How will the Low-Inventory-Level Fee Work?

Everyone’s pondering the new Low-Inventory-Level Fee coming April 1st but no-one’s explaining how it works. 

My first thought was “How will this affect seasonal products which I only hold for short periods?”  And "Will Amazon penalise me for running out of stock?" 🤔

The great thing is, NO!

But, let's understand the fee first. This fee is determined by your product's dimensions and weight, akin to the FBA fulfillment fee, and it activates for each unit sold once your inventory drops below a 28-day threshold.

For Amazon to apply this fee, they analyse your sales data from the past 90 days and the most recent 30 days, both indicating that you're beneath the 28-day benchmark. Amazon wants at least 4 weeks of cover. To offset this, they are reducing monthly storage fees by about £.05 a month. Helpful! 

This implies that abrupt sales surges, such as during peak holiday seasons, won't work against you!

However, a twist might occur when Amazon assesses your account health through an IPI score. Traditionally, maintaining a favourable score meant keeping between 12-30 days' worth of stock on hand. So it will be interesting to see whether this will impact the established IPI scoring mechanism!

ANYWAY - The REAL and much bigger question is...

How much money do you think you're currently losing if you aren't keeping items in stock?  Personally my manufacturers go out of stock all the time due to input-supply issues so I am a bit concerned as I don't have the cashflow to stockpile product. 

For some sellers this is gonna be killer as sometimes inventory levels are controlled by their suppliers. 

I think that the real winners from this will be manufacturers, brands and distributors who can take advantage of the situation as their supply chain won't be as restrictive as their resellers. Ever more reason to try to enter arrangements as high up the food chain as possible.

Are you all prepared for this forthcoming update?

#systems2scale #amazonfbaseller #amazonfbacoaching  #stocklevels #amazonfees  #amazonfbatips #inventorymanagement