Prepping for Amazon's FBA Restrictions in Q4

With all of the FBA restrictions, receiving delays, and shipping window changes, we thought it would be a good opportunity to share how we are planning for the worst and hoping for the best this Q4 with FBA. 

What we know about FBA today:

1. The IPI has become crucial to buy box and fulfillment options almost overnight. You can learn more here too, but basically, as of Aug 15th, any seller account with an IPI score under 500 has restricted storage limits.
2. Amazon FBA centers seem to still be pretty behind when it comes to receiving shipments. In Q4 of last year, we found that LTL shipments typically take up to two weeks longer than ground shipments which usually are received within one to two days. Right now, we see ground shipments taking up to 3-4 weeks to be received. This delay is causing stock-outs and delayed delivery windows for Prime customers.
3. We haven’t seen any official communication from Amazon, but we have a feeling that the IPI score is impacting our buy box. We have two SC accounts and have found that our buy box increases as our IPI score increases and vice versa.
4. Buy box still seems to be favoring delivery dates over the Prime badge or price. We’ve found Amazon is giving the buy box to our FBM (fulfillment by merchant) offering over the Prime FBA offering when we have a shorter shipping window with our carriers.
5. Lastly, and probably most importantly, Amazon introduced ASIN-level quantity limits on products in FBA. They stated that most products will have enough space available for over three months of sales. Unfortunately, this is based on 30-day sales history, so for all of our new fall product releases with no history, we aren’t able to ship in our bulk POs.

Because we work with a lot of seasonal apparel brands with thousands of new SKUs each season, #5 is really a thorn in our side. 

How we’re planning to mitigate risks:

1. We’re creating as many shipping offerings as we can for the same SKU. Ideally, we would have three offerings: one for FBA, one for FBM, one for SFP and one for FBA Onsite. From there, we’ll let the buy box determine the best option for the customer. (We aren’t SFP approved but would love to have that option too.)
2. We’re doing a full shipping cost analysis for our FBM offerings by region. Because we typically rely on a fixed FBA cost, we found that when we switched heavy products from FBA to FBM, the shipping immediately ate up our margin for orders going to Alaska/Hawaii and the west coast. However, it’s a little bit of a double-edged sword because when we charged shipping, the FBM offering wouldn’t serve in the buy box. If we were to increase the MAP price to include shipping (and still offer free shipping), Amazon would suppress our buy box because the price is too high. We recommend running several tests. We even found we could shorten our processing time, and that seemed to help too.
3. We’re still trying to figure out replenishment with different inventory locations in our ERP system. Right now, the plan is to take every order and upload it to Amazon to see what we can send. For every SKU with quantity limits, we plan on splitting the inventory between FBM and FBA Onsite and then replenishing from those two locations to FBA on a daily basis. We haven’t completely figured out what’s the easiest way to monitor different locations, but we plan on using inventory-planner.com as the replenishment tool which does connect to BrightPearl.

Here’s to an interesting Q4! Again, would love to hear how other sellers are prepping for Prime day in October and the holiday season!