Amazon’s New Low-Inventory Fee Is Reshaping FBA Reorder Math

Amazon’s Low-Inventory Level (LIL) fee — first piloted in early 2024 and quietly expanded through 2025 — reached full enforcement across all standard-size ASINs on May 1, 2026. The fee, which charges sellers between $0.32 and $1.11 per unit when a product’s historical days of supply drops below 28 days, is now showing up in significant volume on seller disbursement reports. For high-velocity SKUs with thin margins, the impact is material.

According to data shared by Jungle Scout’s market research team last week, the average affected seller is absorbing an additional $1,840 per month in LIL fees across their catalog — a number that compounds quickly for brands running 50 or more active ASINs. At the same time, Amazon’s inventory placement fees, introduced in 2024, haven’t gone away. FBA operators are effectively paying on both ends: for placing inventory in the wrong nodes and for not having enough inventory in any node.

What exactly is triggering the Low-Inventory Level fee?

The LIL fee is calculated using a rolling 90-day average of units sold at the fulfillment-center level, compared against current on-hand inventory. When Amazon determines that a seller’s supply falls below a threshold covering 28 days of forward demand, the fee activates on a per-unit-shipped basis — not per unit stored. That distinction matters enormously for sellers who assumed the fee only applied to inventory sitting in warehouses.

“Most sellers I work with didn’t understand that this fee hits on outbound shipments, not storage,” said Liz Adamson, founder of Egility, an Amazon-focused agency based in Salt Lake City. “They looked at their storage fees and thought they were fine. Then they got their disbursement and found hundreds or thousands of dollars in LIL charges they hadn’t modeled.”

“The fee is essentially Amazon penalizing you for running lean. The irony is that Amazon has spent years telling sellers to reduce excess inventory. Now they’re charging you for following that advice too precisely.” — Liz Adamson, founder, Egility

💡 Article Summary

Key Insights

1

What exactly is triggering the Low-Inventory Level fee?

2

How are experienced FBA sellers adjusting their reorder models?

3

Are 3PLs and FBM becoming more attractive as a result?

4

What does this mean for Amazon PPC and ranking strategy?

5

How is Amazon framing the fee, and is any relief available?

Source: Ecommerce Times

The fee tiers are structured as follows, per Amazon’s current schedule:

• Large standard size, 14+ days of supply but under 28: $0.32/unit shipped
• Large standard size, under 14 days of supply: $0.72/unit shipped
• Small standard size, under 28 days of supply: $0.32–$0.47/unit shipped depending on weight
• Sellers with fewer than 25 units of historical average daily sales are exempt from the fee entirely

How are experienced FBA sellers adjusting their reorder models?

The sellers absorbing the least damage are those who rebuilt their inventory models in Q4 2025, ahead of full enforcement. The primary adjustment: raising safety stock floors and accepting higher carrying costs as the price of avoiding the LIL fee.

Brandon Young, founder of Seller Systems and a well-known Amazon educator with an active seller community, told Ecommerce Times that his brands now target a minimum 35-day forward supply at all times, up from a previous target of 21 days. “We ran the math. At our average unit economics, the carrying cost of holding 14 extra days of inventory is cheaper than absorbing the LIL fee at our sales velocity. That’s not true for every category, but it’s true for ours,” he said.

The break-even analysis varies significantly by product. A $9.99 commodity item with a 40% margin may find it cheaper to pay the fee occasionally than to tie up capital in extra stock. A $49 private-label supplement with a 65% margin can typically justify the additional safety stock investment with ease.

“We built a simple model in Google Sheets: input your COGS, your average selling price, your monthly storage rate, and your LIL fee tier. It spits out the optimal reorder point. Every seller running more than $50K/month on FBA should be doing this math.” — Brandon Young, founder, Seller Systems

Are 3PLs and FBM becoming more attractive as a result?

One measurable consequence of the LIL fee is renewed interest in Fulfillment by Merchant (FBM) as a buffer strategy. Sellers are increasingly keeping a portion of inventory at a third-party logistics provider, listing it as FBM, and using it to either maintain Buy Box eligibility during FBA stockouts or as a backstop that prevents triggering LIL thresholds on their FBA listings.

ShipBob, which operates fulfillment centers in 12 U.S. markets, confirmed to Ecommerce Times that inbound inquiries from Amazon sellers exploring hybrid FBA/FBM setups increased roughly 34% in Q1 2026 versus Q1 2025. “We’re seeing a lot of sellers who never considered using a 3PL for Amazon backup suddenly very interested,” said Casey Armstrong, ShipBob’s Chief Marketing Officer. “The LIL fee math makes it real for them.”

The practical challenge with hybrid FBA/FBM is Buy Box eligibility. Amazon’s algorithm continues to heavily favor FBA listings in the Buy Box calculation, meaning FBM offers — even at competitive prices — will lose the Box to FBA competitors. Sellers using FBM as a buffer need to ensure they maintain enough FBA inventory to hold Buy Box position while using FBM stock to prevent the LIL fee from triggering on outbound units.

• FBM buffer strategy works best when your FBA inventory drops below 28 days but above 10 days — enough to hold Buy Box while FBM absorbs overflow
• FBM listings require a seller-fulfilled Prime (SFP) badge to remain competitive in most categories; SFP requires a 99%+ on-time ship rate
• 3PLs with same-day or next-day cutoffs in major metro areas — ShipBob, Whiplash, Cahoot — are preferred SFP partners
• The cost premium for SFP-capable 3PL fulfillment typically runs $0.40–$0.90 more per unit than standard FBM, which must be factored into the LIL avoidance math

What does this mean for Amazon PPC and ranking strategy?

The LIL fee has a secondary effect that’s less discussed but arguably more damaging for growth-stage brands: it creates a structural disincentive to run aggressive PPC campaigns. Sellers who accelerate velocity with Sponsored Products spend can inadvertently drain their forward supply faster than their replenishment pipeline can respond, triggering LIL fees on the very units their ad spend generated.

“This is the part nobody’s talking about,” said Mansour Norouzi, head of marketplace strategy at Thrasio, which manages several hundred active Amazon ASINs. “You run a hot PPC campaign, you spike velocity, and if your inventory planning didn’t account for that spike, you’re now paying a LIL fee on every unit you ship from that campaign. Your effective ACoS just went up by several points without your bid changing at all.”

“We’ve had to build LIL fee risk into our PPC campaign planning. Before we scale spend on any ASIN, we now check projected days of supply under three velocity scenarios. If aggressive spend would push us below 28 days within two weeks, we either delay the campaign or expedite an inbound shipment first.” — Mansour Norouzi, head of marketplace strategy, Thrasio

Tools like Pacvue and Perpetua have begun incorporating inventory-level signals into their bid automation logic, though the integrations are still relatively early. Pacvue’s enterprise dashboard now surfaces a “LIL risk” flag on any ASIN where current inventory divided by trailing 30-day daily sales falls below 35 days — a buffer above the 28-day trigger. Perpetua’s roadmap, confirmed at the company’s March 2026 partner summit, includes automated bid suppression when inventory signals approach the LIL threshold.

How is Amazon framing the fee, and is any relief available?

Amazon has consistently positioned the LIL fee as a network efficiency measure, arguing that low-inventory ASINs require more expensive split-shipment fulfillment to reach customers quickly, and that the fee recovers costs sellers effectively externalize onto the fulfillment network. The company has not indicated any plans to roll back or modify the fee structure.

There is one meaningful exemption pathway: new product launches. Amazon waives the LIL fee for ASINs that have been active for fewer than 180 days, acknowledging that new listings don’t yet have reliable demand history. Sellers launching new SKUs have a six-month window to build velocity and adjust their replenishment cadence before the fee clock starts.

There is also a less-discussed operational lever: using Amazon’s Partnered Carrier Program for inbound shipments can reduce the effective lead time between placing a replenishment order and having units available at fulfillment centers by two to four days compared to non-partnered carriers, according to logistics consultants at Global-e’s Amazon advisory practice. That compressed lead time directly improves a seller’s ability to maintain the 28-day supply floor without carrying excess safety stock.

What’s the bottom line for sellers running FBA at scale?

The sellers navigating the LIL fee most effectively share a few common traits: they’ve built explicit reorder point models that account for the fee in their margin stack, they maintain at least one 3PL relationship that can serve as an FBM buffer for high-velocity SKUs, and they’ve coordinated their PPC scaling decisions with their inventory planning calendar.

For smaller operators running under $30K per month in FBA revenue, the fee may be manageable with basic spreadsheet modeling and slightly more conservative reorder timing. For brands running $500K or more per month across a deep catalog, the fee is now a material line item that belongs in the P&L discussion alongside FBA fulfillment fees and storage costs.

“Amazon keeps adding fees that reward scale and punish operators who can’t afford sophisticated inventory software,” said Adamson of Egility. “The LIL fee is the latest version of that dynamic. Get your replenishment model right, or budget for the penalty.”

Sellers looking for software support have several options beyond spreadsheets. Inventory Planner, which integrates directly with Seller Central, now includes a dedicated LIL fee projection module. Skubana (rebranded as Extensiv) offers a similar feature in its warehouse management suite. Jungle Scout’s Inventory Manager, part of the core platform subscription starting at $129/month, surfaces LIL risk scores alongside standard reorder recommendations.