In 2020, COVID-19 drastically changed the world of shopping and ecommerce. Suddenly, shoppers were shifting from in-store to online at an unprecedented rate as people stayed home and in-quarantine. Amazon, being the king of ecommerce, reacted to these changes by introducing new stocking restrictions for sellers in an attempt to better accommodate for an influx in online traffic and provide ample warehouse space for all FBA sellers. These restrictions were implemented at an ASIN level, meaning sellers could only send in certain quantities of items on an individual level, based on product size and sales history. Sellers suddenly had to employ a lot more strategy when it came to inventory management, since they could only send a certain quantity of each ASIN into fulfillment centers at any given time.
Recently, however, times are changing once again. COVID-19 restrictions are lifting across the US and the rest of the world, businesses are reopening to full operation, and life is beginning to approach the “normal” we used to know. Like clockwork, in response to these changes, Amazon has once again introduced new policies for restocking FBA inventory in warehouses. However, instead of returning to the same practices sellers knew before, Amazon is moving in a completely different direction. Surprisingly, rather than removing pressure from sellers and opening up on restrictions, Amazon is doubling-down, possibly making inventory management more challenging than ever.
Amazon Storage Categories
Instead of restrictions that are based on individual ASINs, Amazon is now basing restock restrictions on storage categories. These four categories are automatically assigned to each ASIN and cannot be updated or changed, even through a seller’s request, and limits per category are based on factors such as sales volume, IPI scores, and capacity at Amazon’s fulfillment centers. These categories are broken down into the following types:
- Standard Size Inventory
- Oversized Inventory
- Apparel
- Footware
This means that, instead of allowing a specific amount of warehouse storage space per ASIN, Amazon now allows sellers a certain amount of storage space per category, applying to their entire inventory. BBS has already seen that, because of these changes, sellers with many SKUs in the same category may suddenly find themselves over their stocking limits and unable to send in new stock replenishment orders. Limits can grow if an account continues to perform well and boost sales volume and IPI score, but this can take a significant amount of time and effort. If a seller does find themselves over their assigned limits, they may be forced to initiate product removals to match their allotted storage quantities. If these removals aren’t completed within a 30 day period, Amazon can charge sellers for a manual product removal, then either destroy or resell the extra items at a discounted price. Either way, sellers with excess inventory have a lot at stake, so BBS recommends acting quickly to properly balance inventory numbers..
A New Strategy for Inventory Management
Since there is no longer Amazon warehouse space dedicated on a per ASIN level, and restocking limits have tended to be unusually strict with these new regulations, sellers now need to revise the way they think about inventory management. This new model has shown BBS that Amazon is putting more focus than ever on high-performing products, and that this model is a way for them to pressure sellers to filter out stale inventory and prioritize the items that make up the majority of their revenue. This means that sellers will have to be a lot more strategic and precise in the way they order so they can maximize space for their top performing ASINs while minimizing space for less popular items. In a way, we can see that Amazon is communicating to sellers that their storage locations are not warehouses, they are fulfillment centers. This means that inventory here is meant to be sold and moved quickly, rather than just sitting and gathering dust.
BBS has been developing dynamic inventory management strategies for our clients for years now, and we are thrilled we can help sellers navigate critical changes like these and keep their product in stock!
