FBA is a fantastic option for sellers to ensure that their orders are fulfilled by a top-of-the-line service, with quick delivery, and items picked and packed for you. Recent years have seen a “golden age” when it comes to selling as a third-party on Amazon, with many sellers making a good living from the program, and being able to lean on Amazon’s warehouse network for their own business.
Amazon’s warehouses are expanding at a rapid rate, just like the Amazon business. Check out this incredible chart which shows the growth of the business.
However, warehouse space is running lower due to this expansion, and Amazon has to take some steps to make sure that sellers have their storage on the platform limited, and cannot take up storage space that they don’t really need.
One of the deterrents in place is the fact that Amazon imposes long-term storage fees measured by the cubic foot (or by the volume of items stored, whichever is highest). This isn’t necessarily enough to keep the warehouses from bursting at the seams, and the inventory storage limits have been introduced to keep the warehouses under control.
If you’re a new seller, or you are just looking to launch a brand new product, this can hinder your product launch and create extra work for the seller. In this guide, we explore the storage limits and what they could mean for your product launch.
It might be time to start to do some sums and work out how much of your inventory has been sold through. Luckily, Amazon makes this easy, through something they call the Inventory Performance Index (IPI).
Every seller has their very own IPI which they can access via an “Inventory performance” dashboard in Amazon FBA’s Seller Central. Every week, this score is allocated to your account and recalculated based on a variety of different factors:
If you continually perform well (reliable sales volumes that don’t exceed your limit of storage) then you will likely be allocated more space.
It may help to see your IPI as a sort of credit score. It’s a formula for working out how reliably you use the warehouse space you’re allocated.
If you’re selling via an individual selling account and taking the hit of paying a fee on every product sold then you will automatically have a storage limit of 10 cubic feet. No changes unless you move to a professional account.
Professional accounts may have limits or they may not, it depends on the IPI rating, which must remain over a certain threshold for standard-size, oversize, clothing, and footwear items.
New sellers don’t necessarily have a score due to the fact that there isn’t enough data to work out the IPI score yet.
If you don’t have a storage limit assigned to you then you won’t be able to get over 25 cubic feet of storage for standard, over-size, clothing, or footwear inventory.
If you’re considering whether you want to sell as a professional or an individual, the chart below will show which is suitable for you. If you’re serious about FBA then it is likely that you will opt for a professional account.
The limits apply to certain storage types which are categorized by Amazon. Standard-size, oversize, apparel, footwear, flammable, and aerosol. On your FBA Inventory Age and the Inventory Age report you can check which categories your items have been stored as, but this is not something you can check until your items are in the Amazon warehouse.
As you can see from the graphic above, this is always set by Amazon, rather than being something you can control yourself.
Getting your product launch right is vital at any time, but with these restrictions, it can be hard to maximize your sales as you might not have proven to Amazon that you are a reliable seller. There’s also no way to purchase more space at this time.
How does this impact launches?
This cautionary tale about a board games company can demonstrate. Barry and Jason Games had the capacity within their seller account to ship 230 units, and in their successful product launch last Christmas, their sales hit 50 per day. This meant that after a few days their stock was running low.
You can send more stock, sure, but there is a processing delay while the units are shipped and allocated to warehouses. They weren’t able to make the products available for sale again on Amazon for weeks. You can see how this would hit a new product launch, and even impact things like a Best Seller Rank that you have worked so hard to create.
It’s frustrating, right? You need to make sure that you have space for your products, and if you sell out in a day then it can certainly be very frustrating, and cost you money.
One of the top pieces of advice we can offer is to have another sales channel. If people can’t get the product on Amazon, they can buy it elsewhere, and this is something you can have more control over. You don’t have to sell your products exclusively on Amazon.
If you have other items for sale on Amazon taking up your space and impacting your IPI, you can submit a removal order to have some items returned to you.
The best solution, though, is to continue to improve your status on Amazon by selling regularly, and get to the stage where Amazon knows they can rely on your business. This is likely to lead to higher limits on your account. If you have the foresight, before a big product launch, it may make sense to sell other items on Amazon to reach the 26 week threshold where you get allocated an IPI.
Product launches can still be a success even with these extra restrictions.