Amazon Hits Sellers With Restock Limits Again
On August 29, 2022, Amazon updated their restock limits to allow all sellers to have at least four months of inventory in FBA. You may have already seen a decrease in your Amazon restock limits, and if your current inventory levels, including open shipping plans, are greater than Amazon’s allotted four months of inventory limit per seller may be facing a difficult time in getting more stock sent in to FBA. Therefore, if you have slow sellers or excess inventory clogging your FBA storage space, you might not be able to restock until you get rid of those units. And if you can’t restock quickly enough, you may be at risk of stocking out and losing out on holiday sales (more on holiday fees here).
Sellers Are Pushed Into a Corner
In an email to sellers, Amazon FBA team explained that the updated inventory restrictions were put in place to prevent supply chain bottlenecks during the busy holiday season.
However, it’s hard to believe this explanation knowing that Amazon has nearly doubled their fulfillment network between 2019 and 2022, spending more than $15B and hiring over 628,000 employees.
Expanding their network also allowed them to launch Buy with Prime in April 2022, a fulfillment and checkout service for non-Amazon sellers. One could even take this as a welcome sign that inventory restrictions were gone for good. However, Amazon decided to subvert expectations by bringing back restock limits.
So, what could be the reason for this unwelcome change?
Amazon Warehousing & Distribution Program
Interestingly, Amazon recently introduced a new service to help third-party sellers on the platform solve supply chain challenges.
Entitled Amazon Warehousing & Distribution (AWD), this program offers:
- Automated inventory distribution from AWD facilities to Amazon and non-Amazon destinations
- Low-cost bulk storage solution without restock limits
“Without restock limits” being the key phrase, since it will surely help sellers with low FBA storage space to meet holiday demand. They can turn an entire trailer over to Amazon and not worry about any storage limit at all.
Sellers who decide to stick with their 3PLs will be left dealing with restock limits. The situation may get even more complicated if Amazon suddenly decides to drop their restock limits without prior warning.
With Q4 just around the corner, sellers are under a lot of pressure to do something drastic to increase their restock limits so they can stay in stock during the holidays. They might have to:
- Sell unwanted merchandise at a deep discount
- Pay Amazon to have their excess inventory removed or returned
- Cancel current shipping plans to create more space for top sellers
If all else fails, AWD may be the only recourse.
What’s Your Next Move
While AWD could possibly make many of those supply chain challenges go away, it’s not ideal to put all your inventory in one warehouse. Suppose Amazon loses your trailer or fails to check it in on time. In that case, you could still be facing a stockout.
It would be best to leverage both AWD and independent 3PLs and fulfillment centers to stay flexible, especially during peak season. If you don’t want to deal with low restock limits, use AWD, but also make sure to set aside buffer stock in your backup warehouse for emergencies.
Also consider adopting Inventory-Minded Marketing strategies in preparation for Q4. These inventory systems will help you to avoid stockouts and overstocking during the holiday season and beyond.
For more tips and updates, check out the Inventory Secrets webinar hosted by Chelsea Cohen, CEO & Co-Founder of SoStocked who lays out a game plan to stay profitably stocked.
