Did Amazon Go Too Far with Its New Low Inventory Fee?

Update 5/2/2024: Amazon announced changes it is making to the new fee, see today's EcommerceBytes Newsflash article.

In December, Amazon announced a new "low inventory fee" coming to FBA sellers this year. As we reported at the time, sellers already faced fees for sending in too much inventory to Amazon fulfillment centers, and with the new change, it means this year they face fees if their inventory levels drop too low.

The new fee generated a lot of controversy, but we recently heard from a seller who explains a situation that makes the fees especially irksome for him: end-of-life products. "If I have been selling an item more than 1 year and it gets discontinued (or even has a temporary out of stock), I am going to get hammered by this fee as my on-hand inventory drops to zero on the site. With the last of my sales (when the computer feels I have less than 7 days of stock) getting hit with the highest fee. There is now no way to sell through an item that isn't coming back without this crazy, escalating fee."

Amazon explained the reason for the new fees: "When sellers don't carry enough inventory, we are unable to distribute products as effectively and efficiently across our network, which slows delivery speed to customers and increases shipping costs." Not coincidentally, Amazon issued a press release on Monday boasting about its speed of delivery. It wants to offer buyers absolute reassurance that they'll receive their orders fast.

This has been one of the most stressful changes for sellers who use FBA in recent history. The EcommerceBytes reader told us, "If we don't keep 28 days of stock on hand, the fees kick in. But, all items in the FBA warehouse get charged a storage fee every 30 days." And he said, "I hope you can awaken someone at Amazon to see how this is nothing more than an unfair, unavoidable tax on sellers."

The owner of Amazon marketing agency "My Amazon Guy" Steven Pope delved into the fees in a YouTube video (below), and he too brought up the end-of-life dilemma for sellers. Amazon is letting sellers see what their fees would be for April, but it won't begin charging them until May. Pope explained how the fees were impacting his own account (an extra $800 in the first 2 weeks of April) and called the fees "substantial, confusing, and not transparent." Let us know what you think.

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