Everything was good. Then, it wasn’t. That’s been the sentiment among folks that use Fulfilled by Amazon (FBA) since they radically reduced their restock limits in October 2022.
That’s because more than 3.4B items are sold on Amazon annually. Over 50% of those items are sold by 3rd-party sellers like yourself, then fulfilled by Amazon.
To manage this, FBA has always limited how much inventory it’ll hold for any seller at a time. But until late 2022, these restock limits were rarely an issue.
Then, as Cole South, co-founder of Gold BJJ and BirdRock Baby, so delicately put it: “Amazon [went and] absolutely wrecked 3rd-party sellers’ inventory limits.”
Amazon absolutely wrecked 3rd party sellers' inventory limits this morning… with zero notice, heading right into the busiest time of the year.
makes it really hard to trust them as a business partner. very 🙏 we have our own warehouse.
get your Christmas shopping done early! pic.twitter.com/VOEkoO3dbU
— Cole South (@ColeSouth) October 24, 2022
The changes came without warning. One Amazon seller shared that when they went to bed, their restock limit was 40k. When they woke up, it was less than 4k. And only weeks before the holiday shopping season, no less.
Amazon hasn’t given a reason for these changes. But the change came at a time when the tech behemoth started working to boost its bottom line. So, more likely than not, higher margins for the ~$1T company is the end goal.
They have, however, conservatively estimated that only 6% of sellers will be impacted (an estimated 570k brands). But needless to say, many of these sellers have reached their limits – in more ways than one.
So, starting March 2023, Amazon will again change how they handle restock limits to offset some of this seller frustration. Here’s everything you need to know about Amazon’s restock limits (and the upcoming changes).
Amazon FBA restock limits restrict how much inventory (measured in units) you can ship and store at Amazon fulfillment centers at a given time.
📝 Note: Restock limits should not be confused with storage limits, which measure how much Amazon fulfillment space you can use in cubic feet.
Per Amazon’s Sellers Help team: “Restock limits are determined by a range of factors, including seasonal and peak selling periods for your products, forecasts for your ASINs, the new selection you carry, deals you have scheduled, and fulfillment center capacity.” But generally, these restock limits equal 3 months of inventory and are updated weekly.
For instance, say you sell 4,000 units monthly on the marketplace. Your restock limit will likely be around 12,000 units (we’ll use this number for easy math). If you already have 9,800 units stored at Amazon fulfillment centers, your next shipment can have 2,200 units (maximum) to keep from exceeding your restock limit.
What happens if you exceed your restock limits? Two things:
However, Amazon’s March 2023 changes to its restock limit policy could offer sellers some much-needed forgiveness (more on this in a second).
There are 2 types of Amazon restock limits: Storage-type FBA limits and ASIN-level restock limits.
To avoid overage fees, brands need to follow the more restrictive limitation. However, which is more stringent often changes and is not always straightforward.
Storage-type FBA limits (commonly dubbed “storage limits”) restrict how much inventory a seller can store in an Amazon fulfillment center by storage type (standard-size, oversize, and seasonal).
Amazon looks at the physical space available in its warehouses and factors in any seasonal demand to set these storage limits. The aim is to provide enough storage space for all FBA sellers.
ASIN-level restock limits (commonly dubbed “restock limits”) restrict how much of an individual product (identified by its Amazon Standard Identification Number) a seller can house in an Amazon fulfillment center.
Meaning, restock limits look at the demand for each SKU, while storage limits consider available fulfillment center space. As such, sellers can use their ASIN-level limits to ensure their products are consistently available on Amazon (AKA, avoid overstocking or stocking out).
🔥 Tip: Starting March 2023, Amazon sellers will only have one monthly limit to worry about. Why? Apparently, Amazon is just now realizing that “navigating 2 sets of limits that are measured differently—storage limits and restock limits—can be confusing,” per a recent company announcement.
Amazon uses restock limits to ensure its FBA operations are viable. By controlling how much inventory the service provider carries in its fulfillment centers, Amazon reduces waste, lowers costs, and maintains high levels of customer satisfaction.
Amazon’s restock limits help optimize its storage and transportation resources.
For one, these limits prevent overstocking in FBA fulfillment centers. That way, there is always space to safely accept new shipments and process orders. (The key word here is “safely.” Amazon workers made up nearly half of all warehouse injuries in 2021 before the ecommerce giant implemented stricter restock policies.)
Plus, by limiting how much stock sellers can store, Amazon can ensure its transports goods from the closest available location. This not only reduces shipping costs but improves customer delivery times.
More efficient use of storage space naturally lends itself to lower warehousing costs. This is partly because limiting how much stock each fulfillment center carries means less inventory Amazon has to pay holding costs on.
But restock limits also require brands Amazon sellers to get selective about what to have Amazon hold. For instance, if you can only house 4,000 units at an FBA warehouse, you won’t use 3,000 to store slow-movers that are likely to turn into dead stock.
Nope – you’ll prioritize your bestsellers, leading to faster inventory turnover (again, lower holding costs).
Despite what the pessimists say, restock limits are not trying to stock out sellers. The opposite, actually. Restock limits guide roughly how much inventory to keep on hand (based on your historical sales). As such, these limits double as your maximum and optimal inventory levels.
Meaning, you can not only use these limits to stay in stock but also maximize your profit margins and increase customer satisfaction. How? By prioritizing your bestsellers and most profitable SKUs. That way, your customers can always buy what they’re in the market for.
Plus, as you know, restock limits also prevent excess inventory. Overstock leads to shipping delays and order inaccuracies when warehouse workers struggle to find, pick and pack efficiently.
By avoiding these situations, you can get customers exactly what they want and deliver it faster. AKA, you can provide an incredible customer experience every time (after all, that’s what Amazon is known for and probably part of why you pay for FBA).
As we mentioned, Amazon is also trying to run a viable business. And if you’ve been keeping up with the news lately, their ecommerce sector is not their champion by any means.
Amazon’s ecommerce marketplace has been in the red for most of its existence. But in Q1-Q3 2022, it lost Amazon $5.5B.
And Prime is no longer growing in the US, Business Insider reports. In fact, Amazon was estimated to end 2022 with 168m US Prime members (compared to 170m the year prior).
Meaning, Amazon’s only hope for making ecommerce a viable part of its business model is improving the bottom line. And by using restock alerts to ensure optimized inventory levels, Amazon can minimize waste, maximize efficiency, and provide greater business sustainability.
When sellers hit their FBA restock limit, they can’t send any more replenishments to their Amazon fulfillment centers.
But brands are currently awaiting their holiday shipments, which they planned months before this change was communicated.
Suddenly overstocked, these shipments now have nowhere to go. And brands still need the bestsellers in those shipments to make their months-in-the-making holiday promotions happen.
“The problem for me (& many others) is that at an account level, it looks like I have a good amount of inventory. But at a SKU level, my bestsellers are going to suffocate,” Shinghi Detlefsen, an Amazon seller and former employee, tweeted. “Had I known of these [inventory] restrictions earlier, I would have planned [differently].”
Perhaps the worst part, however, is yet to come. Amazon sellers get slapped with inventory storage overage fees when they exceed their allotted limit for a given month. So, suddenly overstocked folks have less than a month to sell through that excess inventory, move it elsewhere, or pay the price.
Starting March 2023, restock limits will be updated monthly. Sellers can check their new limits on the 3rd full week of each month using their Capacity Monitor in Amazon Seller Central or the corresponding email notification.
📝 Note: Until March, restock limits will update weekly between Sunday evenings and Monday mornings.
These updates include 3 important tidbits of information:
Responding to your Amazon restock limits is a delicate dance, especially if you exceed your allotted amount. Luckily, there are a few ways to sidestep overage fees in this scenario.
Sure, you can always cancel incoming shipments. But before you do, you’ll want to carefully review these orders and consider the consequences of this cancellation on your supply chain partners.
For instance, say you placed a purchase order, and it’s about to get processed. Then, it likely won’t be a big deal to cancel that order. (You probably won’t get your down payment back, but a little burned cash is worth preserving the long-term relationship with that partner and your bottom line.) Just double-check that you can still meet demand without this inventory before you talk to your supplier.
However, say you have a shipment about to dock at your warehouse. In this case, canceling an order really isn’t an option. For one, you won’t get that downpayment back (and depending on your vendor terms, you’ll probably still owe the remainder). But you’ll also frustrate your vendor and logistics partners, which could impact future orders.
As such, a better option might be to re-route those shipments to a non-Amazon warehouse that offers unlimited storage (or at least more flexibility on available storage space). That way, you still have that inventory available (after all, you ordered it for a reason), and you’re not risking your supplier relationship.
Returnless refunds is an Amazon feature where sellers can reimburse a customer without requiring that customer to ship back the returned item.
By doing so, sellers forfeit profits but ultimately save on the added shipping costs, which would eat away at their bottom line (and potentially cost them more than the item is worth).
They also prevent inventory from showing up at an Amazon fulfillment center unplanned. After all, each returned item pushes a seller closer to their restock limit (and might not even be resellable after all the hassle).
To set up returnless refunds:
📝 Note: Returnless refunds are only available in certain circumstances. So, be sure to review Amazon’s latest guidelines before setting this option up.
Chances are good that your supplier’s minimum order quantities (MOQs) are bigger than your restock limits. Meaning, you can’t just send your shipments straight to Amazon fulfillment centers without risking overage fees.
It also means that if you’ve historically done this, you’re likely struggling to get your existing inventory below your restock limit. So, the first order of business is to send any merchandise over your allotted limit to another warehouse or a 3rd-party logistics provider (3PL) like ShipBob.
ShipBob is the #1 ecommerce fulfillment service for DTC brands and offers inventory storage solutions without restock limits or hidden fees. Best part? This Cogsy partner will even prep your FBA shipments to comply with Amazon’s guidelines and fulfill marketplace orders on your behalf.
You’ll also want to send all future purchase orders to this warehouse or 3PL. That way, you can control how much inventory you send to Amazon at once, staying well within your restock capacity.
Cogsy can even monitor your Amazon stock levels in real-time and remind you what, when, and how much to send when you’re running low. You can track that in-transit inventory, so you don’t accidentally double replenish.
A few ways to increase your Amazon restock limits include generating more sales, improving your IPI score, and simply requesting more storage volume.
Likely, no retailer would say no to increasing demand – especially if they have the inventory to fulfill that demand. But this is often easier said than done.
That said, there are a few proven strategies for driving more Amazon sales, including:
Inventory Performance Index (IPI) score is the metric Amazon uses to assess how well FBA sellers manage their inventory. Scores range from 1 to 1,000, with anything above 550 considered a good IPI.
Amazon uses this score when divvying up its available fulfillment center space. The better your score, the higher your restock limit tends to be (plus, the better you organically rank in Amazon searches).
And you can improve your score by maintaining accurate inventory levels.
At a high level, inventory optimization comes down to not over or understocking. But it also means carrying the right inventory (as opposed to aged inventory or even dead stock that costs you more than it makes for you).
But how exactly do you optimize your inventory levels? The best brands do this by implementing an inventory management tool like Cogsy.
Unlike managing inventory in Excel or Google Sheets, Cogsy monitors your inventory levels in real-time. It’ll even notify you when a product is running low and provide data-backed recommendations on how much to reorder. That way, you can effortlessly avoid a stockout (and overstock).
With the March update comes the power to challenge your restock limits. How? By bidding on additional storage capacity.
Brands can do this by specifying how much they’re willing to pay per cubic foot within the new Capacity Manager. Amazon will then objectively divvy out available space to the highest bidders.
But sellers don’t necessarily have to be the ones paying these reservation fees. The ecommerce giant will foot 100% of the bill for that additional capacity if you sell through your inventory.
However, if it turns out Amazon got it right? Then, you’ll be stuck paying for the extra storage space, plus any overage fees, if you end the month above your restock limit.
That’s where your demand forecast comes in.
You can use your forecast to cross-check Amazon’s work and decide if you actually need to bid on more storage. And, if so, where you should cap your bid to preserve profitability.
That way, you can ensure you only request additional storage capacity you need to meet demand. And you’re not haphazardly introducing unnecessary risk to your business (from excess inventory and extra operational costs).
🔥 Tip: You can build demand forecasts with pinpoint accuracy in Cogsy. This forecast will automatically update as new data becomes available, preserving its accuracy over time. That way, you’re always working with the most up-to-date information. Try it free for 14 days.
Sure, Fulfilled by Merchant (FBM) is always an option. But you’d still need to move that inventory. And Amazon is basically set up so that if your items are not FBA, they won’t appear prominently in search and won’t sell as well.
That’s because being shipped FBA gives your product that shiny Prime badge that tells customers, “hey, you can trust us.” Losing that badge means losing business.
In fact, Prime members convert at a whopping 74% (compared to 13% for non-Prime members), and most of the time, they opt for Prime products.
So, while Seller Fulfilled Prime can also earn you the coveted badge, it’s much harder to maintain.
The more strategic play is to only fulfill your bestsellers through Amazon. Then, move any slower-moving SKUs to another fulfillment center, where they’ll be picked, packed, and shipped by your team (or your fulfillment partner).
That’s where ShipBob and Cogsy come in handy.
Staying within your restock limits means sending smaller shipments to Amazon fulfillment centers more frequently. And lucky for you, Cogsy and ShipBob have partnered to make managing these moving pieces a whole lot easier.
With Cogsy, forecast demand with pinpoint accuracy holistically or by location – up to a year out. Then, factor in your supplier’s minimum order quantities (MOQs), order lead times, and Amazon restock limits to plan how much inventory you’ll need, where, and when.
You can even rank all your products to identify your bestsellers (AKA, the ones worth fulfilling with Amazon) and your slower movers (the ones you’ll want to fulfill yourself).
Once your plan’s set, get a godlike view of your stock levels, restock needs, incoming purchase orders, and upcoming marketing events – all in 1 place. That way, you always send your next shipment to Amazon at exactly the right time.
By integrating Cogsy and ShipBob, you can even track shipments to, from, and between Amazon fulfillment centers (and ShipBob warehouses). That way, you always know where your inventory is.
Simply house the rest of your available inventory at any of ShipBob’s 30+ warehouse locations. The 3rd-party logistics provider can then prep and send FBA shipments to Amazon.
You can even use ShipBob to fulfill marketplace orders (plus countless other channels) across North America, Europe, and Australia – without leaning heavily on FBA or sacrificing 2-day shipping options.
Best part? In light of Amazon’s recent inventory limit changes, ShipBob’s offering Cogsy merchants $300 in free shipping credits.
As of 2022, Amazon’s restock limit for all sellers is 3 months of inventory. Meaning, the Seattle-based ecommerce marketplace will hold 90 days of stock in its fulfillment centers for brands that use FBA. That said, this limit is based on Amazon’s forecasts for the total number of units the seller will move in those 90 days, not the seller’s sales projections. As such, if your Amazon inventory is not managed properly, aged inventory can take up a large chunk of this restock limit. Thus, it’ll leave little room for new products.
Amazon sets restock limits based on each seller’s last 3 months of sales. So, if you want to increase your Amazon restock limits, you’ll need to drive more sales on the marketplace. To do this, try offering deep discounts on overstocked items, cross-selling complimentary products, optimizing your product listings for search, and leveraging price-per-click (PPC) ads.
Historically, Amazon updates sellers’ restock limits weekly between Sunday evenings and Monday mornings. However, starting March 1, 2023, Amazon will update these limits monthly on the 3rd full week of each month.