Amazon To Delay the New Controversial Fees from the Sellers Until Next Month (May)

Following pushback from third-party sellers utilizing Amazon's Fulfillment by Amazon (FBA) service, the e-commerce giant has decided to postpone the implementation of a newly introduced "low-inventory-level" fee.

The technology giant isn't completely abolishing the fee; instead, it announced on its Seller Central forum on Monday that it will proceed with charging FBA low-inventory-level fees accrued from April 1 to April 30. However, Amazon assures sellers that following the month's end, they will receive credits for all fees incurred during this period.

So, the fee will resume on May 1 without a credit.

In a statement, Amazon acknowledged the uncertainty expressed by numerous sellers regarding the impact of the fee on their businesses. The company stated, "To assist sellers in understanding the immediate impact on their business, we are offering a transition period throughout April."

Dharmesh Mehta, Vice President of Worldwide Selling Partner Services at Amazon, explained that the purpose of the credit is to enable Amazon selling partners to evaluate whether adjustments are necessary to avoid the fee in the future. He emphasized that any initial fees incurred will be refunded as part of this process.

Initially announced in December, this fee targets products exhibiting consistently low inventory levels relative to their unit sales, a metric referred to by Amazon as a seller’s “historical days of supply.”

The fee applies when Amazon assesses that there are fewer than 28 historical days of supply remaining for the product. This calculation considers both long-term (over the last 90 days) and short-term (over the last 30 days) historical sales. The fee is only levied if the inventory dips below 28 historical days of supply based on both long-term and short-term historical sales.

Amazon contends that maintaining adequate inventory levels enables efficient distribution of products across its fulfillment network, thereby enhancing shipping speeds for customers and ideally stimulating further sales.

Over the past year, the e-commerce giant has intensified its efforts to shorten delivery times, notably increasing the volume of same-day or overnight deliveries in the U.S. by over 65% compared to the previous year.

However, sellers have expressed contrasting views, particularly those who feel burdened by additional charges for maintaining excess inventory.

The Seller Central post was met with predominantly negative feedback from merchants, with one initial response stating:

“This is absolutely ridiculous…How are we supposed to pinpoint that 'sweet spot' of inventory when sales fluctuate from month to month?!?”

Other seller comments ranged from advocating for the complete elimination of the fee to labeling it as a farce, with one remarking, "How about ceasing the convoluted fee structure and providing transparent pricing? But that’s not what you want. You prefer sellers to remain unaware of their true operational costs.”

Mehta's post on LinkedIn didn't elicit as much overt hostility but rather raised concerns from sellers and seller partners.

Gwen McShea, president of Amazon consulting firm Lean Edge Marketing, expressed that "Amazon’s capacity to precisely forecast 'days of supply' isn't always applicable or beneficial" due to factors like product seasonality, emerging competitors, product trends, and occasional bulk purchases, underscoring that "the intricacy of this is simply overwhelming."

Constantine Kirillov, co-founder of third-party seller Comfify specializing in home décor, labeled the fee as "a trap from start to finish."