In April 2021, Amazon imposed FBA (Fulfilment by Amazon) restock limits to accommodate the increased number of sellers that started using FBA during the global pandemic, which has had a knock-on effect for businesses that sell on the marketplace.
During 2020, e-commerce experienced a boom especially during the pandemic, which saw Amazon increase the number of products that brands were able to stock. Throughout the pandemic, businesses that traditionally didn’t trade on Amazon flocked to the marketplace as it was a sales channel that was still operating when traditional retail outlets were closed.
Businesses were able to send stock to Amazon warehouses with enough products to cover a 90-day stock period – this is huge in the e-commerce market.
As a trusted Amazon agency, we have helped multiple clients understand and pivot to these recent changes in re-stock limits. In this blog, we will explore the reasons why a re-stock limit was introduced, what this means for your business, how you can remain agile with these changes and continue to be a success on Amazon.
Why has a re-stock limit been introduced?
Although it appears that Amazon has done this to ensure sellers and Amazon have enough room to store their products, it has had a huge impact on businesses because these limits are hugely restricting the amount of stock sellers can now hold in comparison to larger storage limits that they had previously.
Amazon had to effectively reset to cope with the huge increase in demand caused by the pandemic.
So, what does this mean?
Across our client base, we’ve seen restock limits drop from Unlimited Storage down to 1000’s of units. This means that we’re having to rethink how we manage FBA storage going forward.
It is possible to run Amazon businesses on much smaller stock covers, but it requires sellers to be more dynamic and reactive to changes in demand and keep a closer eye on stock levels. Having an efficient internal logistics and strong stock management will give sellers an edge over their competition as they head into Q4 of 2021.
Ultimately, these changes were made because of insufficient warehouse capacity at Amazon and now vendors on the marketplace need to adapt to make the most out of their restock limits.
How to work within the re-stock limits?
These are our recommendations for best managing FBA limits:
- Prioritize your most profitable items – now that it is an overall account level limit (rather than ‘by product’), we advise decreasing your inventory levels in slower selling products and increasing them in your best-selling products. Focusing on products that sell well and make your business more profitable in the long run.
- Increase your sales – Generally, 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. Explore ways to promote your products and increase sales through PPC and promotional activity.
- Sell slow-moving items through FBM – If you’re selling solely through FBA, it might be time to try FBM (Fulfilled by Merchant) or SFP (Seller Fulfilled Prime). With these restock limits getting crazier, you may have to use 3PLs going forward. Why not reserve this for items that don’t sell as fast?
- Create removal orders – create room in Amazon storage for your best-sellers and new products by creating a removal order to have your inventory returned on slower selling lines.
To get a grasp on the changes, it is important as a business to understand your stock levels, best-selling items, your marketplace and how you perform during seasonal periods. We are heading into a key trading period (Amazon Prime Day, Black Friday, and Christmas), do you have products stocked with Amazon that perform better than others during this time?
Will Amazon change the re-stock limit again?
As with most things Amazon-related, sellers the platform is open to changes. Amazon has promised that it will update restock limits regularly and we believe that it will be refined as time moves on.
Your Q3 performance and IPI score will undoubtedly influence your Q4 restock limits – so we advise you to start taking actions now, to stand you in good stead for the busiest trading period for Amazon.
To handle the increased demand, Amazon is increasing its number of warehouses so will soon have increased capacity, which we believe will lead to further amends to the re-stock limits.