Amazon's "Low-inventory fee" - - a real small business crusher
I've been selling full time on Amazon for 8 years and for the first time I am questioning if my business can survive in the new year.
The abrupt introduction of the new "Low-inventory fee" has been a hurdle that is almost impossible for us to clear. Unlike a lot of sellers, most of our inventory comes from within the USA, so we don't normally need to order large quantities of inventory to meet minimum order quantities. Nor do we deal with long cargo ship routes. I can get more inventory within a few days, not weeks. So I've always tried to hold about 2-3 weeks worth of inventory at a time. Now that we are required to hold a months worth of sales, or face steep fees, we are in a catch-22.
1. Hold about $700,000 worth of inventory at a minimum. (We must pay our suppliers, so that means taking out a business loan and paying the interest on that loan)
or
2. Continue to hold about $300,000 worth of inventory and incur about $6,000 worth of new "Low-inventory fees" per month.
Obviously, if your a large conglomerate who has access to millions in cash, this wouldn't be a problem, but I am a one-person operation! A small business with a lower case b.
Please Amazon, I am begging you to drop the 30-day minimum down to 14-days. If you must keep this fee, please do not keep the minimum threshold at 30 days of sales, that's a very high bar to clear unless you are a very large seller.
Amazon's "Low-inventory fee" - - a real small business crusher
I've been selling full time on Amazon for 8 years and for the first time I am questioning if my business can survive in the new year.
The abrupt introduction of the new "Low-inventory fee" has been a hurdle that is almost impossible for us to clear. Unlike a lot of sellers, most of our inventory comes from within the USA, so we don't normally need to order large quantities of inventory to meet minimum order quantities. Nor do we deal with long cargo ship routes. I can get more inventory within a few days, not weeks. So I've always tried to hold about 2-3 weeks worth of inventory at a time. Now that we are required to hold a months worth of sales, or face steep fees, we are in a catch-22.
1. Hold about $700,000 worth of inventory at a minimum. (We must pay our suppliers, so that means taking out a business loan and paying the interest on that loan)
or
2. Continue to hold about $300,000 worth of inventory and incur about $6,000 worth of new "Low-inventory fees" per month.
Obviously, if your a large conglomerate who has access to millions in cash, this wouldn't be a problem, but I am a one-person operation! A small business with a lower case b.
Please Amazon, I am begging you to drop the 30-day minimum down to 14-days. If you must keep this fee, please do not keep the minimum threshold at 30 days of sales, that's a very high bar to clear unless you are a very large seller.
5 replies
Seller_z3XfkorVSmnEY
You forgot option 3 -- migrate some ASINs to FBM.
Seller_i6S8knzW6zU6Z
Hi @Seller_hOQvH7By4JJ33,
Looking at the help page Low-inventory-level fee, there are a few key points that could be relevant for your business model with quick US-based suppliers. The fee won't apply if either your long-term (90-day) OR short-term (30-day) historical days of supply is above 28 days.
There's also good news in the FAQ section - the fee won't apply to products that sell fewer than 20 units per week. This could help reduce the impact on some of your slower-moving items.
Given your ability to get inventory quickly, you might want to look into Amazon Warehousing and Distribution. Under the FAQ section of Minimum Inventory Level overview, it mentions that using their auto-replenishment service could make you eligible for a fee waiver. The help page notes: "When you maintain safety stock at Amazon Warehousing and Distribution, you can react to fluctuations in customer demand faster, which reduces the inventory level needed in the Amazon fulfillment network."
I know this doesn't directly address the 30-day threshold you're concerned about, but it might offer a way to manage inventory levels that better suits your quick-supply business model.
Hope this helps provide some options to consider!
Best regards, Michael
TaylorR_Amazon
Hi @Seller_hOQvH7By4JJ33, I see that @Seller_i6S8knzW6zU6Z has recommended AWD below. Check out this help page: Amazon Warehousing and Distribution (AWD) and let me know if you have any questions.
