When it comes to selling on Amazon through the Fulfillment by Amazon (FBA) program, understanding inventory limits is crucial. Amazon imposes storage limits to ensure efficient utilization of its fulfillment centers and maintain operational excellence.
Failure to comply with these limits can result in additional fees or even account suspension, making it essential for sellers to stay informed and proactive.
What are Amazon Storage Limits?
Amazon storage limits refer to the maximum amount of inventory space allocated to each seller in Amazon's fulfillment centers. These limits are calculated based on your sales performance and inventory levels over the past year. Amazon assigns Inventory Performance Index (IPI) scores to sellers, which determine their storage limits.
Key Points about Amazon Storage Limits:
- IPI Score Range: Amazon calculates IPI scores on a scale of 1 to 1000, with higher scores indicating better inventory management.
- Restock Limits: Based on your IPI score, Amazon assigns restock limits, which dictate the maximum amount of inventory you can send to their fulfillment centers at a given time.
- Long-Term Storage Fees: If your inventory remains unsold for more than a year, Amazon charges long-term storage fees to incentivize efficient inventory management.
- Inventory Clean-Up: Amazon periodically removes aged or excessive inventory from its fulfillment centers, potentially resulting in the disposal of your products.
Strategies for Effective Inventory Management:
- Monitor Your IPI Score: Regularly check your IPI score and take steps to improve it by maintaining healthy sell-through rates and avoiding excess inventory.
- Utilize Inventory Planning Tools: Leverage Amazon's inventory planning tools or third-party software to optimize your inventory levels and avoid overstocking.
- Implement Multichannel Fulfillment: Consider fulfilling orders from your own facilities or a combination of Amazon and your facilities to reduce reliance on Amazon's storage limits.
By understanding and proactively managing amazon storage limits, sellers can minimize fees, maintain a healthy inventory flow, and ensure a seamless selling experience on the Amazon platform.