Amazon has created a marketplace where business owners like you can thrive. One thing to note, however, is that changes can happen fast. Amazon sellers over the last couple of years have become increasingly aware of that fact. In the spring of 2020, the COVID-19 pandemic led to a restock limit for Amazon sellers who use Fulfillment by Amazon (FBA).
The initial restrictions were ASIN-level quantity limits. This meant that you could only send a limited number of units per ASIN to Amazon. As of April 2021, this practice was discontinued. Now, the restock limit is based on storage type. The new inventory changes may affect your business positively or negatively.
What Are Amazon Storage Types?
The latest Amazon updates to inventory limits are based on storage type and past and forecasted sales. Understanding the restock limits, helps to understand how Amazon categorizes storage types. There are four categories with Amazon:
Standard-size refers to any unit that weighs less than 20 pounds. These items cannot exceed the dimensions 18"x14"x8. Oversize, on the other hand, is any unit that exceeds the standard-size limits. Amazon counts any wearable clothing and accessories as apparel. Footwear includes shoes, slippers, and boots.
How Do the Restock Limits Impact Sellers?
The new restock limits vary from seller to seller because they are based on past and forecasted sales. For example, if your previous sales data does not show the need for more units, then you cannot send in more inventory. Last spring, Amazon's reasoning for the limits was to maximize the selection for customers. Now with the Amazon FBA changes, the intent was to allow sellers to have more flexibility.
Your shipping queue page includes all of the information that you need to find out your restock limits. From the shipping queue page, check out your inventory performance. Amazon calculates your maximum shipping quantity by taking your maximum inventory level and subtracting your utilization. While pending removals and reserved units are not included in the calculation, your overall inventory does include customer returns.
How Do the Restock Limits Benefit Sellers?
One of the major benefits of this change is how it affects your ability to release new products. Under the 2020 limit for example, you could not store more than 200 new units at a time. Now, you can send as much of your new inventory as you want. The only limit is your general restock limit. This makes it easier for businesses who want to introduce new goods to meet demand.
Another advantage is for those who have a diverse catalog of items. If your store carries various storage types, then your limit probably won't affect you as much. You will be able to send a variety of units from different storage types.
How Do the Restock Limits Harm Sellers?
While many people were relieved to lose the ASIN-level quantity limits, there are disadvantages with the new restock limit. Since the restock limit depends on your past and future sales, it has created an issue among those who sell popular seasonal goods. For example, if you sell Christmas decor, you may sell very little throughout most of the year. In fall and winter, however, you may make enough sales to make up for it. Unfortunately, under the new limits, you may not have enough room for decorations when the time comes because Amazon took your slow season into consideration.
In addition to difficulty with popular seasonal items, the change was sudden, and sellers did not have time to change their strategy. If you have shipments abroad or on the water, it would be more difficult to make changes to those shipments, even if it would bring you above your restock limit. Manufacturing abroad and sending straight to Amazon is a lot more difficult.
As a seller, you have to be able to manage and monitor your Amazon FBA inventory. Amazon does continue to assess network capacity, and there may be more changes in the future. If your restock limits change, you can check them instantly by looking at your restock limits monitor. If you want to reduce your utilization ratio, you need to decrease your inventory or cancel open shipments that you don't plan to send to Amazon. If you want to decrease your inventory, you have to create a removal order or sell more products.
The ability to sell on Amazon isn't going anywhere anytime soon. Understanding the restock limit can save you the hassle of hitting your limit or losing critical sales. Find out how you can take your Amazon business to the next level by contacting ScaledOn at 604-392-7004.