One of the golden rules to becoming a successful FBA seller on Amazon is to make sure that you don’t run out of inventory. Managing your inventory effectively is one of the most crucial aspects of becoming a lucrative business on Amazon’s massive e-commerce platform. The Amazon A10 Algorithm puts a lot of emphasis on sellers who keep their inventory in stock, meaning those who are able to manage their inventory properly are more likely to be favored in search results. When an FBA product runs out of stock, its conversions and rankings inevitably suffer. As a seller, it should always be a priority to keep up with your inventory in order to avoid any catastrophic missteps.
What are Restock Limits?
Proper inventory management is not impossible, however, Amazon isn’t making it any easier. As of April 22, 2021, Amazon has implemented new limitations on inventory, also known as “restock limits”. Restock limits establish boundaries for how much inventory a specific product can take up inside of Amazon warehouses. Restock limits update on a weekly basis and are different based on what category a product falls under. The most common product categories include standard size storage, oversize storage, apparel storage and footwear storage, but there is also a category for things like aerosols or flammables. Restock limits are not based on volume, rather, they’re simply provided as an absolute number of units. While there is no set equation for calculating these restock limits, the underlying idea is based on inventory turnover rates. Products with high inventory turnover are generally allowed more restock capacity while low turnover products, or products that aren’t selling fast, are given less space in Amazon warehouses.
Tips for Navigating Restock Limits
If restock limits have put some bumps in the road for your Amazon FBA business, don’t worry! Black Caiman Media has some tips to help you manage these unprecedented times, and it all has to do with sell-through rate. The main idea for managing Amazon’s new limitations on inventory storage is to increase your sell-through rate, meaning the amount of inventory you sell through in a given period. The higher your percent is, the better, and a general rule of thumb is to try for 80-85% or higher. You can increase your inventory restock limit with tactics such as Sponsored Ads, lowering product price to be more competitive in the market, running Sponsored Ads, offering promotions and coupons as well as getting read of any “dead” inventory.
Are you presently unable to ship inventory into Amazon warehouses due to restock limits? Here are a few ways to mitigate the problem going forward.
- Replenish inventory more frequently, in smaller quantities. This is slightly more tedious than before, but completely doable and worth it to keep your FBA business thriving.
- If you are selling multiple items under your brand, it’s worth taking a look at your product catalog to identify whether or not any of your products are staying in stock longer than average. Any products that have a lower than average turnover rate should be reduced substantially.
- If you have the ability and means to do so, seller fulfilling more of your items may provide as a viable option.
- Outsourcing for inventory management, warehousing, and fulfillment with a 3PL company, or third party logistics company, can be a great way to get extra help with inventory storage and generalized fulfillment service. Working with a 3PL company can help FBA businesses who are struggling with restock limits.
- Focusing on selling your products on different marketplaces, in addition to Amazon, is another great strategy to help manage restock limitations.