Difficulties for Amazon Sellers Due to Amazon 3pl Policy

Any amazon seller who has experienced confusion at least once in the Amazon 3PL policies and changes in Seller Central functions that seem to be updated every other day.

For sellers running Amazon businesses, the impact of amazon 3PL policy and regulation changes is absolute. It is a concern for many sellers because it can be a significant disadvantage depending on the situation. One of the major policy change issues that baffled many Amazon sellers was the ‘restriction on inventory quantity.’ For example, at the end of last year, Amazon announced: “Amazon sellers with an IPI (Inventory Performance Index) score less than 500 will be subjected to storage limits from August 16 to December 31.” As Amazon, it must have been an inevitable choice to operate the limited FBA logistics capacity as efficiently as possible while attracting more amazon sellers in line with the rapid growth of the e-commerce market triggered by Corona. Unfortunately, the regulation was a fatal change factor that significantly increased the burden of inventory management for many sellers, such as additional expenses incurred in hiring 3PL warehouses and lead time calculation problems due to delivery.

Also, in 2023, Amazon is adjusting its warehouse space to maximize commissions while disregarding FBA sellers while still not providing enough capacity. All sellers pay a referral fee (a percentage of the total price, shipping, and all gift wrap costs). These fees will remain the same, with the new fees taking effect on January 17, 2023.

However, sellers using Amazon FBA fulfillment services will see significant increases in the new year. These include:

• FBA outbound fee rates increase by $0.22on average.
• The maximum monthly storage fee for unclassifiable networks increases by $0.20 per cubic foot.
• Off-season storage rises by 3 to 4 cents per cubic foot.
• Beginning April 1, 2023, a new storage utilization surcharge will apply to sellers who store high inventory cubes compared to their most recent weekly sales cubes.
• Starting April 15, 2023, Amazon will increase the surcharge applicable to inventory stored between 271 and 365 days.
• Beginning April 15, 2023, Amazon will charge an obsolete inventory surcharge for inventory stored between 180 and 270 days, excluding products in the Clothing, Shoes, Bags, Jewelry, and Watches categories.

As well as storing goods that cost more, Amazon has announced that it will almost double the cost of removing items from Amazon fulfillment centers. Therefore, for the Amazon restocking limit handling method, you need to do the following:

First, the best way to deal with restocking caps is to increase the IPI score. This score is based on excess, sell-through, stranded, and in-stock inventory. Amazon states, “Sellers with consistently high IPI scores will receive higher storage limits, adjusted based on volume sold and available capacity. When setting limits for upcoming quarters, Amazon considers recent and seasonal sales over the past year.” Although the IPI score is updated weekly, Amazon calculates it every three months and adjusts storage limits based on sales volume, historical IPI score, and available fulfillment center capacity.

Next, if you have access, another way to deal with the restrictive Amazon FBA inventory limits is to use the warehouse or corporate with a 3PL fulfillment center. The 3pl warehouse ca

n hold inventory and fulfill FBM orders until more products are ready to be sent to FBA.

Finally, inventory planning can be challenging to manage when selling multiple products on Amazon. You may underestimate or overestimate your inventory needs. Using the proper inventory management tools will help keep your IPI score in line with Amazon’s requirements, so you won’t be locked into minimal storage when needed.

In other words, at this point, when the scale of the global e-commerce market continues to grow, Amazon is expected to continuously update its operating regulations and policies to create new revenue models and maximize profits. Therefore, to continue successful Amazon selling, it is necessary to constantly check Amazon updates through Amazon Seller Central and seller forums and related communities and prepare appropriate countermeasures accordingly. Therefore, PNPLINE, an E-commerce 3PL company, can help avoid potential inventory and operational issues and take the necessary steps to boost your business.

References

Lesley, H. (2022) 2022 in review: 8 lessons learned for selling on Amazon. Riverbend consulting. Reference from 2022 in review: 8 lessons learned for selling on Amazon – Riverbend Consulting

Brain, C. (2022) How to Handle Amazon Quantity Limits in 2022. JungleScout. Reference from How to Handle Amazon Quantity Limits in 2022 – Jungle Scout

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