Sellers have come to rely on Amazon FBA to store and fulfill their orders, so running up against restock and storage capacity limits can be frustrating and feel like the company is putting the brakes on their revenue potential. In October, we reported several times about anxious complaints from sellers that Amazon had significantly reduced the FBA storage space available to them in its fulfillment centers.
Amazon announced today a new system for sellers it says will give them more control over managing their capacity. It is combining weekly Restock limits and Storage limits together into a single new “FBA capacity limit” that will apply monthly.
Amazon Vice President of Selling Partner Services Dharmesh Mehta said in a blog post today that sellers had told the company they need more capacity, more predictability, and more control over their inventory. “Our teams have been hard at work to create a streamlined system that offers new capacity management tools and resources to better empower sellers and help them grow,” he said in the post. This is designed to make it less difficult for sellers to plan how much inventory to procure and manufacture, he said.
FBA capacity limits are influenced by sellers’ IPI scores (Inventory Performance Index), as well as other factors such as sales forecasts for their ASINs, shipment lead time, and Amazon fulfillment center capacity.
Capacity limits for the upcoming month will be announced in the third full week of each month via the Capacity Monitor in Seller Central and an email notification. “Like restock limits today, capacity limits consider inventory on-hand in Amazon’s fulfillment centers and shipments sellers have created that have not yet arrived.”
And, Amazon said, “The majority of sellers will now have access to greater capacity volumes than before.”
In addition to a capacity limit for the upcoming month, Amazon will also provide estimated limits for the following two months to help sellers plan over a longer time horizon, Mehta said.
Amazon will also display capacity limits in cubic volume “which better represents the capacity sellers’ products use in our fulfillment centers and transportation vehicles,” but Amazon will continue to show inventory usage in units, providing an estimate of how many units specific cubic volume capacity limits are likely to permit.
Another major change is how sellers can request more capacity once the new system is in place. Marketplace Pulse called it an auction system – “Amazon will allow sellers to go beyond the allocated warehouse space by bidding for more,” it wrote.
An Amazon spokesperson confirmed the new Capacity Manager is the same as the Amazon “Storage Limit Manager” we wrote about last year that was piloted with certain US sellers.
Here’s how Amazon’s Mehta described the opportunity to request a higher limit in today’s post:
“With our new Capacity Manager, sellers can request additional capacity based on a reservation fee that they specify. Requests are granted objectively, starting with the highest reservation fee per cubic foot until all capacity available under this program has been allocated.
“When additional capacity is granted, sellers’ reservation fees are offset by earning performance credits from the sales they generate using the extra capacity. Performance credits are designed to offset up to 100% of the reservation fee, so sellers don’t pay for the additional capacity as long as their products sell through.
“Our goal is to provide sellers with more control over how much space they can have while limiting unproductive use. We’ve piloted this feature with certain US sellers, and we’re excited that with this launch, we will expand it so all sellers can request higher FBA capacity limits.”
Amazon’s spokesperson told us today the company received very positive feedback from participants in the pilot program so it is now being made available to all sellers. “To date, the vast majority of sellers have had their total reservation fee reimbursed. The capacity manager ensures that a seller’s specific capacity limit does not prevent them from growing and trying new things. We do not want sellers to pay for the additional space, and have provided them with both tools and guidance to help them make an educated decision about whether and how much space to request so that they do not pay any fees.”
The new capacity management system goes into effect March 1, 2023.
Related stories:
Amazon FBA Shares News about Restock and Storage Limits (December 21, 2021)
Amazon Sellers Can Bid for More FBA Storage Space (February 24, 2022)
