Key takeaways:
- Amazon FBA Storage limits determine the maximum inventory space available to sellers in Amazon's fulfillment centers. These limits vary based on the seller's Inventory Performance Index (IPI) score, sales volume, time of year, and storage type.
- If you exceed your storage limits, Amazon may remove excess inventory, you may be charged overage fees, or your ability to send more inventory to Amazon fulfillment centers could be restricted until the issue is resolved.
- To avoid running into issues with Amazon FBA storage limits, you need to regularly monitor your IPI score and inventory levels, optimize inventory turnover, use Amazon's Restock Inventory tool, and leverage Multi-Channel Fulfillment.
The Amazon FBA program is a service that provides sellers with a convenient way to fulfill orders on the Amazon marketplace.
With fulfillment by Amazon, sellers only have to ship their products to an Amazon fulfillment center while Amazon takes care of everything from storing and handling your Amazon products to picking and shipping them to customers.
However, amidst these benefits, the FBA program also has its limitations. One of them is the Amazon FBA inventory limit.
As an Amazon FBA seller, understanding your Amazon FBA inventory limit is critical to proper inventory management and your overall success.
In this article, we look at all you need to know about an Amazon FBA inventory limit and how it can affect your business.
What is an Amazon FBA Inventory limit?
An Amazon FBA Inventory Limit, now referred to as FBA Capacity Limit is a storage limit placed by Amazon on sellers. It specifies the maximum number of Amazon inventory you can store at Amazon fulfillment centers. This inventory limit varies from seller to seller.
You may be thinking, why does Amazon have an inventory limit? Well, while Amazon has many fulfillment centers all over the world, Amazon wants to have fewer products in their storage picking up dust.
If you have a high sell-through rate, you will likely be able to send more products to fulfillment centers. On the other hand, if you overstock or have a slow-selling inventory, your Inventory Performance Index (IPI) will take a dip, decreasing your FBA inventory limits.
Where to find your Amazon FBA inventory limit
To check your Amazon FBA inventory limits, simply go to your Seller Central Dashboard, and on the Inventory menu, click on Manage Inventory > Manage FBA shipments.
At the end of the page, you will see “Storage Volume” and “Restock Limits”. Go to “Restock Limits” to see how much storage space is available for different storage types. You will also find the following quantities:
- Utilization quantity
- Maximum inventory level
- Maximum shipment quantity.
Amazon's current inventory quantity limit
In February 2022, Amazon placed restock limits for different storage types. Each product is categorized into one of six storage types: standard, oversized, footwear, apparel, flammable, and aerosol. These categories are based on the product's characteristics, and storage limits are applied depending on the type. This means that sellers were no longer limited to ASIN-level restock limits which were introduced in 2020 due to the pandemic.
With the storage-based restock limits, sellers can create shipment plans without worrying about ASIN restrictions.
However, this type of inventory limit also has its limitations. For example, it may be difficult to add new products or more products to a particular storage type. Also, if your available inventory and inventory in transit go over your restock limit, you won't be able to create a shipment on your Amazon seller account.
What happens if you ship above your Amazon FBA storage limit?
If you try to ship inventory above your restock limit, you will be violating Amazon's Terms of Service. When your on-hand inventory exceeds your capacity limit, Amazon charges excess inventory fees. These fees are calculated based on the difference between your actual inventory and your capacity limit. Continuously shipping above your FBA capacity limits can lead to account suspension and if you consistently fail to comply with FBA capacity limits, Amazon may delist certain products from sale.
The only way to get around your Amazon FBA inventory limit is to store your inventory at a third-party fulfillment center or your own storage space. Any shipment plan created will be canceled.
How to avoid exceeding your Amazon FBA inventory limits
Here are effective strategies to manage and avoid hitting your FBA storage limits:
- Know your FBA capacity limit: Regularly check your FBA capacity limits in your Amazon Seller Central. Amazon adjusts these limits based on factors like your Inventory Performance Index (IPI) score, product type, and storage availability.
- Focus on fast-moving products: To avoid exceeding your FBA storage limits, keep your fastest-moving items in stock. This ensures that you are meeting customer demand without inflating your inventory levels.
- Cancel open shipments: If you have open shipments that aren't planned for immediate arrival at Amazon, cancel them to free up inventory space to avoid them being counted towards your FBA storage limit.
- Integrate FBA and FBM: For a large product mixture, use a combination of FBA and FBM. For fast-selling, high-margin items, you want to use FBA and for low-profit, slow-moving, or large items, you may consider using FBM.
- Stay up-to-date: Amazon's policies evolve, so take note of any changes to Amazon's inventory policies and adjust your inventory management strategies.
How to increase your Amazon FBA inventory limit
Amazon revises inventory limits based on how well a seller performs. So here's how you can increase your Amazon FBA inventory limit:
Generate more sales
Amazon calculates your restock limits using your sales history. If you can generate more sales, you may get a little increase in your maximum inventory limit. Several strategies can help you increase sales for slow-selling inventory. You can invest in PPC campaigns to increase visibility and ultimately boost sales. Additionally, you can drive external traffic to your product listing using email marketing and social media.
Improve your IPI score
Your IPI score or Inventory Performance Index is a metric that reflects your inventory performance over a period. It shows how effectively you are managing your Amazon inventory.
Improving your IPI score may earn you a boost in your FBA restock limits.
Here are a few ways you can improve your IPI score:
- Improve your FBA sell-through rate: Your FBA sell-through rate is calculated as the number of units shipped and sold over the past 90 days divided by the number of units on hand in fulfillment centers within the same period. To improve your sell-through rate, only stock products that you can sell quickly.
- Fix your stranded inventory: Some inventory may become stranded for various reasons and this could affect your IPI score. Ensure you check your Seller Central account regularly to fix any stranded inventory.
- Reduce excess inventory: Avoid overstocking and maintain a balance between on-hand and sold inventory. You can lower prices to sell slow-moving products faster or liquidate them through a wholesale liquidation company.
- Keep the most popular products in stock: Plan your shipments using the replenishment quantity and ship date recommendations in your Seller Central account. You may also want to invest in inventory management software to monitor the process and avoid going out of stock on your most popular products.
If your IPI score is above 450, it is considered good on Amazon. If maintained for a few weeks, you get unlimited storage space for each storage type. However, restock limits will still apply.
Avoid long-term storage fees
Amazon charges long-term storage fees if your inventory is stored in Amazon fulfillment centers over a full year. You want to avoid these fees by generating sales for slow-selling inventory.
Automate inventory management
Inventory management can become challenging especially if you are selling multiple products. As an Amazon seller, you want to ensure you have enough products in stock and also avoid overstocking products.
To accurately predict this, you can invest in inventory management tools. This will automate the process and help you maintain a good IPI score.
Strategically plan your inventory
Use historical sales data and market trends to accurately forecast demand. This helps you get just the right amount of inventory to meet customer needs without overloading your FBA storage. Be proactive in managing your inventory levels, especially during peak seasons. This can help you avoid last-minute rushes that could lead to exceeding your storage limits. If you have slow-moving items or inventory that cannot be stored in Amazon's fulfillment centers, you can consider using Amazon’s secondary warehouses or a third-party logistics (3PL) provider to manage your inventory and free up FBA space.
Do individual and professional Amazon sellers have the same restock limits?
Restock limits for individual sellers are different from those for professional sellers.
Individual sellers have a fixed restock limit of 500 units for standard-size storage products and 100 units for oversized storage products. In contrast, professional sellers may have more flexible and higher restock limits, which can increase over time based on their performance and adherence to Amazon's policies
When does Amazon reset FBA restock limits?
There are no scheduled dates when Amazon revises restock limits. The restock limits are revised based on the performance of sellers, particularly their Inventory Performance Index (IPI) scores. Amazon regularly assesses your performance, including aspects like sell-through rates, return rates, and order fulfillment rates and improvements in these areas can lead to higher restock limits. So, following best practices to increase your restock limits improves your chances of getting a good review.
Conclusion
Handling Amazon FBA inventory limits can be quite challenging. However, with proper planning, you can navigate the restock limits and manage your inventory properly.
If you have further questions on how to handle Amazon FBA inventory limits effectively, you can speak to one of our Amazon FBA consultants on ePlaybooks right away.
