This week Amazon made an important announcement about ASIN limits and FBA storage rules. Some of these new rules are great and some are less appealing depending on your sales history and your inventory management. Let’s take a look at how this announcement affects you as an Amazon seller.
Previous Amazon FBA Inventory Restrictions
You’re probably familiar with the ASIN limit of 200 units which was implemented on new sellers last fall. This was done in order to respond to the jarring effect the Covid-19 online sales landscape had on Amazon’s warehouse and storage facilities. Amazon saw the effect this boom of online sales had on its FBA warehouses before the holiday rush and wanted to get ahead of any issues that might arise around storage during that busy season.
New sellers were limited to 200 units and many were forced to look to 3rd Party Logistics (3PL) providers in order to store and move their inventory.
This week Amazon revoked the 200 unit limit and changed the way it assesses sellers’ overall storage limits. New sellers are now able to start off with anywhere from 500-100 units depending on their storage type. All sellers, new and old, are subject to new restock limits at the account level. Amazon no longer limits storage by ASIN number, but rather looks at your entire portfolio of products.
Storage Limits Lifted By ASIN – What does this mean?
Amazon now assesses your Inventory Performance Index (IPI) in order to determine if you qualify for unlimited storage. If you have an IPI of over 450, congratulations you will have access to unlimited storage. This score is assessed in the middle, and at the end, of every quarter. If you keep your IPI above this 450 level you will continue with unlimited storage for the following quarter.
Unfortunately, ‘unlimited’ storage doesn’t mean you can simply send as much product as you want into Fulfillment by Amazon (FBA). Amazon has also adjusted its ‘restock limit’. This limit is based on your overall sales and your product turnover. This limit also takes into account the type and size of products you sell. If your products are oversized or irregularly sized your limit will likely be lower.
So is this shift from ASIN-based limits to account level-based limits a good one for sellers? Well for new sellers this is great. It was hard to adhere to the 200 unit limit, many wholesalers sell products in larger quantities and so new sellers were forced to turn to 3PL’s even before they’d sold a single unit. The 500-1000 starting account restock limit is a much better fit for these sellers.
When it comes to established sellers the answer is a bit more complex. For some sellers the change is great, If your IPI is good and your inventory moves at a moderate and consistent pace you will likely applaud this decision by Amazon. However, some sellers, like those who sell very quickly and at high volume, may run into difficulties with the limit on restocking items. The restocking limit may cause delays as inventory moves out more quickly than the restocking limit allows for replacement products. This can lead to problems with customer satisfaction and negatively affect a seller’s IPI for the following quarter.
Another concern is, if an established seller is using their max restocking limit effectively they may have some trouble launching a new product.They will have to first limit some of their restocking of current products in order to make room for the new products they wish to sell.
Adapting To The New Reality
So as you can see Amazon’s new rules surrounding FBA, ASIN, and restocking limits can be seen as a positive or a negative depending on what kind of products you sell and your overall account, including your IPI.
So what do you have to do to adapt to this new restocking limit-based reality? Make sure to monitor your IPI, ensure your inventory rotates through FBA within 90 days. Stale inventory will negatively affect your IPI. Also, make sure to look ahead to important shopping periods and potential lulls so that you don’t get caught with not enough or too much inventory.
With all of these changes, it might be a good time to invest in your business by hiring a FBA Auditing and Reimbursement service like GETIDA.
Auditing and Reimbursement services will look back through 18 months of inventory management and ensure that there aren’t any discrepancies in your account. They will find and manage any reimbursement claims you might be entitled to. This frees you up to focus on your selling and gives you the peace of mind that you aren’t losing money due to discrepancies from Amazon.
Hopefully, this helps you move forward more confidently with your inventory management, and make sure to keep an eye on the IPI!
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