{"id":11167,"date":"2020-10-01T08:21:01","date_gmt":"2020-10-01T15:21:01","guid":{"rendered":"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/?p=11167"},"modified":"2020-10-01T08:21:01","modified_gmt":"2020-10-01T15:21:01","slug":"amazon-fba-storage-restrictions","status":"publish","type":"post","link":"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/blog\/amazon-fulfillment\/amazon-fba-storage-restrictions\/","title":{"rendered":"Amazon FBA Storage Restrictions for Q4 2020, Explained"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Sellers who use Fulfillment by Amazon (FBA) as part of their shipping strategy know by now that Amazon has imposed storage restrictions on inventory levels for Q4 of this year. After facing unprecedented demand this year, Amazon is taking a proactive stance to contain the challenges of a potentially very busy peak season by limiting the storage capacity of their warehouses for FBA sellers. The restrictions will affect sellers with lower volume inventory, based on historical stock levels and Amazon\u2019s ASIN quality assessment. These restrictions may have a similar impact to sellers when Amazon placed <\/span><a href=\"https:\/\/sellercentral.amazon.com\/gp\/help\/external\/help.html?itemID=GF37V7QBB8WSVF43&amp;tag=bisafetynet2-20&amp;\"><span style=\"font-weight: 400;\">restrictions on inbound<\/span><\/a><span style=\"font-weight: 400;\"> shipments at the beginning of the coronavirus pandemic.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cSuppliers need to implement a plan to manage the very real possibility that Amazon&#8217;s FCs will be unable to accept enough inventory to meet Q4 demand. Make sure you have the internal and external resources needed to manage a sudden spike in FBM or SFP fulfillment during the height of the holiday peak. Also ensure that every internal team that touches FBM \/ SFP fulfillment (operations, sales, accounting, etc.) has a plan in place internally and with your 3PL to meet a big spike in FBM \/ SFP demand.\u201d \u2014Mark Williams, Managing Partner at On Tap Consulting<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It\u2019s worth noting that Amazon also continues to increase the number of new fulfillment centers across the US, and hire thousands of new employees to help support sellers during this coming holiday season.\u00a0<\/span><\/p>\n<p><a href=\"https:\/\/sellercentral.amazon.com\/forums\/t\/fba-changes-as-we-prepare-for-a-successful-peak-us\/660985\"><span style=\"font-weight: 400;\">Amazon\u2019s announcement<\/span><\/a><span style=\"font-weight: 400;\"> of these peak season restrictions went into effect in August 2020. There are three main changes for third-party merchants storing goods in Amazon\u2019s US warehouses:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">An inventory storage limit for sellers with overall lower volume (IPI below 500)\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">An inventory storage limit for slow moving inventory (specific ASINs)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Temporary promotion for zero cost inventory removal\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The storage limitations are based on sellers\u2019 historical inventory volume and sales, both on an overall weekly performance level, as well as a per-product basis. Here is a breakdown of the changes and the impact it will have on sellers during peak season this year.\u00a0<\/span><\/p>\n<p><b>Storage Limitations for IPI Below 500\u00a0<\/b><\/p>\n<p><i><span style=\"font-weight: 400;\">What is IPI?\u00a0<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">Amazon uses a metric called Inventory Performance Index (IPI) to calculate overall inventory performance over time. The metric is updated weekly, based on the past three months of sales benchmarked against inventory levels.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The following are included in the IPI calculation:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Sales volume (including your sales&#8217; seasonality periods)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Historical IPI scores<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Available fulfillment center capacity<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Storage capacity is measured by the total volume of inventory (measured by cubic feet). Amazon also factors the storage type of the products (standard-size, oversize, apparel, footwear, flammable, and aerosol) when determining the storage capacity.\u00a0<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">Q4 Inventory Storage Limitations<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">During peak season this year, sellers with an IPI below 500 will have limited storage capacity with Amazon warehouses. A seller\u2019s remaining 2020 storage limits will be determined based on their IPI during two score check weeks: the week of July 12, 2020 (Week 29) and the week of August 10, 2020 (Week 33).\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Sellers with consistently higher IPI scores will receive higher storage limits, adjusted for sales volume and available capacity. When setting limits for the upcoming quarter, Amazon will consider both your recent sales volume and seasonal volume from the last year.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Sellers with an IPI higher than 500 are not subject to storage restrictions at this time. Amazon <\/span><a href=\"https:\/\/sellercentral.amazon.com\/gp\/help\/external\/202174810?language=en_US&amp;ref=efph_202174810_cont_XLRKWL8L5BMSHWB\"><span style=\"font-weight: 400;\">provides recommendations<\/span><\/a><span style=\"font-weight: 400;\"> to track and monitor your IPI. The full explanation of <\/span><a href=\"https:\/\/sellercentral.amazon.com\/gp\/help\/external\/XLRKWL8L5BMSHWB\"><span style=\"font-weight: 400;\">Amazon\u2019s changes<\/span><\/a><span style=\"font-weight: 400;\"> can be found on their SellerCentral site.\u00a0<\/span><\/p>\n<p><b>Storage Limitations Based on ASIN Quantity\u00a0<\/b><\/p>\n<p><i><span style=\"font-weight: 400;\">What is an ASIN?\u00a0<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">Short for Amazon Standard Identification Numbers, the ASIN is a product identification number. These help distinguish products within Amazon\u2019s catalogue\u2014they do not correspond to any other identification outside of Amazon\u2019s catalogue.\u00a0<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">Q4 ASIN Limitations\u00a0<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">This year Amazon is also imposing a limit on the number of specific ASINs that can be in the FBA storage at one time. This restriction is Amazon\u2019s protection against having high inventory levels of items that are not selling at a high enough rate. It also maximizes the selection of products available for consumers during this high volume period.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Sellers will be able to stock inventory to accommodate three months of sales. Amazon promises that sellers will be able to track their inventory levels and make inventory level adjustments when possible. Ultimately Amazon wants to ensure all FBA sellers have enough room for their products. If a seller has inventory that sits for too long it will incur extra fees.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While there are no explicit metrics that Amazon cites as an acceptable ASIN quality level, their standard policy for items that haven\u2019t moved for six months or more are assessed as semi-annual long-term items and incur extra storage fees. The good news is, the quality limit of a specific ASIN can change over time based on inventory levels and sales data. Read <\/span><a href=\"https:\/\/sellercentral.amazon.com\/gp\/help\/external\/G200734520?language=en_US&amp;ref=efph_G200734520_cont_XLRKWL8L5BMSHWB\"><span style=\"font-weight: 400;\">Amazon\u2019s official explanation<\/span><\/a><span style=\"font-weight: 400;\"> of the ASIN rules.\u00a0<\/span><\/p>\n<p><b>Free Inventory Removal (Temporary)<\/b><\/p>\n<p><span style=\"font-weight: 400;\">In order to promote more inventory movement within it\u2019s warehouses Amazon has implemented a temporary free inventory removal service. This includes either returning the inventory to you or disposing of the inventory. Sellers can opt to have Amazon remove inventory that is old or not selling. This allows sellers the ability to create room for productive inventory in preparation for the holidays. This service began July 14, 2020 and is noted as temporary, although no end date has been publicized. Inventory removal usually incurs an extra cost.\u00a0<\/span><\/p>\n<p><b>What\u2019s the Impact for Sellers\u00a0<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Hopefully sellers have had time to adjust their storage strategy prior to the implementation of these restrictions, unlike in March when Amazon abruptly restricted accepting new shipments of any goods deemed non-essential.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cAmazon&#8217;s continued focus on inventory management creates challenges for Sellers like us, but also forces us to operate our business more efficiently.\u00a0 While there is short term pain, it allows us to be more profitable and customer focused.\u201d \u2014Keith Richman, Co-Founder of <\/span><a href=\"https:\/\/boostedcommerce.com\/\"><span style=\"font-weight: 400;\">Boosted Commerce<\/span><\/a><span style=\"font-weight: 400;\">\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Experts identify that sellers should plan to monitor inventory levels more often than usual in Q4 to limit stock outs or sending too much inventory to fulfillment centers. Amazon is explicit that if inventory arrives that exceeds your storage capacity, your items may be refused at the fulfillment center. Extra storage fees will be applied to any inventory that exceeds your specific storage limit.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cWith increased demand and strain on Amazon&#8217;s FCs, some warehouses likely will face constraints in accepting and checking in inventory throughout Q4. It may be better to reserve some share of inventory to fill those last minute orders through FBM than have holiday inventory gather dust in a freight yard outside of an Amazon FC until the new year.\u201d \u2014Mark Williams, Managing Partner at On Tap Consulting\u00a0<\/span><\/p>\n<p><b>Alternative Options for Sellers<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Many companies have found these storage restrictions and frequency of these changes cumbersome and disruptive to their business. While Amazon may be a critical, if not the only, sales channel for many sellers, there are several alternatives to replace or augment their reliance on the Amazon FBA service.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Certainly both Seller Fulfilled Prime or Merchant Fulfilled Network are options if FBA is costing too much or creating too many headaches. With both services, the seller retains the value of Amazon\u2019s massive marketplace, but has more flexibility and control with the storage and fulfillment of their products. Alternatively, sellers can take advantage of the growing number of online marketplaces, including Ebay, Walmart.com, and Target.com.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Working with a 3PL to help manage inventory is another great option. A good 3PL will have experience working with companies using Amazon Seller Central services (FBA, SFP, and MFN) and managing dropshipping for other marketplaces. They will have the infrastructure to help manage your inventory strategy and make recommendations on which Amazon program is the most efficient for you, based on sales, inventory, and product type. You can learn more details on <\/span><a href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/blog\/amazon-fulfillment\/top-3-amazon-fba-alternatives\/\"><span style=\"font-weight: 400;\">FBA alternatives<\/span><\/a><span style=\"font-weight: 400;\"> here.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you have specific questions about how to navigate your Amazon business, or are looking for a 3PL to partner with, <\/span><a href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/company\/get-started\/\"><span style=\"font-weight: 400;\">please reach out<\/span><\/a><span style=\"font-weight: 400;\">. DCL Logistics has an experienced and reliable team, dedicated to our clients success. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Sellers who use Fulfillment by Amazon (FBA) as part of their shipping strategy know by now that Amazon has imposed storage restrictions on inventory levels for Q4 of this year. After facing unprecedented demand this year, Amazon is taking a proactive stance to contain the challenges of a potentially very busy peak season by limiting [&hellip;]<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[28,19],"class_list":["post-11167","post","type-post","status-publish","format-standard","hentry","category-amazon-fulfillment","tag-amazon-fba","tag-fulfillment"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Amazon FBA Storage Restrictions in 2020 - DCL Logistics<\/title>\n<meta name=\"description\" content=\"After facing unprecedented demand this year, Amazon has limited the storage capacity of their warehouses for FBA sellers. 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