• Amazon Restock Limits Are Back

    By ZonSupport | Posted on November 7, 2022| Blog

    Your sell-through rate is all that matters in any business, e-commerce or otherwise. However, this is very much tied into how you control your inventory, or in Amazon’s case, how they control you to control your inventory to best serve their needs!

    We have long been advocates of So Stocked with many clients using their software. When I saw their blog, I thought it best for you to hear about Amazon’s update from this leading industry expert.

    Here’s the detail…

    After not having capacity restrictions for the better part of 2022, on August 29th sellers woke up to just that with an announcement from Amazon that they are bringing back restock limits to prepare for Q4!

    Hello,

    We want to ensure that we can receive, store, and fulfill products in a timely manner for all sellers using FBA. One of the ways we do this is through restock limits that enable all sellers to be able to send sufficient inventory to meet future customer demand.

    As we prepare for the busy holiday season, those demand patterns naturally change. To ensure a successful holiday season, including accounting for seasonality and scheduled deals, we are updating our restock limits to allow all sellers to have at least four months of inventory in FBA. 

    While all sellers using FBA will see their limits updated, this updated limit will currently restrict about 5% of sellers using FBA from being able to restock additional products due to their already having high levels of inventory.

    Our records show that your current inventory levels (including open shipments) are within our projected four months of inventory limit, and so these limits should not have an impact on your current ability to restock products. As always, you can review your current restock limits and maximum shipment quantity on the Inventory Performance dashboard (https://sellercentral.amazon.com/inventory-performance/dashboard 11).

    Your restock limits are determined by a range of factors, including seasonal and peak selling periods for your products, forecasts for your ASINs, the new selection you carry, deals you have scheduled and fulfillment center capacity. For more information on restock limits, go to Restock limits by storage type: Frequently asked questions (https://sellercentral.amazon.com/gp/help/external/GUWWC8QVAF8TFVFR 2).

    You can create more room for products within your limits by selling through your inventory, creating removal orders for products that are unlikely to sell, or canceling non-urgent shipments to fulfillment centers. For more recommendations, go to FBA Inventory (https://sellercentral.amazon.com/inventoryplanning/manageinventoryhealth 3).

    We thank you for choosing to sell on Amazon and for all you do to provide an excellent experience for customers by maintaining healthy levels of inventory.

    The Fulfillment by Amazon team

    With this update, all sellers will be allowed at least four (4) months of inventory in FBA, which completely contradicts recent moves they’ve been making to entice eCommerce sellers that are not even selling on the Amazon platform to use FBA Prime fulfillment services. 

    The announcement also came after the launch of Amazon Warehousing & Distribution (AWD), a low-cost upstream storage and distribution program that could rival independent 3PLs. 

    One of the selling points of this new service is that you can send inventory to an AWD facility without any storage limits. Interesting timing… 🤔

    They also boast lower storage and transportation costs, making it an attractive logistics option for sellers who may want to bypass the current inventory restrictions without leaving the Amazon fulfillment network, and possibly to keep costs down amid rising FBA fees.

    Coinciding the return of restock limits with the launch of AWD seems like a deliberate move by Amazon to:

    Make sellers more reliant on their storage, distribution, and fulfillment network. Otherwise, if sticking with your 3PL, you’ll be dealing with low restock limits leading to stockouts. You may have to run flash sales to sell through your slow-moving inventory that’s clogging your storage limits, pay hefty removal fees to get rid of extremely slow sellers, or cancel your FBA shipping plans to make room for products within your restock limits.

    Take more customers from Shopify and other 3PLs. In April 2022, Amazon rolled out Buy with Prime to offer fulfillment services to non-Amazon sellers, taking direct aim at Shopify. The Canadian eComm giant then fought back by acquiring Deliverr in order to offer 1- to 2-day shipping to marketplace sellers, going toe-to-toe with Amazon’s Prime services.

    But if everything works out in Amazon’s favor, they will be able to generate more revenue for their fulfillment business arm, which recently grappled with excess capacity and massive financial obligations associated with maintaining facilities they no longer need as economies reopen.

    It’s unfortunate (but not surprising) that the cost of Amazon’s over-expansion is, more and more, trickling down to sellers. While AWD can be a good way to avoid restock limits, it is still in its early stages and may not be as seamless as one could hope. We saw how Amazon handled their logistics last year!

    Handing over months’ worth of inventory to Amazon may be risky given that they’re not exactly immune to shipping delays and mistakes, especially during congestion times.

    So, proceed with caution, weigh your options carefully, and don’t ever let anyone have all your stuff! Especially not Amazon. Be sure to check out Amazon Restock Limits Tips and Updates for more information and sign up to get notified when new restock updates drop!

    About the Author

    Chelsea Cohen is the Founder and CEO of So Stocked, a fully customizable Amazon Inventory Management and Forecasting Software program. They recently introduced a new forecast algorithm that takes their program to the next level.

    As always, ask us anything. If we don’t know the answer, we’ll know someone who does!

     

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