Amazon imposes a monthly limit on the amount of inventory that FBA sellers can ship and store in Amazon’s fulfillment centers.
Over the next two months, Amazon will provide sellers with estimated capacity limits to help them plan for the longer term, according to the company’s blog post. Finally, sellers can now request more capacity by offering a reservation rate per cubic foot that they are willing to pay. Amazon will grant these overage requests based on the highest bidder until we run out of available capacity. This new inventory management system will go into effect on March 1 and will replace the weekly replenishment limits Amazon used to calculate his FBA storage locations.
A director of Amazon agencies and accelerators told Modern Retail that these new changes will help sellers better predict their inventory. The full impact of these developments has yet to be seen, but brands with unsold products accumulating in Amazon’s warehouses may find it more difficult to request additional FBA storage space.
Dharmesh Mehta, Vice President of Amazon Worldwide Selling Partner Services said in a blog post: “Our goal is to give sellers more control over the amount of space they can own while limiting non-productive use,” he added.
“This is a big problem for brands with unproductive inventory in Amazon warehouses and fulfillment centers,” Casey Green, director of sales at Pattern, told Modern Retail. “It may hurt [sellers] Features that demand more space in the future. I think people with fast-moving products will be great for them and can demand more products and more space, but unproductive products will hurt them ‘ added Green.
As purchasing patterns changed dramatically over the course of the pandemic, Amazon has made countless changes to its inventory limits as it struggles to know exactly what kind of inventory it should prioritize in its warehouses. In April 2022, Amazon added a new oversized storage type to the existing standard size, oversize, apparel, and footwear storage types. In 2021, in his SupplyKick blog post, an Amazon agency, some third-party sellers reported that their maximum inventory capacity had dropped by 25% to 60% overnight without warning. is explained in detail.
“This is a hot topic right now and has probably been going on for the last four to five months,” said Green. Specifically, Green says, “Many of his 1P brands say their orders have halved in the last six months due to capacity constraints.” And on the 3P side, “most sellers are also shrinking their fulfillment center space. rice field.
In addition to booking fees, another expert noted that excess volume could create additional hoops for sellers to jump, said Kiri Masters, head of retail market strategy at Acadia. He said: “My concern is that we can’t significantly increase capacity from the start. We have to pay a price for that,” she added.
Amazon has been careful that sellers don’t have to pay for additional capacity as long as the product sells. This is to reward performance credits intended to cover up to 100% of the reservation price.
Masters also warned that it remains unclear whether “the baseline amount of sellers’ overall inventory allocation has been reduced and they are being asked to fund additional space.”
Last week, Amazon announced that Buy With Prime, a tool that allows brands to qualify products for Prime shipping on their websites, will be available to all US sellers starting January 31st. bottom. Masters said these inventory changes are part of Buy with Prime’s wider rollout.
“They seem to be trying to bring in more merchants. [Buy With Prime]And it only works if it’s in stock. And while they’re looking to drive inventory, storage, and fulfillment, we’ll have to see what those projections look like.
Overall, Masters said he welcomed the new management system. [Amazon] had MeIn the past” Added masters.
