The biggest frustration for anyone in the e-commerce industry this year has been logistics issues. Dealing with Amazon storage limits can be aggravating as they are continuously and unexpectedly changing. Amazon restock limits have changed multiple times in the past year and Amazon promises more changes around December 2021. We’re reviewing the best tactics Amazon sellers can use to handle cuts and increase Amazon restock limits…
FBA Restock Limits
You can view your most up-to-date restock limits by storage type and maximum shipment quantity from the Inventory performance dashboard or Shipping Queue, by expanding your restock limits monitor at the bottom of the page. Amazon updates restock limits regularly, with new updates usually occurring weekly on Monday or Tuesday. After expanding your restock limits monitor, you can determine how much inventory you can send by reviewing your maximum shipment quantity by storage type. This can be used across your ASINs based on your preference as sellers are no longer subject to ASIN-level quantity limits.
How to Handle Cuts to Your Inventory Storage Limit
Amazon reduced your storage limit, now what? If Amazon gives you a storage limit, you will no longer be able to create shipments for a storage type until your inventory drops below the limit for that storage type. If you send more inventory to the warehouse than your storage limit allows, Amazon may refuse your inventory. Also, inventory over the storage limits will be charged an Inventory Storage Overage Fee of $10 per cubic foot for the amount over your limit, along with any applicable monthly or long-term storage fees.
Before launching into strategies to increase your Amazon restocks limits, let’s first discuss how to best handle cuts to your inventory storage limit…
Prioritize Your Most Profitable and Best-Selling Products
This April, Amazon announced the removal of individual ASIN limits and instead enacted overall account ASIN limits. Now that it is an overall account level limit, sellers can decrease inventory levels for their least profitable and least popular products and increase it in other, most profitable, or best-selling products. Additionally, make more room for best-selling products by creating a removal order with Amazon to have your less popular inventory either returned to you or disposed of for a fee.
Utilize Both FBA and FBM
With restock limits getting more unpredictable, FBA sellers might want to consider selling some slow-moving items through FBM.
How to Increase Your Amazon Restock Limits
Now that we’ve discussed a few basic strategies to handle inventory cuts, let’s go over some key strategies to increase your Amazon restocks limits.
First of all, Amazon states that quarterly storage limits are based on your sales volume, your historical Inventory Performance Index scores, and their available fulfillment center capacity. Two of these factors are in your control as the seller…
Drive More Sales
In general, Amazon will look at the last 3 months of sales history and update your capacity to reflect this. The more you sell, the higher your limits become. Two simple ways to increase your sales are through PPC ads and by driving your external traffic. Additionally, you should increase your sales by keeping your most popular products in stock at the right levels to meet customer demand and maximize customer satisfaction. Doing so will help improve your IPI score…
Improve Your Inventory Performance Index (IPI) Score
The Inventory Performance Index is a metric Amazon uses to gauge your inventory performance over time. You can track your IPI score on the Inventory Performance dashboard in Seller Central. Your IPI score relates directly to the amount of warehouse storage space Amazon will allot you as an FBA seller.
Your IPI score is a reflection of how efficient and productive you are in managing your FBA inventory. There are multiple actions you can take as a seller to improve your IPI score…
Improve Your Sell-Through Rate
Your FBA sell-through rate is your units sold and shipped over the past 90 days divided by the average number of units on-hand in Amazon fulfillment centers during that time period. Improve your 90-day rolling sell-through rate by maintaining the right balance of inventory over the same time period. Only send in inventory that you can quickly sell and restock later. For example, send in a month’s supply of inventory that you can consistently replenish every 30 days. Amazon will ding you for inventory that is too old, especially if you are getting close to the 180 or 365-day mark.
Reduce Excess Inventory
Maintain a balanced inventory level between sold and on-hand inventory and avoid overstock. Sell excess inventory as soon as possible! Do everything you can to make sure you don’t have stale inventory just sitting at Amazon’s warehouse taking up space for extended periods of time. Amazon expects sellers to either reduce their inventory relative to sales OR change the pricing strategy for inventory at their warehouses. Lower prices to get rid of inventory and remove any excess you’re not able to sell. FBA Liquidations is an Amazon program that assists FBA sellers in recovering value from excess inventory. Through the FBA Liquidations program, sellers who participate can choose to have their obsolete/excess inventory liquidated through a wholesale liquidation company. In other words, for a fee Amazon arranges a buyer (liquidator) for the items that sellers have deemed excess and subject to liquidation. The liquidators involved in the program sell Amazon-owned and FBA inventory to downstream consumers, and since Amazon contracts them, these liquidators cannot resell the FBA liquidated products on Amazon. Apart from the FBA Liquidations program, sellers can also use Amazon Outlet to recover value from excess inventory. Read our post on Amazon liquidation options to learn more.
Fix Stranded Inventory
It is crucial that you fix all of your stranded inventory immediately. Keep tabs on your stranded inventory page daily and ensure your inventory is buyable by fixing listings that are stranded.
Prioritize Keeping Popular Products In-stock
In situations where you don’t intend to or cannot restock certain inventory, hide your restock recommendations in Seller Central. On the other hand, if you have inventory items that consistently sell, then be sure to monitor these items and replenish your inventory to avoid going out of stock. Read more on best practices for forecasting inventory on Amazon.
Be Aggressive When Launching New Products
When launching new products on Amazon, improve your IPI by being aggressive in your launch strategy. Keep your sell-through rates high by driving external traffic to Amazon and running coupons.
Avoid Long Term Storage Fees
Amazon FBA fulfillment centers are meant to be used as fulfillment centers, not as long-term storage solutions for FBA sellers. If a seller makes a habit of sending in inventory that doesn’t sell quickly, Amazon will force a solution by either imposing storage limits or storage fees. The FBA Liquidations program helps sellers avoid paying storage fees for excess inventory items stored in the Amazon warehouse.
Conclusion
Finally, consider teaming up with an agency like Envision Horizons which can help you navigate the continuously changing eCommerce and Amazon space.
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