As of 7/13/2020, Amazon announced three updates to its policies regarding FBA inventory within Amazon warehouses. These changes are a part of Amazon’s continued response to COVID-19, as well as preparing for the peak Q4 time period. While all this news is critical, Amazon sellers who use FBA will immediately feel the impact of changes to the weekly replenishment process (point 2 below).
Amazon FBA Policy Updates:
- Amazon now has increased the minimum threshold for the Inventory Performance Index (IPI) score to 500 (it was previously 400). If your account IPI score is below 500, Amazon will impose storage limits on your account. If you exceed these storage limits, Amazon will impose additional storage fees and you will not be able to ship in new inventory until IPI score is improved to above 500.
- You can find your Inventory Performance Index in “Inventory Planning” under the “Inventory” tab of your seller account.
- The Inventory Performance Index is based on how well you keep popular products in stock, maintain healthy inventory levels, and fix listing problems.
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There are now inventory limits on inbound FBA shipments. This is to help Amazon maximize the breadth of selection during peak season.
- These inventory limits are ASIN-specific. (At HINGE COMMERCE, we are currently seeing on average ~200 units per ASIN).
- The limits are based on sales velocities, sell-through rates, return rates, in-stock rates, and bestseller rankings.
- All ASINs will have limits, including new ASINs. For new items, once you build up sales history, Amazon will adjust the limit on these items.
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There is a free removals promotion to help remove slow sellers and free up space to send in top products.
- This is a limited-time promotion but Amazon didn’t specify for how long (only stating that they will notify by email when the promotion ends). HINGE COMMERCE recommends that all removal decisions be requested in Seller Central by the end of the month.
- Amazon will process must removals within 4 weeks of submission.
- Once a removal request has been submitted on an ASIN, you may not ship in inventory for that item for 90 days.
- Please note this can help improve your IPI score, by reducing the amount of low sell-through inventory within Amazon’s warehouses.
Implications For Your Business:
- If you are selling FBA today, you will want to make sure to get your IPI score above 500 to avoid Amazon storage limits.
- You may want to explore Fulfill By Merchant (FBM). Watch this short video to help you determine if FBM is right for your business. This checklist also shares tips for moving to FBM.
- If you are not yet selling on Amazon, and intend to use FBA, you need to launch on the platform as soon as possible in order to build up sales history in time for Q4. Do not wait until Q4 to launch!
Finally, if your business qualifies, HINGE COMMERCE may be able to refer your products to our Seller Fulfilled Prime distributor partners. Reach out to us to learn more.
