Amazon Now Charges You for Too Little Inventory AND Too Much. The Safe Zone Is Shrinking.

Amazon Now Charges You for Too Little Inventory AND Too Much. The Safe Zone Is Shrinking. Speaker 1: Amazon charges you for carrying too much stock and I'm sure you already knew that. What you probably haven't noticed Amazon now also charges you for carrying too little, and the window in between those two fees is narrower than you think. At 50 units a day, one SKU running lean can cost you over $1,300 a month in fees alone. If you've got 10 active variations at different stock levels, the number compounds fast, and it's sitting as a line item in your date range report right now that you haven't probably never gone looking In the last video I showed you how DD plus 7 is a permanent and invisible cost that hasn't made it to most PNLs. This is the second policy that makes it worse and the two of them together are a trap that specifically tighten the faster you grow. Now I'm going to show you the full mechanism of the low inventory fee, the January 2026 change you might have missed and exactly how How these two policies interact. Then I'm going to give you the practical levers to get out of the middle. There's a tactical detail buried in the fee policy that gives you a short term out when a restock is inbound and you're at risk of getting hit. Now we'll get to that at the end. Now here's the framing Amazon uses. When your inventory runs low, Amazon can't distribute your products across its regional fulfillment network. Network. That means slower delivery for customers and higher shipping costs for Amazon so they pass the cost back on to you. That logic is not unreasonable. The problem is what it does when you put it next to everything else Amazon has been doing for the last 3 years. From 2021 to 2023, Amazon spent 2 years aggressively pushing lean inventory. So they raised storage fees, tightened capacity limits, making it expensive to hold stock at FBA. Then in April 2024, they introduced a fee for carrying too little inventory. The fee triggered when your historical days of supply measured over the last 30 days and the last 90 days fall below 28 days. And the part that's actually useful to know, if you can fix either window, short term or long term, these fees stop. You don't need to solve both at once. Push your 30 day metric above 28 days with a partial restock and the charges stop immediately, even if your 90 day history is still below the threshold. Now the 2026 fee rates For large standard products over £3, which is where most private label brands land, and this depends on how far the threshold you are, 21-28 days of supply, $0.47 per unit. 14-21 days of supply, $0.87 per unit. Below 14 days, $1.11 per unit. Smaller or tighter products sit at a lower rate, but if you're selling supplements, home goods or anything with weight behind it, These are your numbers. So put it in real terms. You sell 50 units a day. You've got 18 days left of stock. You're in 14 to 21 day band. That's 87 cents per unit. Times 50 units a day, that's $43.50 a day. Over a month, that's over $1,300 from one SKU alone. If you've got multiple fast moving variations dipping below the threshold at different points in the year, it can get Expensive. So make sure you go to Seller Central, go to Payments, Reports Repository, Date Range Report, pull the last 90 days, look for Low Inventory Fee line item. If you've been below 28 days on any fast moving FN SKUs, it's in there. So if you haven't done so already, make sure you subscribe. I cover this kind of stuff every week. When the Low Inventory Fee launched in April 2024, it was assessed At the parent ASIN level, if you sold a product in four sizes, so let's say small, medium, large, and extra large, Amazon looked at total inventory across all four variations combined. Your overstocked large was shielding your running thin medium from the fee. The total kept you above 28 days, even when one variation was heading into trouble. As of January 15, 2026, that shield is gone. Amazon now assesses the fee per FN SKU, per individual variation. Every size, every color, every child listing is evaluated independently. Your best-selling variations can no longer be bailed out by slow-moving ones sitting next to it. So your hero scoot, the one with the highest velocity, is the hardest to keep in stock. It's the one most likely to dip below 28 days during a reorder cycle. And it's now the one Amazon tax This is most heavily for running lean. Your slow-moving variations, meanwhile, are likely overstocked. Before January, they were doing you a favor. Now, they do nothing except accumulate aged inventory fees on the other side of the equation. This is why accounts with 5-20 variations are suddenly running into fee exposure they didn't see coming. Their inventory planning was built around parent-ascent averages. The model is now wrong and the fee is showing up to tell them so. The immediate fix is rebuilding your inventory view at an FNSKU level. Identify your top 5 FNSKUs by sales velocity. Calculate days of supply for each one individually. Set a reorder alert at 35-40 days, not 28 days because you need a buffer for Amazon receiving time on top of the threshold itself. Now if you've watched the last 2 videos you know that DD plus 7 Locks your revenue for 7 days post delivery. At $10,000 a day in sales, that's a permanent flow of $70,000 to $100,000 sitting in Amazon's reserves. Working capital you cannot touch. When cash is that tight, running lean on inventory makes sense. Order less more frequently don't tie up capital in FBA storages. So DD plus 7 pushes you towards lean inventory to protect cash flow. The low inventory fee punishes lean inventory. They push in opposite directions and both get worse the faster you grow. End-to-end lead time for placing a purchase order to inventory available in FBA 60 to 120 days. Accounting for Production, Freight, Customs and Amazon Receiving. To maintain 28 days of FBA supply consistently, you'd need 60 to 120 days of pipeline inventory funded in motion at all times. But DDU plus 7 means the revenue from your current stock hasn't landed yet. You're funding tomorrow's inventory before yesterday's revenue has cleared. And there's one more layer. Amazon tightened ASIN level restock limits in May 2025 To a 90-day cap per product. For accounts already running low IPI scores, this is the trap inside the trap. You can't restock to safety because Amazon won't accept the units. The fee is accumulating and the mechanism to stop it is blocked. That's the worst version of this problem and it's hitting accounts right now. A brand selling 20 units a day with a 45-day supplier lead time needs roughly 1,000 units at FBA at all times plus Another 60-90 days of pipeline inventory on order or in transit. Add DD plus 7 on top of that and you're financing 4-5 months of total inventory commitment with working capital that structurally shrinks as you grow. Now the window where you're not getting charged either for too little or too much inventory It's 28 to 90 days of supply per FN skew. Below 28 days you're paying the low inventory fee. Above 90 you're heading towards age inventory surcharges and IPI score damage and That reduces your storage capacity. Now Amazon charges you on both sides. The safe band in the middle is generally narrow, especially under DD plus 7 cash constraints with overseas lead sums. The quickest fix is to stop timing your orders around when Amazon pays you. Under DD plus 7, if your purchase orders go out when cash lands in your bank account, they're already 7 days late. Based on your replenishment decisions on real-time days of supply data in Amazon Warehousing and Distribution works as a buffer layer for the medium term. AWD stores inventory upstream at lower costs with auto replenishment rules that transfer units from From FBA when stock drops to a set threshold, say 30 days of supply. For high-velocity F&S SKUs where your low inventory fee triggers regularly, AWD keeps you above the threshold automatically without requiring you to hold 90 days of stock at FBA rates. AWD fees increase roughly 19% for West Coast Storage And up to 22% for managed transport in 2026. So the economics need modelling per SKU. But for your fastest movers it often pays for itself. If oversea leads times are the core constraint, a domestic 3PL changes the maths. Replenishing FBA from a US based 3PL takes 3-7 days instead of 60-120. The safety stock required to stay above 28 days drops significantly. And the capital you free up from not carrying 90 days of pipeline inventory is the same capital DD plus 7 is locking. So the two solutions work together. Now I said at the start there's a lever you might not know about, here it is. The low inventory fee only triggers if you've shipped more than 20 units of F&SKU in the prior 7 days. If a restock is inbound and you're heading towards the fee, raising the price or pausing ads on that variation can stop sales velocity below 20 units a week, temporarily exempting it from the fee while the stock arrives. And remember the trigger mechanic, you only need to fix one window not both. Get a partial restock in fast enough to push your 30 days of supply above 28. And the fee stops immediately. You don't need to wait for 90 days history to recover. Now Amazon has built a fee structure where inventory that's too low costs you, inventory that's too high costs you and the cash flow policy running underneath makes it harder to hit the window in between. None of that is going away. What changes is whether you model it. You don't solve this by having more cash. You solve it by knowing exactly where your cash is. If you haven't watched the DDPlus7 video yet, that's where this starts. It covers the permanent flow Amazon is holding from your revenue right now, how to calculate the real cost of it and why it compounds with growth in the same way the fees do. The link is somewhere here. I'll catch you on that video.