This will be another busy year for Amazon. Its Q4 season sales, Prime Day, Black Friday, and Cyber week will happen one after the other. To avoid potential pitfalls during this holiday season, the retail giant announced the new Q4 Amazon storage limits for retail sellers.
This is due to the fact that Amazon increased its number of fulfillment centers in the USA to 33. Each one with a total storage capacity of 35 million cubic feet!
Here’s a rundown of these new Q4 Amazon storage limits, so you can crush this holiday season.
New Q4 Amazon Storage Limits
An email sent to the sellers outlined all the changes regarding new Amazon storage limits.
For starters, they depend on the storage limit criteria you fall into, and your storage type and volume (measured by cubic feet).
Q4 Amazon Storage Limits Promotion Criteria
Amazon counts the recent sales volume and the previous year’s seasonal volume to establish the storage limits for the upcoming quarter.
The promotion limits will also change depending on available fulfillment center capacity.
1. Individual selling accounts have a set storage limit of 10 cubic feet. These are not a part of the Amazon storage limits promotion.
2. Professional selling accounts are subject to the new storage limits, depending on whether they meet some criteria:
To calculate Inventory Performance Index (IPI), sellers must keep popular products in stock (which drives sales), and manage their on-hand inventory efficiently (no over- or under-stocking).
Sellers who have an IPI of 500 and above on either of the two score checkpoints won’t get storage volume limits for standard-size, over-size, apparel, and footwear items.
New sellers who were active less than 26 weeks or sellers who haven’t enough sales data to generate an IPI score during both score check weeks won’t get storage limit extensions.
Professional accounts that have storage limits will still have at least 25 cubic feet for standard-size, over-size, apparel, and footwear items.
Professional account holders can track their IPI on the Inventory performance dashboard and learn more about IPI from the IPI help page.The dashboard works as a hub for optimizing your FBA business, including customized recommendations to increase sales and reduce costs.
The IPI score is updated weekly and determined by your ongoing inventory management.
How to Take Advantage of the New Q4 Storage Limits Promotion
Keep your IPI scores within the Excellent and Good range. If you have good sales volume and Amazon warehouses have the capacity to stock more of your items, your score will eventually increase.
Increase your sell-through rate to balance out the inventory weeks of cover (selling more steadily rather than in spurts).
Avoid stranded inventory and fix any issues immediately to make sure that all your inventory is sellable.
Note that Amazon determines storage limits by volume.
Your remaining storage for this year will depend on your IPI during two score check weeks: Week 29 (July 12, 2020) and Week 33 (August 10, 2020).
The good news is brand new products can get their limits increased within these two weeks, even without having massive sales.
Your Amazon storage limits may vary, according to the product type and inventory situation at the Amazon warehouse where you stock your products.
Increased Inventory Performance Index (IPI) Threshold
Staring August 16th, 2020, Amazon increased its IPI minimum threshold from 400 to 500. This restriction will last throughout the rest of the year.
The Inventory Performance Index (IPI) measures your in-stock inventory, excess inventory, sell-through rates, and stranded inventory. Overall, how well you manage your inventory.
Keep an eye on your inventory management throughout the year to avoid running out of stock during this busy season.
Moreover, poor inventory management and sales loss can lead to storage restrictions and affect your seller account and IPI.
An IPI score of 550 or above is commendable.
If your score is lower than 450, this means you’ll need to step up your game to avoid Amazon putting any limits to your storage capacity.
In case you have extra inventory that isn’t selling fast or at all, you’ll get a low score.
If you have sufficient inventory at a given time that is enough to fulfill the orders and some extra when sudden demand emerges, and strong sales volume, you’ll likely to get a high score.
Sellers with a low score will be subject to storage limits. But it won’t affect most sellers as Amazon announces, “most sellers with IPI scores below 500 will have more storage space than last year”.
The reason is, Amazon is going to open 33 new fulfillment centers in the USA this year, increasing storage capacity by approximately 35 million cubic feet.
Check your score at the Inventory dashboard now. If your score is below 500, try to figure out what adjustment you should make to meet the new minimum threshold.
Amazon has different storage limits for six storage types: standard-size, oversize, apparel, footwear, flammable, and aerosol. Each product is classified by only one particular storage type.
You may not see a storage type on the storage monitor if you have a limit of zero for that storage type.
Dangerous goods, such as flammable items and aerosols, are handled separately and require different storage limit adjustments according to the FBA Dangerous Goods (hazmat) Program.
The storage type of your inventory is further determined by the products’ characteristics.
Amazon may adjust your limits based on this.
Calculating Cubic Feet
A cubic foot is measured by multiplying the length by the width by the height of the product in inches to get the volume, then dividing the volume by 1728 (12 cubic inches).
Amazon verifies the weight and dimensions of products using representative samples. If there’s a difference between Amazon’s information and the seller’s information on a product’s weight and dimensions, Amazon’s data will be used to calculate fees. Amazon may change the information about a product’s weight and dimensions from time to time to reflect updated measurements.
ASIN Quantity Limits
Amazon is limiting the number of units per ASIN that can be placed in FBA storage to cope with the high demand selling phase that Q4 brings. Amazon wants to ensure that customers have a wide selection of items during the peak holiday season.
According to Amazon, “most products will have enough space available for over three months of sale.” It means you can stock enough inventory to cover three months. You can also review your quantity limits for each product on the Restock inventory page and Restock report. Amazon reviews this and makes adjustments when possible to allow more space for your products as needed to meet demand so you can keep selling more.
Check your sales velocity and sales volume for the Q4 season to know how much you can expect to sell. Aside from that, look at your product limits to figure out how much to order and when to order.
Exceeding FBA Storage Limits
According to the FBA Inventory Storage limits Policy, you won’t be able to create any new shipments to Amazon for a storage type until the inventory level for that particular storage type drops below the given limit. If you send to a fulfillment center more inventory than your storage limit allows, the excess inventory will be refused. Read the Shipping and routing requirements carefully.
Moreover, Storage overage fees will be charged if the existing inventory exceeds your storage limit for any storage type on any day within a given month. Have a look at the Overage fee help page to know more about this.
If you want to reduce the amount of inventory you have at an Amazon fulfillment center, you can sell more inventory. The Manage Excess Inventory page gives recommendations to increase sales. If that won’t solve the problem, you can submit a request to return the inventory to you or have the inventory disposed of by creating a removal order. This works well for products that aren’t selling well. See Remove inventory (overview) for more information.
Submitting a Removal Order
Note that when you submit a removal order, the inventory Storage Monitor won’t show the changes until your request has been processed (usually on the following day). Customer returns also impact your overall inventory count.
You may be eligible for free removals under a limited-time Amazon promotion. (There is no set end date for this promotion.) If you predict that you will have excess inventory issues, it is a wise move to take advantage of this and place removal orders. It will help you avoid storage fees on excess/stranded inventory. You’ll also be able to create more space for inventory that sells well. Visit the Inventory Age tool and choose “Create Remove Order” from the menu next to the FBA item in question.
Remember, this free promotion is for removal orders only and not for storage fees. If you miss the opportunity to get free removals and end up with stranded inventory, you’ll still be charged storage fees. And they might be higher if your IPI is low. You can go for FBA alternatives if you are looking for a new fulfillment option.
A few more notes on Amazon storage limits
- Amazon does not offer the authority to purchase storage space.
- Amazon determines storage types based on the characteristics of that particular product.
- You cannot trade inventory between storage types.
- The previous storage type ‘hazmat’ turned into two storage types: aerosol and flammable, and they must be handled separately.
- If you are a new FBA seller, you will not be subjected to storage limits for two full storage limit cycles after you first receive an IPI score. Most sellers will first receive their IPI score nearly 15 weeks after FBA receives their first product.
- A whole new product can get its limit enhanced within two weeks of launch, even without having massive sales.
- Amazon might create the status of any particular product active; even the product isn’t received by Amazon yet (depending on the characteristics and sales volume of the product).
Amazon has already sorted the operational issues it faced in March and April during COVID-19, and is planning to avoid the problems that might interfere with its Q4 sales.
The adjustments with Q4 Amazon storage limits are great for both Amazon and sellers. Why? Because they compel sellers to plan for better inventory management.
You need to maintain a high IPI, strong selling velocity, and low storage fees to extract more benefits from the Amazon storage limits promotion.
Start investing in inventory that sells and in marketing campaigns now. Get rid of poor stock and replace it with fast-moving items.