy change effectively. By understanding how these fees are calculated, utilizing Amazon’s warehousing and distribution services, and staying on top of your inventory levels, you can minimize the impact of these fees on your business. Remember, it’s important to regularly monitor your inventory status and make adjustments accordingly to avoid unnecessary charges. As always, our team at E Business Online is here to support you in selling your products online, whether you need assistance with inventory management, optimization, or scaling up your sales. Feel free to reach out to us for any further guidance or support. Happy selling!
Made with VideoToBlog
