Amazon policy changes again! Seller: I want to withdraw from FBA

Amazon has once again updated its policy, adding a new "minimum inventory level" indicator. Its stated purpose is to help sellers avoid low inventory fees. However, as soon as the policy was released, it triggered a new round of complaints from sellers. Everyone pointed out that Amazon's robot algorithm is not reliable and cannot understand its own business better than the seller. The platform's move is just to charge more. Some sellers have even threatened to withdraw from FBA.

Amazon adds new FBA “minimum inventory level” metric

Earlier this month, Amazon updated its logistics fees, adding a low-volume inventory fee. This fee is charged for standard-sized products and applies to products whose inventory is kept too low for a long time. It will be levied on sellers from March 1, 2024. At that time, sellers felt that "if there is too much inventory, you have to pay long-term storage fees, and if there is too little inventory, you have to pay low-volume inventory fees. It is too difficult to prepare goods."

Perhaps Amazon has heard the voices of sellers. Recently, Amazon US issued an announcement to update its policies again, announcing the launch of the "Minimum Inventory Level" indicator to help FBA sellers plan inventory levels more effectively , increase delivery speed, and avoid low inventory fees .

Amazon mentioned in the announcement that the “minimum inventory level” indicator is based on advanced machine learning models to analyze demand and predict replenishment settings to recommend sellers the minimum inventory level of each product in the distribution center.

According to Amazon, maintaining inventory above minimum inventory levels has two benefits : first, it helps sellers meet customer demand and provide faster delivery because products can be distributed at local fulfillment centers closer to customers; second, sellers will experience an average of a 15% increase in sales over a four-week period (actual results may vary).”

Amazon also reminds sellers to use the “minimum inventory level” indicator together with the following indicators to manage FBA inventory more efficiently:

Historical Days of Supply : Beginning April 1, 2024, when both the long-term historical days of supply (past 90 days) and the short-term historical days of supply (past 30 days) fall below 28 days (4 weeks), a low inventory level fee will apply;

Inventory Performance Index ( IPI) : Effective inventory management requires balancing inventory levels so that they are not too much or too little. The IPI score reflects the extent to which sellers reduce excess inventory, fix stranded listings, and increase sales. Maintaining minimum inventory levels will contribute positively to sellers' IPI scores. The platform will update the inventory performance dashboard in the coming weeks to reflect this change;

Capacity limits : Capacity limits are influenced by the IPI score as well as other factors, such as the product’s sales forecast, fulfillment center capacity, and shipping lead time. Capacity limits determine the inventory that sellers can hold to avoid fees for low inventory levels, provided that sellers do not hold excess inventory.

Restocking suggestions : Restocking suggestions will continue to provide sellers with specific recommended shipping dates and replenishment quantities for the next batch of goods to help sellers maintain minimum inventory levels. The platform is working to add restocking suggestions to the FBA inventory page in the coming weeks.

The new changes have caused dissatisfaction, and sellers have threatened to withdraw from FBA

Amazon’s new “minimum inventory level” policy has caused dissatisfaction among many sellers. Some sellers called out to Amazon: "Please remove this fee, Amazon, it is unreasonable and just a way to make money." They believe that the new fee will affect their business. The specific points of dissatisfaction are mainly concentrated on three points:

First, the fees are too high, forcing sellers to withdraw from FBA

“This huge fee will force many of us out of FBA. If inventory levels are lower than what Amazon’s machine learning models have historically shown, the standard fee ranges from $0.32 to $0.89 per item, which is unsustainable for us because the products we sell are highly seasonal and for most of our products, these fees account for 5% to 11% of our sales price. Amazon has already canceled the Small and Light program, and it’s possible that the platform will force us out of FBA through other overpriced services .” One seller said bluntly.

Another seller believes that this is just another way for Amazon to take sellers' money . If it is just to provide assistance, Amazon will provide guidance for seller accounts and will not charge any related fees.

Regarding the issue of overcharging, one peer pointed out: “Amazon lost $2 billion last year. After years of data mining on our products and sales, they intend to make up for this loss by driving us out of the industry.”

Second, machine learning models are not reliable

Some sellers believe that the platform’s machine learning model is too high-level a concept to be used in conjunction with the following flawed low-level questions:

There was an incredible delay in reception;

Counting error when receiving;

Lost goods at any time.

None of the non-machine learning algorithms on Seller Central are correct. In Manage Inventory, the ASIN will show "Warning, 4 weeks of inventory remaining, please consider replenishing!" Then I click on the SKU and scroll to the inventory, and I see "Overstock, please consider creating a removal order."

Minimum stock indicators are like determining real flavors versus imitation flavors in baked goods, but the measuring spoons and cups are wrong and have holes in them.

Another seller found a similar problem and questioned: $0 in sales in the past 90 days, 0 units, 1 on hand, minimum level 3. Why set the minimum level higher than 1 when the inventory page shows that it has enough inventory for 411 days? Is it to justify adding a low inventory fee for the remaining 1 unit when the SKU sells?

Some peers believe that the replenishment recommendations of machine learning algorithms are not for the convenience of sellers, but that Amazon imposes these policies on third-party sellers without consultation. Amazon also cannot finally determine what necessary information to provide third-party sellers to avoid future penalties for any algorithmic errors, which are also developed without consultation.

Third, seasonal product fluctuations cannot be avoided

Let's say I have a great Christmas item and based on years of sales I would sell 5-10 per month year round, but starting in mid-September sales might go up to 100 per day until Christmas, after which sales would drop back down to 5-10 per month.

When we hit Christmas, both 28-day and 90-day sales would indicate that we would need at least 2,800 units in stock to avoid fees, but a rule of thumb is that only 10% or less is needed to fully satisfy customer demand. So how does the system handle this normal seasonal fluctuation?

In short, why not let sellers run their own businesses? Why do you think robots know their business better than sellers do?

The update of Amazon’s FBA policy may increase the logistics costs of some sellers and raise their operating costs. One seller lamented: “There are always more and more harvesting projects on the Amazon platform!”

Amazon

change