Earlier this year, Amazon FBA started limiting the number of third-party shipments to their fulfillment centers for a select — and in some cases, surprising — group of ASINs. Is there any method to this madness? How will this change affect Private Label? ASD Insider’s experts show us all the way forward.
Here’s the situation: On March 18, 2016, a number of third-party sellers woke up to find that they could no longer send their inventory to Amazon’s fulfillment centers, a.k.a. Amazon FBA.
Instead, they received warnings that the allocated space for certain items was full, and that Amazon would not be able to accept any further units from them.
Some shrugged it off, thinking Amazon was playing around with its algorithms — others assumed the worst, and prepared for the dawn of a new and terrifying era in which Amazon rejects items willy-nilly and cuts sellers out of important decision-making processes.
For many sellers, the new set of inventory restrictions seemed random and needlessly convoluted. Right now there’s no way to know which ASINs will be accepted and which will be rejected.
What about those sellers who have already purchased inventory and listed their items? Are they now expected to merchant-fulfill orders themselves, find an alternative selling platform (always a good idea), or store their items indefinitely? (Or even — gulp! — donate them and claim a tax write-off?) After all, how do we know Amazon’s changes are here to stay — and where they’ll finally land?
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The Amazon Experts Weigh In
From Katharyne Shelton of online selling platform, Blue Sky Suite.
“Amazon has gradually been taking measures to tighten warehouse storage over the last year or two. At the same time, the company has been updating and expanding their ‘Seller Coach’ reporting tools, which predict inventory requirements and encourage sellers to not only meet those predictions, but also to price competitively. It is clear that they want to keep inventory moving and not have items stuck in the warehouse, gathering dust so this development seems in line with that goal.”
From Skip McGrath, Publisher of the eBay and Amazon Sellers News
“Some sellers are seeing certain ASINs blocked when they try and add them to a shipment. This happened to me a few days ago and what was strange was that is was good selling product. I only had six left in stock and and was trying to send another twenty-four. I thought that was strange so I opened a support ticket. I received an answer to wait a day and try again. Sure enough — I created another shipment the next day and it went through fine. I think what is going on is Amazon is trying to automate the process of controlling FBA inventory and their auto-system still has some glitches in it. But there is no doubt this is a new policy sellers will have to cope with going forward.”
The Difference Between Rejected ASINs and Amazon’s Long-term Storage Policies
The Insider highly recommends reading Amazon expert Lisa Suttora’s highly informative post on the subject — which also conveys the shock that many sellers experienced after Amazon began to randomly refuse to allow shipments of certain ASINs to FBA. She also clearly describes the difference between rejected, “slow-turn” ASINs and Amazon’s long-term storage policies.
So what’s the next step?
“As of today [Friday, March 25th], there have been no official comments from Amazon, although it is heavily rumored that they will shortly be updating their mobile seller app and other seller central tools to handle this change — and to hopefully warn sellers if a product is at capacity before they reach the shipping stage of the product listing process,” says Shelton. “This would be a very welcome change and will hopefully save sellers money. In the meantime, one solution for frustrated sellers is to use third party ‘Prep and Ship’ companies to warehouse and fulfill the products to customers.”
“This is great news for people creating Private Label, White Label, and bundled products. Private Label is accessible now — even for smaller sellers — and the opportunity to build your own brand and scale your product line is truly immense.” – Katharyne Shelton of Blue Sky Suite.
Shelton also ran a poll of her 8,000 member group, Treasure Hunting, and spoke to a number of sellers who encountered the restriction.
“Primarily, this change is affecting sellers who are sharing listings with multiple other sellers. Book and media sellers seem to be most heavily affected, particularly those who are selling ‘long tail’ media such as used books or CDs, however it is also hitting more general goods sellers too, including clothing and shoe sellers,” observes Shelton.
According to Shelton, it helps to think of Amazon pooling the inventory for each product. For example, if they expect ten orders for a particular pair of shoes in April and one seller has already shipped in ten pairs — or Amazon.com themselves are stocking ten pairs — then it makes sense that Amazon will refuse further shipments of those shoes from any other seller.
Should FBA Sellers be Worried? Not Really.
“Based on what I’m seeing in my account and clients’ accounts, I don’t think this is a problem for most FBA sellers. My advice is to simply be a little more cautious while sourcing, concentrate on keeping stock levels at two weeks to one-month fulfillment, and look for more items with less competition,” advises Kat Simpson, whose excellent article on the subject definitely warrants attention.
And How Does This Affect Private Label?
“The good news is that sellers who create their own unique listings seem to be unaffected so far,” Shelton affirms. “This is great news for people creating Private Label, White Label, and bundled products.”
A Final Thought From Katharyne Shelton:
“Ultimately, I would strongly encourage serious Amazon sellers to look toward creating and branding their own products: in addition to the inventory control advantage, this makes them eligible for Amazon Brand Registry, which allows sellers to maintain control over the images and details displayed for their product, ensuring optimized, high quality listings. Private Label is accessible now — even for smaller sellers — and the opportunity to build your own brand and scale your product line is truly immense.”
Editor’s Note: as of April 5th, 2016 many sellers have indicated that products they tried to send in are now processing correctly. Amazon also sent out an email offering sellers free removals to pull excess inventory from their warehouse – all in an effort to clear space and streamline the inventory storage process. Most, if not all FBA rejection glitches appear to have been worked out by Amazon.