Amazon Addresses FBA Storage Limit Pain Points With New Capacity Management System

Amazon launches a new Fulfilled by Amazon (FBA) capacity management system that will enable most sellers to reach higher capacity limits while providing more predictability and greater control to get more capacity when they need it the most.

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What you need to know: These changes provide sellers more visibility and control over capacity limits in order for them to better plan and manage their inventory and supply chain.

The company also announced a new and improved system to help selling partners manage their FBA inventory capacity, a widely requested feature by sellers.

Amazon created a streamlined system that offers new capacity management tools and resources to empower sellers and help them grow. This new capacity management system will go into effect on March 1, 2023.

4 New FBA Capacity Management Features

(1) A single, month-long FBA capacity limit. Sellers have struggled with having weekly restock limits can make it difficult for them to plan how much inventory to procure and manufacture.

Additionally, navigating two sets of limits that are measured differently — storage limits and restock limits — can be confusing. FBA capacity limits will resolve these pain points by offering a single monthly limit to determine how much inventory sellers can send to and store at Amazon.

Capacity limits for the upcoming month will be announced in the third full week of each month via the Capacity Monitor in Seller Central and an email notification.

Like restock limits today, capacity limits consider inventory on hand in Amazon’s fulfillment centers and shipments sellers have created that have not yet arrived. The majority of sellers will now have access to greater capacity volumes than before.

(2) Estimated capacity limits to help sellers plan three months in advance. In addition to a capacity limit for the upcoming month, Amazon will also provide estimated limits for the following two months to help sellers plan over a longer time horizon.

The company will forecast how much space and labor they expect to have to provide these estimates, but the estimates may vary up or down based on how efficiently sellers are using their capacity, as measured by the Inventory Performance Index (IPI) score.

(3) The opportunity to request a higher limit. With the new Capacity Manager, sellers can request additional capacity based on a reservation fee that they specify. Requests are granted objectively, starting with the highest reservation fee per cubic foot until all capacity available under this program has been allocated.

When additional capacity is granted, sellers’ reservation fees are offset by earning performance credits from the sales they generate using the extra capacity. Performance credits are designed to offset up to 100% of the reservation fee, so sellers don’t pay for the additional capacity as long as their products sell through.

The goal is to provide sellers with more control over how much space they can have while limiting unproductive use. Amazon has piloted this feature with certain U.S. sellers already and is looking forward to launching it to all sellers soon.

(4) FBA capacity limits expressed in cubic volume to better reflect capacity usage. Amazon sets capacity limits and measures sellers’ inventory usage in cubic feet (vs. the number of units), which better represents the capacity sellers’ products use in Amazon’s fulfillment centers and transportation vehicles.

The company understands that many sellers prefer to plan in units, so they will continue to also show inventory usage in units, providing an estimate of how many units specific cubic volume capacity limits are likely to permit.

Of note: Like storage limits today, overage fees will apply if a seller’s on-hand inventory in Amazon’s fulfillment centers (not including open shipments) exceeds their capacity limit.

Overage fees are calculated based on the highest estimated or confirmed limit we provided for the given period. Overage fees help prevent excessive inventory levels and shouldn’t impact sellers who maintain healthy inventory levels. To learn more, go to Overage Fees*.

FBA capacity limits* are influenced by sellers’ IPI scores*, as well as other factors such as sales forecasts for their ASINs, shipment lead time, and fulfillment center capacity.

Where to get more information: To start using the new FBA capacity management system, and to view capacity limits which will take effect on March 1, as well as estimated limits, sellers can head to the FBA Dashboard*.

This news item was sourced from a blog post by Dharmesh Mehta, Vice President, Amazon Worldwide Selling Partner Services, published today.

* Note: Links in this post requires an Amazon Seller account.