Amazon Announces New Changes to Inventory Limits

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Amazon is making more changes to its inventory limits, including a new extra-large category and an increased price threshold for its small and light program.

Starting last Monday, Amazon added a new type of extra-large storage, in addition to the standard-size, oversize, clothing, and shoe storage types. it already has in place. Existing inventory that meets the qualification for the extra-large storage type will automatically be reclassified as extra-large. Amazon also adjusted the price threshold for its US Small and Light program to $10 from $8, effective April 28.

The e-commerce giant has always made adjustments to FBA inventory limits with little to no warning. Last year, several third-party sellers learned that Amazon had reduces their maximum inventory capacity for products oversized by 25% to 60%. The recent announcement highlights some of the uncertainties merchants face when relying on fulfillment by Amazon (FBA) to fulfill orders. These inventory limits determine how many units of various products sellers can send to a warehouse at any given time. So any changes to inventory limits can impact whether or not a seller is able to keep enough products in stock.

“Your FBA quantity limits will be determined separately for extra-large items and oversize items,” Amazon said in the announcement. “This determination will be based on your past and forecasted sales, adjusted for fulfillment center capacity.”

Amazon didn’t explain why it added a new type of storage, but said it would give sellers more “flexibility” in how they manage inventory and quantity limits for larger products. However, one possible reason may be to free up inventory space for brands that can sell more units while taking up less capacity in warehouses, according to SupplyKick, a company that optimizes sales for sellers on Amazon.

SupplyKick CEO Chris Palmer told Modern Retail on Tuesday that the introduction of the new extra-large category has “since this morning has prevented us from sending items that are actually key items [like] air conditioners and large items.

Amazon said its changes to FBA Small and Light allow more products to qualify for the program and get discounts for fulfillment. Other program requirements, including weight limits and product dimensions, have not changed. Products eligible for the Small and Light program may qualify for reduced fulfillment costs.

A large number of third-party sellers use Amazon FBA to fulfill orders. According to Jungle Scout, 68% only use FBA while 21% use both FBA and Fulfillment by Merchant (FBM).

At the height of the pandemic, Amazon had to make a number of changes to FBA, such as temporarily accepting shipments of non-essential items. Amazon has also made various changes over the years to the amount of inventory sellers can send to their warehouses at one time, which often depends on seller performance.

“Amazon fulfillment used to be a much more predictable service that sellers could use,” Juozas Kaziukėnas, founder of trade publication Marketplace Pulse, previously told Modern Retail about the impact of FBA changes on sellers. “Now there’s this incredible uncertainty in quantity limits and shipping speeds.”

The inventory limit changes come just a week after Amazon announced a 5% fuel and inflation surcharge on existing fees it receives from third-party merchants. Amazon told Modern Retail that this surcharge will increase fulfillment fee rates by an average of $0.24. In Amazon’s fourth-quarter results, third-party seller services net sales rose 11% year-on-year to $30.32 billion.

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