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Amazon Rolls Out New Inventory Planning Metric for FBA Sellers 

Successfully navigating Amazon’s latest inventory metric and FBA changes will absolutely matter in 2024 – Here’s what eCommerce sellers should know!

  • January 9, 2024
  • /
  • CANOPY Management
A view of boxes on shelves at an Amazon warehouse with the Amazon "a" logo overlayed in the center of the screen.

Amazon recently announced an additional supply chain visibility metric called Minimum Inventory Level aimed at helping sellers on the Fulfillment by Amazon (FBA) platform avoid costly stockouts and low inventory fees in 2024. 

As an Amazon Management Agency working with a number of seven and eight-figure eCommerce businesses, we closely track updates like these with the potential to significantly impact our partners – then translate the key takeaways into actionable insights.

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In a nutshell, by leveraging advanced artificial intelligence-enabled demand forecasting, Amazon is now providing recommended minimum quantities sellers should carry for each product across fulfillment centers. 

Amazon says that stocking above these levels can lead up to a 15% sales lift over 4 weeks. That’s because fuller inventories enable quicker order processing and faster delivery speeds. At the same time, this will enable projections allowing for products to be distributed across local fulfillment centers closer to customers. 

Rolling out the new recommended inventory minimums ties into Amazon’s upcoming fee changes charging FBA sellers if both short and long term days of supply metrics fall under 4 weeks.

Here Are Amazon’s Latest Updates

How can online sellers best prepare themselves for the coming changes? Here are the key aspects of Amazon’s recent changes:  

Historical Supply Metrics

Amazon says that, “effective April 1, 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).” 

Amazon’s Inventory Performance Index (IPI)

Sellers are well aware that efficient inventory management is a fine art and a balancing act. Amazon says that “your IPI score reflects how well you reduce excess inventory, fix stranded listings, and improve sell through.” 

The Minimum Inventory Level will contribute directly to your overall IPI score, and it’s one more reason to make sure that you – or your Amazon Agency – keep a close eye on your Amazon inventory. 

(To review your IPI score, go to the FBA Inventory dashboard or the Inventory Performance dashboard)

Amazon’s Capacity Limits

Your Amazon capacity limits are directly influenced by your IPI score. Amazon takes that number, and combines it with other factors including, sales forecasts, fulfillment center capacity, and shipment lead time to come up with your overall capacity limits.  

Amazon’s Restock Recommendations

Amazon says that their restock recommendations will continue to provide “specific recommended ship-by dates and replenishment quantities for your next incoming shipments to help you maintain the Minimum Inventory Level.” 

A view of an enormous, fully loaded container ship moving diagonally away from the viewer.

Optimized Amazon Supply Chains Will Be Essential in 2024

With Amazon raising expectations around supply chain resilience, leveraging FBA recommendations to stay on top of estimated days of supply will be an important factor in boosting your Amazon account health. 

Every year there are new supply chain challenges. So much so that Amazon seems determined to “help” eCommerce sellers stay one step ahead of the volatility inherent in global distribution. 

Fortunately, one of the extremely positive upsides of the many recent advances of artificial intelligence has been in their ability to help online sellers make increasingly accurate inventory projections. 

As an Amazon Agency managing millions in FBA inventory, we empower brands to capitalize on algorithmic inventory planning insights and prepare supply chains for the year ahead.

If you need assistance operationalizing these new metrics, managing your Amazon business, or forming inventory strategies balanced against sales growth plans, our experts are poised and ready to help you in 2024.

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