Amazon has introduced a new fee targeting low inventory levels, but in a supportive gesture, the company is offering a one-month credit to third-party sellers affected by this charge. This initiative is designed to ease sellers into the new system, allowing them to refine their inventory strategies without immediate financial repercussions.
Fee Structure and Seller Credit
The fee, applicable to standard-sized products with less than 28 days of supply, is intended to optimize Amazon’s distribution capabilities and enhance delivery efficiency. Sellers will see a credit in May for fees incurred on units shipped throughout April. From May 1st, the fee will be enforced without credits. The fee schedule is as follows:
- Small standard: $0.89 (0-14 days), $0.63 (14-21 days), $0.32 (21-28 days)
- Large standard (Up to 3 lbs.): $0.97 (0-14 days), $0.70 (14-21 days), $0.36 (21-28 days)
- Large standard (3 lbs. to 20 lbs.): $1.11 (0-14 days), $0.87 (14-21 days), $0.47 (21-28 days)
Strategic Inventory Management
April serves as a transitional phase, allowing sellers to assess the impact of their inventory management decisions in real-time and make necessary adjustments to avoid future fees. Amazon’s aim is for sellers to experience the full process and comprehend its implications, thereby encouraging them to maintain adequate inventory levels and drive sales.
Network Shift and Cost Coverage
The fee was announced following Amazon’s shift to a regional fulfillment model, which has led to faster delivery times and better stock availability. The fee also helps Amazon offset the costs of strategically distributing seller inventory to match demand.
Expert Advice for Sellers
Jagath Narayan, CEO of Ordoro, advises small business owners utilizing Fulfillment by Amazon (FBA) to closely monitor stock levels and shipping history. Maintaining real-time visibility and timely restocking of FBA warehouses is crucial to circumvent these fees.
Exemptions to the Fee
Notably, the fee does not apply to new sellers, products new to FBA, or items replenished automatically by Amazon Warehousing and Distribution, providing some leeway for certain seller categories.
Amazon’s credit for the low inventory level fee in April is a strategic move to support sellers in adapting to a new inventory management framework, with the ultimate goal of enhancing the efficiency of Amazon’s fulfillment network and the seller experience.
