The tech titan isn’t voiding the fee entirely, stating in a post on its Seller Central forum Monday that it will still charge FBA low-inventory-level fees incurred between April 1 and April 30. But after the end of the month, Amazon says it will credit the seller for all fees charged during the period.
The fee will be reinstated without a credit on May 1.
“We have heard feedback from a number of sellers that they are still uncertain what the exact effect of this fee will be on their business,” the post said. “To help you better see how this affects your business in real time, we will provide a transition period during the month of April.”
According to Dharmesh Mehta, vice president of worldwide selling partner services at Amazon, the goal of the credit is to help Amazon selling partners learn if they need to make adjustments to avoid the fee in the future, while knowing that any initial fees incurred will be credited back.
First announced in December, the fee applies to products with consistently low levels of inventory relative to their unit sales, which Amazon refers to as a seller’s “historical days of supply.”
The low-inventory-level fee applies when Amazon estimates that there are less than 28 historical days of supply left for the product. The 28 days of supply is calculated based on long-term (last 90 days) and short-term (last 30 days) historical sales. The fee will only be charged if inventory falls below 28 historical days of supply according to both long-term and short-term historical sales.
Amazon argues that maintaining sufficient inventory levels allows the company to effectively distribute products across its fulfillment network, thus improving shipping speeds for customers and ideally driving more sales.
Over the past year, the e-commerce giant has continued to shorten its delivery times, increasing the number of items delivered the same day or overnight in the U.S. by more than 65 percent from the year prior.
But sellers have seen things differently, particularly those that say they are also charged for having too much inventory.
The Seller Central post was largely greeted with more negative comments from merchants, with the first response saying:
“This is absolutely ridiculous…How in the heck are we suppose[d] to find that ‘sweet spot’ of inventory when sales vary from month to month?!?”
Other seller responses ranged from “This fee needs to be done away with completely,” to “This fee is a joke,” to “How about stop with the shell game and just be very clear with the fees. But you don’t want that. You want people to be clueless as to what [they’re] true operational cost is.”
Mehta’s post on LinkedIn didn’t generate as much overt outright negativity and hostility, but saw more concerns from sellers and seller partners.
Gwen McShea, president of Amazon consulting business Lean Edge Marketing, said “Amazon’s ability to accurately predict ‘days of supply’ is not always relevant or good” due to product seasonality, a new competitor, product fads and one-off large volume purchases, echoing that “the complexity of this is just too much.”
Constantine Kirillov, co-founder of home décor third-party seller Comfify, called the fee “a trap from the start to finish.”
“You have too little—you pay low level fees. You have to much—you pay storage fees. Sales are not linear or consistent for any product,” Kirillov said, “There is seasonality, economy, delays due to Amazon, carriers, etc. Because none of these variable[s] are [in] our control, this fee is simply ‘damned if you do, damned if you don’t’ tax. There is no margin left to squeeze, so along with other fees and expenses, you can expect a mass exodus from Amazon marketplace.”
Seller fees have been a massive revenue generator for Amazon. Third-party sellers accounted for more than 60 percent of items sold on Amazon during the fourth quarter, with the company reeling in $140 billion from seller fees alone in 2023.
The low-inventory-level fee was one of two new charges added in December, with the other being an inbound placement fee for FBA-using sellers that was effective March 1, which is designed to cover Amazon’s cost of shipping products around fulfillment centers across the U.S.
Under the inbound placement fee, sellers are required to use the pay-as-you-go Amazon Warehousing and Distribution (AWD) storage service. Merchants can skirt the fee, but only if they elect to ship goods to four Amazon warehouses.
The fees have reportedly garnered the attention of the Federal Trade Commission (FTC), according to a Fortune report. The FTC already filed its long-awaited antitrust suit against Amazon in September.
