Minimum Inventory Level – The New Metric to Help you Plan FBA Inventory Levels

Elise Jackson

Post details

  • AUTHOR: Elise Jackson
  • CATEGORY: Amazon News
  • DATE: 03/01/2024

Calling all Fulfilment by Amazon (FBA) sellers – this announcement’s for you!

Amazon has launched a new Minimum Inventory Level metric to help you plan inventory levels more effectively, improve delivery speeds, and avoid the recently announced low-inventory-level fee.

The new metric is calculated using advanced machine learning models to analyze demand forecasts and replenishment settings while also recommending the minimum number of units per product that you should have at your fulfilment centres.

Why is this important?

Avoiding the low-inventory-level fee is a great benefit to this new metric! But also, it makes it easier to maintain inventory above the Minimum Inventory Level which helps you meet customer demand and offer faster delivery speeds as products can be distributed across local fulfilment centres closer to customers.

Also, Amazon states that sellers who maintain units above the Minimum Inventory Level see a 15% increase in sales over a four week period on average. Sign us up!

 

How can the metric be used?

The Minimum Inventory Level metric is an additional data point that helps you manage your FBA inventory and works alongside other important tools and metrics, take a look:

 

Historical days of supply

Starting April 1st, 2024, the low-inventory-level fee will apply when both the long-term historical days of supply (last 90 days) and short-term historical days of supply (last 30 days) are below 28 days (4 weeks), so the Minimum Inventory Level metric will help you avoid these fees!

 

Inventory Performance Index (IPI)

To efficiently manage your inventory, you need to balance the inventory level so that it’s not too much (excess) or too little (low or out of stock).

Your IPI score reflects how well you reduce excess inventory, fix stranded listings, and improve sell-through, so by maintaining the Minimum Inventory Level, you will positively contribute to your IPI score!

 

Capacity limits

Your capacity limits are influenced by your IPI score, as well as factors like sales forecasts for your products, fulfilment centre capacity, and shipment lead time.

These limits allow you to carry enough inventory to avoid the low-inventory-level fee, provided you don’t utilize your capacity to hold excess inventory.

 

Restock recommendations

To maintain the Minimum Inventory Level, Restock recommendations will continue to provide you with specific recommended ship-by dates and replenishment quantities for your next incoming shipments. Amazon has also stated that they’re working to bring restock recommendations to the FBA Inventory page in the coming weeks.

 

Who has access to the new metric?

Amazon has not stated that this will be rolled out to only a few countries, so we assume this will be made available globally at the same time!

 

Our thoughts

Amazon has been making a few changes this year to FBA, like the introduction of the low-price FBA rates and the launch of new FBA capacity limits, so it’s interesting to see more come through, they are always looking to improve their service.

Great to have an extra helping hand when it comes to notifying you if you are about to run low on stock. Avoiding late fees that will be introduced on April 1st, 2024 (is it too early to be an April Fools joke?) is a massive plus of the new metric – we’re a fan!

Are you stuck on something in Amazon and need a helping hand? From advertising to product optimisation, we’re ready and keen to help! Give us a message or call us to get started.

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