April was just a transition month for this new, and rather controversial fee. But now it’s being levied, what does it mean for you – and how can you mitigate the chances of being charged?
What is the Low Inventory Cost Coverage Fee?
This contentious fee, which saw uproar on Seller Central after its announcement in December, applies to products with consistently low inventory levels relative to their unit sales, with the threshold set at less than 28 historical days of supply.
Amazon’s view is that the fees are there to help maintain sufficient inventory levels, which in turn allows for effective product distribution across its fulfilment network, improving speeds and generating more sales.
But Sellers flocked in droves to flag their concerns, highlighting how seasonal fluctuations, supply chain issues and impact on business operations could render the charge both impractical and unfair – and calling for more understanding and transparency from Amazon.
Why were April fees returned on 1 May?
Dharmesh Mehta, Amazon VP of Worldwide Selling Partner Services, said that Amazon decided that April should be a transition period only – where fees would be charged but re-credited to help Sellers learn whether they’ll be impacted and, if so, by how much.
So, although the fee was set to be introduced from 1 April onwards, Amazon returned amounts charged between 1-30 April to Sellers on 1 May.
The idea is to allow time for adjustments to be made, and to show many Sellers that the fees won’t impact them.
And if you were charged?
Now’s the time to look at how you could improve the health of your inventory levels.
Looking to maximise any of these opportunities for your marketplace business? Click here to speak to our Award-Winning Amazon Team!
Useful Links
- Amazon Announcement – Introduction of the Low-Inventory Cost Coverage Fee (Pan-EU)
- Amazon’s Low Inventory policy page
- FBA inventory page (to track historical days of supply)