New Fulfillment by amazon storage capacity limits for 2023
Many Amazon sellers currently utilize Fulfillment by Amazon or FBA to package and ship their products. FBA is a very popular service among sellers because it takes the responsibility of shipping, handling, and customer service away from sellers and into Amazon’s hands. FBA also offers sellers Prime Shipping, which is a huge incentive to use the shipping service. Many love the program, but just like with anything else, it has its downsides. One major complaint from sellers has been Amazon’s restock and storage limits. The restrictions have been particularly troublesome for sellers over the recent holiday season. Restock and storage limits in FBA warehouses can make it difficult for sellers to keep their most popular products on the shelves, and available to customers, at all times. Now, Amazon has finally responded to sellers’ complaints with new storage capacity guidelines for 2023. We’re breaking down Amazon’s latest announcement and what this will mean for sellers.
new capacity management system
Amazon announced a new storing system just two days ago that will lift some of the previous restrictions on sellers. The company is replacing the weekly restock limit and quarterly storage limit with a single monthly capacity limit for each storage type. According to Amazon, this new storage management system, set to go into effect on March 1st, 2023, will give sellers more control and consistency with their inventory and allow them to plan how much they can ship in advance. This new monthly system is a rejuvenated model of the previous restock and storage limits. And the program has many projected benefits.
month-long fBA capacity limit
One of the issues that sellers had with weekly restock limits was that they made it difficult to plan how much inventory to obtain and manufacture. Another problem was that it is confusing to juggle two different restrictions, restock and storage limits, especially since they were measured differently. Amazon has now released the monthly storage limit to resolve these issues. With a single limit for the month, sellers will know how much inventory they can ship to and store in the Amazon warehouse. In line with this new system, Amazon will announce the capacity limits for the following month in the third full week of each month. Sellers will receive email notifications regarding capacity limits but can also find this information posted in the Capacity Monitor in Seller Central. Capacity limits are determined by various factors including a seller’s Inventory Performance Index, sales forecasts for ASINS, shipment lead time, and FBA warehouse capacity, to name a few.
planning in advance
Amazon will not only provide storage capacity limits for the upcoming month, but will also give sellers estimated limits for the following two months. Amazon will base the storage limits on the amount of space and labor available in the FBA warehouse, as well as individual seller metrics like IPI. They will also take into consideration how efficiently sellers are using their warehouse capacity to help create these storage limit estimates. The limits take into account active inventory in FBA warehouses as well as pending shipments from sellers that have not yet arrived at the warehouse. These estimated limits will help sellers plan their inventory several months in advance, and hopefully avoid some of the chaos and stress that comes with unpredictable storage capacity.
requesting a higher limit
If Amazon’s storage limits are not enough for you, don’t fret. You can request more storage space by providing reservation fees to Amazon through the new Capacity Manager. This is basically a bidding system where sellers will be granted additional storage space based on how much they bid for it. Amazon will then give sellers what they call “performance credits”, which they can earn from sales made using the extra storage space. The performance credits are designed to compensate for up to 100% of the reservation fee. So ideally, if sellers are using the extra storage space efficiently and their products are selling, they will not have to pay for the extra space. Amazon’s reasoning for this is they want to give sellers more control over how much space they need, while also staving off unproductive use of FBA warehouse space. Amazon has actually already tested out this bidding system for storage space in a pilot version given to certain US sellers last year called “Storage Limit Manager”. And now, the company wants to make the feature available to all sellers as part of the new storage system.
measuring by volume
As another aspect of the new system, Amazon will now be measuring storage capacity by volume. The company explained in their announcement that volume is a better form of measurement to represent the capacity sellers’ products take up. Measuring by volume will allow Amazon to provide more accurate estimates for storage capacity limits. But because many sellers prefer using units, Amazon will continue to provide inventory usage in units and provide an estimate for how many units will fit into a specific capacity limit measured by volume (cubic feet).
Similar to before, if sellers surpass their capacity limits with their on-hand inventory, they will be charged overage fees. These fees are determined by the highest estimated or confirmed limit that Amazon provided to a seller for the given period. Sellers can avoid overage fees by keeping inventory under the allotted capacity limits.
All in all, Amazon’s goal in changing up the FBA storage system is to alleviate some of the troubles sellers have been dealing with. The new program has great potential and will hopefully allow sellers to manage their inventory more efficiently and make the most out of FBA storage space. To learn more about Fulfillment by Amazon and how it can help your business, check out our blog on the benefits of FBA. Happy selling!