Amazon restricts inventories in an effort to prevent the holiday rush. The upcoming October Amazon Prime Day is expected to make thi...
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Amazon
restricts inventories in an effort to prevent the holiday rush.
The upcoming
October Amazon Prime Day is expected to make this holiday season busier than
ever. As part of its fulfillment plan, Amazon is increasing its storage
capacity. In addition, the massive online retailer disclosed that it is
imposing additional storage restrictions on its partners.
In an email
to sellers, Amazon said that it will be enforcing stringent storage limitations
for all third-party vendors who keep merchandise in US warehouses in order to
satisfy customer demand.
The goal is
to avoid having to use up storage space over the holidays due to massive
shipments.
Thus, in
order to avoid setbacks and difficulties during the busiest time of the year,
Amazon sellers need to prepare.
Let’s get
into the details.
News on
Amazon Inventory In the midst of the Christmas rush, Amazon just revealed the
following:
"From
August 16 to December 31, storage limits will apply to Amazon sellers having an
IPI (Inventory Performance Index) score of less than 500.”
What does
that signify?
First of
all, because this news was made without previous notice, some sellers may
become anxious. But sellers still have until August 16th, and it takes time for
the IPI score to adjust.
How
should vendors get ready?
With Q4
quickly approaching, having an intelligent inventory management system is
essential to prevent stockouts during periods of high demand.
The
necessity of keeping an eye on inventory levels has increased with the
introduction of new regulations. Inadequate inventory control will lower your
account's health, reduce sales, and lower the Inventory Performance Index.
How well you
handle your on-hand inventory will determine your IPI. Several of the
significant factors are as follows:
1. Excess inventory
2. Sell-through rate
3. Stranded inventory
4. In-stock inventory
Eliminating
surplus inventory that isn't selling quickly enough should be your top
priority. Based on previous sales, Amazon regularly updates this metric.
Therefore, storage constraints apply to your goods if your IPI score is less
than 500. Utilize your Inventory Performance Dashboard to monitor your IPI
score. You can raise your score by taking into account Amazon's suggestions.
Approaching
the second announcement now.
Quantity
Limits for ASINs
The quantity
of products per ASIN that can be kept in FBA storage is limited by Amazon.
All product
categories are impacted, and the limited numbers vary depending on the
product.
Why is
Amazon acting in this way?
As the
coronavirus pandemic spreads, Amazon finds it difficult to modify its business
practices. It's possible that Amazon implemented this new restriction in order
to meet the increasing demand and maximize the range of products that are
available to buyers.
How can
merchants address this issue?
You can keep
three months' worth of sales worth of inventory, and you should routinely check
the quantity restrictions for each product.
Go to the
page where you can refill inventory and select "Days of supply." On
the page, you may find the maximum delivery amount that is permitted. This is
the highest amount of inventory that Amazon will permit.
Sellers need
to be aware that restrictions at the ASIN level are already in effect.
Furthermore, since sellers are unable to remove limits, you must understand the
distinction between restrictions imposed at the account level and those imposed
at the ASIN level.
Last but
not least, Free Removals
Stale and
dead inventory can always be taken out of the warehouses by Amazon. Amazon has
now enabled free removes promotion, which has greatly simplified the procedure.
These kinds of removal offers are becoming more common, which is not surprising
given the impact of COVID-19 on the Amazon supply chain.
With this
new change, sellers won't have to pay to remove FBA product from warehouses,
saving them money on expensive storage fees. The alternative has limitations,
the business added. It did not, however, specify the expiration date of the
offer.
With
immediate effect, Amazon has announced that it will no longer charge for any
removal orders that are filed to its fulfillment centers.
Not sure how
to locate it?
In order to
initiate a removal order, go to the Amazon Inventory Age Page.
What is
it that sellers need to remember?
The problems
with logistics and operations aren't going away anytime soon, despite Amazon's
best efforts. As a result, sellers ought to consider this while organizing
their Christmas season. Companies that sell big things, particularly 1P
suppliers, should anticipate some hiccups along the route.
Although
Amazon merchants might profit from this revelation, they should think about the
possible long-term effects on their IPI score.
For
instance, before August 16th, a seller with a low IPI score is unlikely to make
a profit and should probably think about leaving merchandise at the Amazon
fulfillment facility. They can scarcely restock the same stock levels in the
near future, which is the cause of this. However, merchants on Amazon with an
IPI score higher than 500 must to closely examine their stock. Sellers who have
merchandise that would be less expensive for you to store should think about
removing it as storage charges can increase in Q4. Later in the year, you can
transfer the stock to Amazon.
Final
Thoughts
The
operational problems that Amazon encountered in March and April of 2020 as a
result of the coronavirus epidemic have been resolved. But given the retailer's
desire to prepare for Q4, this latest update is hardly shocking. By doing this,
they will be able to steer clear of any inventory and operational problems that
can arise throughout the Christmas season. It might compel you to schedule your
inventory far in ahead, but it can assist you in taking the essential steps to
grow your company.
Read More:
How to Use Liquidation Inventory to Boost Your Amazon Sales
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