Need Extra Storage Space for your Amazon FBA Business? Check out this Hot Tip!
Some sellers have been struggling to keep up with the new FBA storage limits. Now, Amazon is offering certain companies a way out – if they can afford it! The company announced today (February 24) that beginning this month and for six more weeks in 2019; any business lucky enough be selected will receive increased shelf space at no cost as long their inventory doesn’t move too quickly or get stocked by another vendor before being ordered onto ships from amazon.
The “pilot” program provides an opportunity not just allow these select few businesses store tons more products upfront but also take advantage of reduced shipping rates once items.
An Amazon spokesperson told EcommerceBytes, “Based on feedback from our selling partners, we are testing a new feature to allow sellers to request additional storage space in our fulfillment network, and at no cost provided they use the additional space efficiently.”
In November 2017, Amazon began assigning sellers an IPI score which measures their inventory performance. Those with a high enough number have no storage limits and can sell at will during times when other companies are limited by how much they’re allowed to store in total or specific regions due supply issues like natural disasters that might make it difficult for them operate freely as normal businesses would want too otherwise if there was less than perfect distribution networks available around town
The company has since lowered this requirement down from 400 points before but now only requires buyers who rated your listing poorly because you didn’t restock often enough.
Sellers with an IPI score between 350 and 400 were sent a letter today inviting them to participate in Amazon’s new program, Storage Limit Manager. The company is offering those who qualify the chance for increased storage space on its servers by paying fees based upon their current usage rates.
Amazon explained in the email, “many of you have told us that because of your unique knowledge about your products, planned launches or promotions, or other factors, you need more storage than we’ve allocated. We designed Storage Limit Manager in response to that feedback and to put you more in control.”
The seller reserves the right to charge a reservation fee for any wasted storage space. This allows them more control over how much physical inventory they have on hand at any given time, which in turn leads down an easier path towards reducing transportation costs and increasing overall profitability.
Amazon went on to explain:
“We’ll assess our capacity weekly and approve as many requests as space allows, starting with the highest reservation fee. For all sellers approved in a given week, the lowest reservation fee will apply, which means your reservation fee could be lower than you specified in your request.
“If your request is approved, your storage limit will increase for the second quarter. No fees will be charged to your account until after the quarter ends.”
Sellers can offset up to 100% of the reservation fee with performance credits. Amazon explained:
“You’ll earn performance credits for every dollar of sales that you generate using the additional space during the second quarter. These credits give you the opportunity to offset 100% of the reservation fee.
“The tool’s performance credit preview is updated daily so you can easily track the amount of credits you’ve earned.”
If a seller’s product isn’t moving as they had expected, it will be important for them to monitor in real time their sell-through rate throughout the quarter so that when quarterly reports come around at month end you can see if there has been any changes.
This program will not affect sellers with an IPI of greater than 400, since they do not have storage limits.
Sellers whose initial inventory does move won’t be charged (and will able to replenish that space throughout the quarter) as part of a new initiative by Amazon Web Services called empirical research pilot programs .
Restock limits are a touch more relaxed than FBA storage ones but it’s worth noting that they exist for different reasons. The introduction of the pandemic created an incentive to keep employees safe while also boosting efficiency at Amazon centers; these were introduced during its height in order not only manage inventory efficiently between workers who may come down sick or transfer out due changing needs within their company- rather then having them sit on shelves taking up space until someone else can use them -restrictions have been gradually removed since October 2017 so now if you’re able enough (or just want) there’s no excuse not to.
The Amazon Storage Limit Manager came with a calculator to help sellers estimate the potential cost of their request and how many sales they would need in order for it not be profitable. Note that Amazon executive John Felton addressed issues such as restock limits and seasonal limits in a keynote during the company’s October Accelerate conference, which is worth watching on YouTube (starting at about minute 19).
July 14, 2022
About the Author:
Nick Uresin is the Founder and CEO of ArgoMetrix, a New York based software and consulting company established in 2013. Nick is an Entrepreneur, Electronics, Communications and Computer Science Engineer, who has a passion for problem solving with technology. Nick built an online retail company with annual revenues of over $10 million. He developed his vision to organize the knowledge and technology he developed to become a large Amazon Seller and provide it as a service to manufacturers and sellers of consumer products. Let's get social! Follow us and get ArgoMetrix's latest updates on Twitter, Facebook or LinkedIn.