If you stay current with any of the Amazon news articles or LinkedIn forums, you already know that the buzz this week has been focused on an update that Amazon released involving Important Changes to FBA Capacity Limits, coming March 1, 2023.
As it is not shocking that Amazon is changing another process - this one, however, is very unique - and overall seems to put some control back into the Seller’s hands after a fairly brutal holiday season with capped Restock Limits and sellers left unable to send inventory in.
What is Changing
Starting on March 1, 2023, Amazon will begin to implement the following 4 Updates:
- The cadence in which Amazon evaluates Capacity Limits is changing. Currently, FBA Sellers are held to a weekly and quarterly recalculation of limits. Beginning March 1 there will be a Single Monthly Capacity Limit (per storage type).
- Amazon will begin providing Estimated Capacity Limits 2 months in advance, allowing sellers to plan for future months and take action to increase velocity and performance.
- The New Capacity Manager will become available to all FBA Sellers, which will allow Sellers to request Capacity Limit Increases for a fee. Amazon is essentially auctioning off additional space to sellers who are willing to pay for it
- Amazon will begin to measure Storage Limits in Storage Volume rather than Unit Count. This change should allow for more adequate space in their FCs.
Potential Benefits and Obstacles
As of now, we can only make predictions using our best judgment. We foresee the following benefits and potential obstacles with this announcement:
- Using Volume instead of units is not easy to measure for most sellers, and becomes a more manual exercise in most cases if trying to determine units that can be sent in
- Amazon is releasing this update having tested it with only a few US sellers – we expect there to be bumps along the way until things have smoothed out
- Sellers need to adapt to, and are “stuck with” capacity limits for an entire month, unless wanting to bid for more space
- Making the current FBA Storage monitoring system easier to understand and monitor is a HUGE benefit, as it has been an unknown algorithm to crack up until now
- Giving sellers the option to bid for more space is unique, and puts a little bit more control in the seller’s hands if stuck and needing to send in inventory
- Having advance notice about estimated limits for the next 2 months allows sellers to make any changes needed to optimize current inventory performance in an attempt to generate additional capacity ahead of time
- The additional Manager tools being released allow additional insight to current business status, and help to plan inventory levels more in depth than before
What's to Come
Retail Bloom is going to be continuously monitoring this change in the Amazon space, and looking at internal processes to address if any, and what changes need to be made to adapt to the update. Be on the lookout for upcoming releases as we continue to navigate this update. We recommend each seller read thru the full Amazon news release to understand all of the pieces, and begin to put any necessary practices in place to adapt to the update.
If you are looking for additional support in understanding this update, or are looking to partner with someone to handle your Amazon business needs, please contact us to schedule a consultation today.
Feel free to reach out to us with questions, or subscribe to our blog so you don't miss a thing.