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Amazon inventory management is the boring discipline that separates $50K/mo brands from $500K/mo brands. Stockouts cost 30 days of velocity. Overstocks cost $6.90/cu ft/month. This is the workflow that keeps both at zero.
Who this is forSellers with at least 5 active SKUs in FBA who don’t have a structured restock cadence. Especially relevant if you’ve been hit by Low-Inventory-Level fees, Long-Term Storage fees, or stranded inventory in the last 90 days.
What you'll need
Step 1
Inventory → Inventory Planning → Restock Inventory. Amazon calculates recommended restock quantities based on sales velocity, transit time, and lead time.
Navigate to Inventory → Inventory Planning → Restock Inventory.
For each SKU, Amazon displays: current FBA inventory, estimated days of cover, recommended restock quantity, and recommended ship date.
Configure your lead times: Settings → Fulfillment by Amazon → Inbound Settings → Vendor Lead Time. Default is often 0 — set it to your actual supplier-to-FBA lead time (typically 14-45 days for overseas manufacturing).
Days-of-cover target: 60-90 days for stable SKUs, 30-45 days for fast-moving or seasonal SKUs. Below 28 days = Low-Inventory-Level fee ($0.89/unit).
Enable email alerts: Settings → Notification Preferences → Inventory → "Low Inventory."
Audit weekly: any SKU with under 35 days of cover = ship now. Any SKU with over 120 days of cover = pause future orders.
Step 2
IPI score is Amazon’s composite metric: excess inventory + sell-through rate + stranded + in-stock rate. Above 400 = good. Below 350 = storage limits.
Inventory → Inventory Planning → Inventory Performance.
IPI score 400+: full storage capacity, no warning. IPI 350-400: warning band. IPI below 350: storage limits enforced — Amazon may reject inbound shipments.
Four sub-scores: (1) Excess Inventory (over 90 days of cover), (2) Sell-Through Rate (units sold / units on hand), (3) Stranded Inventory %, (4) In-Stock Rate.
Quick wins to lift IPI: liquidate dead stock via Outlet Deals (drops Excess Inventory), fix stranded listings (drops Stranded Inventory %), restock fast-movers (lifts In-Stock Rate).
IPI updates weekly. After taking corrective action, expect 2-3 weeks before score reflects changes.
Step 3
Stranded Inventory = inventory at FBA with no active listing. Every stranded unit pays storage and earns zero revenue. Audit weekly.
Inventory → Inventory Planning → Stranded Inventory.
Common stranding causes: (1) listing suppressed for policy violation, (2) ASIN merged with another listing, (3) listing was deleted but inventory remained, (4) category compliance flag.
For each stranded SKU: click "Edit listing" → fix the flagged issue → resubmit. Most stranding clears within 24 hours after fix.
Unfixable strands (discontinued ASIN, deleted product): create a Removal Order — Inventory → Manage FBA Inventory → select SKU → "Create removal order" → ship back or destroy.
Removal fees: $1.00-$1.65 per unit standard, $3.12+ for oversize. Destruction fees: $0.97-$1.62. Almost always cheaper than continued storage.
Schedule weekly Stranded Inventory audit: 5-10 minute task, prevents months of silent storage bleed.
Step 4
Inventory aged 271-365 days = $6.90/cu ft/month (or $0.15/unit minimum, whichever higher). Audit every 30 days to dodge.
Inventory → Inventory Planning → Manage Excess Inventory → Long-Term Storage Fee.
Amazon assesses LTSF on the 15th of each month for inventory aged over 271 days.
Pre-emptive action by day 240: (1) Lightning Deals at 25-40% off to move volume; (2) Outlet Deals (a discount-tier badge for older inventory); (3) Removal Orders to your warehouse or 3PL; (4) destruction order if SKU is unsellable.
For seasonal SKUs (Q4-heavy products like Christmas decor): plan removal in February to dodge the entire summer/fall LTSF cycle.
Run Reports → Fulfillment → FBA Inventory Age weekly. Sort by Age. Anything over 180 days needs an action plan.
Step 5
Settings → FBA → Inbound Settings → Inbound Placement Service. Three options with different fees and shipping splits.
Settings (gear) → Fulfillment by Amazon → Inbound Settings → Inbound Placement Service.
Three options: (a) Amazon-Optimized Distribution — default, cheapest IPSF ($0.21-$1.95/unit), Amazon splits inventory across 2-5 warehouses for you; (b) Partial Shipment Splits — fewer warehouses, $0.30-$2.30/unit IPSF, you do more pre-shipment work; (c) Minimal Shipment Splits — 1-2 warehouses, $0.41-$3.10/unit IPSF, simplest for small shipments.
For shipments under 100 units: option (c) is often cheapest despite higher per-unit fee.
For shipments over 500 units: option (a) is usually cheapest because Amazon handles the splits.
Run the math per shipment: total IPSF cost varies based on quantity AND product weight/dimensions.
Step 6
Pull 90-day sales velocity. Calculate weekly demand. Project 90 days out. Adjust for seasonality, planned promos, and lead time.
Reports → Business Reports → Detail Page Sales and Traffic by Parent Item → last 90 days.
For each SKU: total units sold ÷ 90 = average daily sales velocity.
Project: average daily velocity × 90 = 90-day demand.
Adjust for seasonality. Q4 demand is typically 1.5-3x Q1-Q3 for consumer goods. Use last year’s Q4 vs Q1 ratio if you have history.
Adjust for planned promotions: Lightning Deals lift sales 2-5x for the deal day. Plan inventory to absorb without stocking out.
Place restock orders so they arrive 7-14 days before forecasted stockout. Build a 7-day buffer for shipping variance.
Step 7
After 30 days: IPI should be stable above 400, Stranded Inventory should be 0, Low-Inventory Fee charges should be < 5% of normal storage.
IPI check: Inventory Performance dashboard. Should be 400+. If below, identify which sub-score is dragging.
Stranded Inventory check: should be 0 units. Any stranded = un-fixed listing or pending removal order.
Low-Inventory-Level Fee check: Reports → Payments → Storage Fees. LIL fees should be minimal — under 5% of total FBA fees.
Storage utilization check: Reports → Fulfillment → Monthly Storage Fees. Compare to last 90 days — if storage is climbing without revenue climbing, you’re over-stocking.
Sell-Through Rate check: target 2.5+ (units sold / units on hand quarterly). Below 1.0 = excess inventory issue.
Common mistakes
Letting FBA inventory hit zero
What goes wrong: Stockouts cost 30 days of velocity score on top of immediate lost sales. On a $5K/mo SKU, a 2-week stockout = $2,500 lost during the stockout PLUS $1,000-$2,000 in slow recovery over the next month. Total: $3,500-$4,500 per stockout.
How to avoid: Set restock alerts at 35-day cover (not 28). Build a 7-day shipping buffer. For high-velocity SKUs, keep 60-90 days of cover at FBA.
Over-stocking to avoid stockouts
What goes wrong: Excess inventory accumulates $0.87-$2.40/cu ft/month in storage, hits Long-Term Storage Fees at 271 days ($6.90/cu ft/mo), and drags IPI score below 400. Triple cost: storage + LTSF + storage capacity restrictions.
How to avoid: Target 60-90 days of cover, not 180+. Use Amazon’s recommended restock quantity as a guide. If lead times are unpredictable, address the supplier — don’t buffer with storage.
Ignoring Stranded Inventory
What goes wrong: Stranded units pay full storage fees while earning zero revenue. A 50-SKU seller commonly has 200-500 stranded units bleeding $100-500/month silently.
How to avoid: Weekly Stranded Inventory audit. 5 minutes per week. Fix every strand within 7 days — either re-list or create a removal order.
Wrong lead time setting
What goes wrong: Default lead time = 0 days. If your real lead time is 45 days from supplier-to-FBA, Amazon’s Restock Inventory under-recommends by months of cover. You stock out repeatedly.
How to avoid: Settings → FBA → Inbound Settings → Vendor Lead Time = your true overseas-to-FBA timeline. Be honest — overestimate slightly.
Not pre-positioning for Q4
What goes wrong: Q4 demand is 1.5-3x normal for most consumer goods. Sellers who restock in October stock out in early December. Lost sales during peak season = 30-50% of annual revenue at risk.
How to avoid: Place Q4 restock orders by August. Ship to FBA by mid-September. Storage rates spike in Q4 ($2.40/cu ft vs $0.87 off-peak), so don’t over-ship — but DON’T under-ship.
No Long-Term Storage Fee audit before day 270
What goes wrong: LTSF hits on day 271. A 100-unit SKU at $0.50/unit avg storage cost suddenly costs $4.20-$6.90/cu ft/month. On 50 cubic feet, that’s $345/month extra — silently, on the 15th of next month.
How to avoid: Monthly LTSF audit at day 240. Pre-emptive Lightning Deals, Outlet Deals, or Removal Orders for any SKU approaching the threshold.
Recap
Done — what's next
How to choose and set up FBA vs FBM on Amazon
Read the next tutorial
Hand it off
Inventory management is operations work — it rewards consistency over creativity. Most founders don’t enjoy the discipline and bleed $500-2,000/mo in storage waste + stockout costs. A specialist runs weekly restock planning, monthly stranded/LTSF audits, and quarterly demand-forecast updates. Typical engagement: $14-16/hr, $800-2,400/mo. ROI: usually pays back 3-5x in cost savings + recovered velocity.
See Amazon specialist rates
400+ is healthy and unlocks unlimited storage capacity. 350-400 is a warning band. Below 350 triggers storage limits — Amazon may reject inbound shipments. Most sellers operating well-managed catalogs sit at 500-700.
Depends on velocity. High-velocity SKUs (10+ units/day): every 30-45 days. Medium-velocity (3-10 units/day): every 60-75 days. Low-velocity (under 3 units/day): every 90-120 days. The goal is to maintain 60-90 days of cover at all times.
Technically yes — that’s Multi-Channel Fulfillment (MCF) from FBM. But you lose Buy Box advantage and Prime eligibility. Most sellers above 100 units/month use FBA for primary fulfillment and keep a small FBM backup for stockout coverage.
On day 271, Amazon charges $6.90/cu ft/month (or $0.15/unit minimum, whichever is higher) on top of normal storage. For most consumer goods, this is 5-10x the normal storage cost. Almost always cheaper to liquidate via Outlet Deals or Removal Orders before the threshold hits.
Amazon FBA: $0.87/cu ft (Jan-Sep), $2.40/cu ft (Oct-Dec). Typical 3PL (ShipBob, ShipMonk, ShipHero): $0.50-$1.50/cu ft year-round. For Amazon-heavy brands (70%+ Amazon revenue), FBA storage is competitive. For multi-channel brands, a dedicated 3PL with MCF integration usually beats FBA on storage but loses Prime advantage. See our Amazon vs Shopify tutorial for the full math.
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