Amazon USA recently announced that the Amazon platform has launched the minimum inventory level indicator (minimum inventory level) to help FBA sellers plan inventory levels more effectively, improve delivery speed, and help them avoid the recently announced low inventory level fees.
Amazon will use machine learning models to analyze demand and settings and provide sellers with recommendations on the minimum quantity of each product they should have in fulfillment centers.
Amazon says that keeping inventory above minimum inventory levels helps sellers meet customer demand and provide faster delivery because products can be distributed in local fulfillment centers closer to customers. Sellers who keep their products above the minimum inventory level see an average of 15% more sales over a 4-week period, but actual results may vary.
The platform notes that the minimum inventory level metric is an additional data point that helps sellers manage FBA inventory and work with other important tools and metrics, and consists of four parts.
1. Historical Days of Supply: From April 1, 2024, when both the long-term historical days (last 90 days) and the short-term historical days (last 30 days) are less than 28 days (4 weeks), the Low Inventory Level fee will apply. To view the number of days in history, go to FBA Inventory.
The second is the Inventory Performance Index (IPI): Effective inventory management requires balancing inventory levels so that they do not have too much or too little inventory (understock or out of stock). A seller's IPI score reflects their performance in reducing excess inventory, fixing stranded lists, and increasing sell-through rates.
Maintaining minimum inventory levels will have a positive impact on sellers' IPI scores. The platform will update the inventory performance dashboard in the coming weeks to reflect this change. To view your IPI score, go to the FBA Inventory Dashboard or the Inventory Performance Dashboard.
Capacity limits: Sellers' capacity limits, which are affected by IPI scores and other factors such as product sales**, fulfillment center capacity, and shipping lead times, will allow sellers to carry enough inventory to avoid low inventory level fees. The premise is that the seller does not use the capacity to hold excess inventory.
Fourth, Restock Recommendations:* recommendations will continue to provide sellers with specific recommended shipping dates and quantities for the next purchase to help maintain minimum inventory levels. The platform is working to bring recommendations to the FBA inventory page in the coming weeks.