Deciphering Amazon FBA Inventory Challenges in Q4 - What's in Store?
This is another article of the series “Launching & Scaling on Amazon”. This article is authored by Jenny Berglund and Meghann Urewicz . Jenny Berglund is the Senior Research and Development Director and Meghann Urewicz is the Managing director at The AmaZone, an Amazon Brand Management Agency that has facilitated over $100M+ in Amazon sales. Together we pull on our extensive backgrounds preparing, launching and scaling sales on Amazon, to bring you tactical tips and tricks to sell on Amazon. The articles are geared to issues for Food and Beverage Brands and the US marketplace (Amazon.com), but most tips apply to other CPG Brands.
Managing Amazon FBA inventory during the bustling Q4 period comes with a unique set of challenges. In 2022, FBA sellers grappled with "restock limits," measured in total units, which often swung wildly on a weekly basis, culminating in a sharp decline as Q4 approached. For instance, one of our clients saw their limit shrink from around 20,000 units in early August to a mere 8,000 units by early September, eventually plummeting to fewer than 4,000 units in November. Alongside this rollercoaster, there were alarming delays in receiving inbound inventory. These draconian and unpredictable limits led to significant inventory planning headaches.
As we step into 2023, a new player enters the arena: "capacity limits." These were introduced in March and, in essence, resemble their predecessors but are now measured in cubic feet and change monthly. Amazon has also granted a sneak peek into "estimated" capacity limits, offering a non-guaranteed projection of limits two months ahead. Since their introduction, these limits have been quite generous and have not put any strain on the typical seller account. Additionally, there is a new option – "Capacity Requests" – allowing sellers to bid on extra storage space, with the potential to recoup fees if utilized judiciously.
All of these changes seem positive to the FBA seller. However, there's a cloud of uncertainty looming. Until recently, Amazon disclosed capacity limits for the upcoming month and estimates for the following two, typically about a week in advance. But September saw a departure from this norm. The September limits were not unveiled until September 1, and as of this moment, estimates for October and November have yet to surface (supposedly set to release on September 8). This raises concerns that the shift to different limits might not have addressed the fundamental problem of Amazon Fulfillment Centers grappling with Q4 demand. It's entirely conceivable that we may witness significant limit reductions in the coming months, potentially ushering in chaos akin to previous years. While the Capacity Request feature offers a glimmer of hope, it's largely untested. Very few sellers have had to resort to it until now, given the comfortable confines of regular limits.
As we inch closer to the holiday season, it remains uncertain whether Amazon sellers will face fewer frustrations in managing their inventory successfully. The question of whether this Q4 will be any less trying than previous ones hangs in the balance, with the unpredictability of capacity limits adding to the suspense.
How to Handle Inventory Challenges: Tips for Q4 Success
Early Stocking: If your profit margins allow for the increase in storage fees, consider bolstering your inventory in September while you still can. This proactive approach can help cushion the impact of potential Q4 inventory restrictions.
Selective Inventory Reduction: While removing inventory might not be your preferred strategy, it's worth evaluating if you have a substantial surplus of low-selling items. However, it's essential to exercise caution here. Often, low-selling items don't contribute significantly to storage issues for high-performing products. Removing excessive quantities can introduce complications and expenses that may outweigh the benefits.
Seek Personalized Guidance: Every seller's situation is unique. If you find yourself wrestling with inventory management decisions, don't hesitate to reach out to experts like The AmaZone for personalized guidance. Our experience and insights can provide valuable assistance in making the right choices to optimize your inventory and navigate the Q4 challenges effectively.
Don't let Q4 uncertainties hold you back. Partner with The AmaZone, a Full Service Amazon Agency, and together, we'll navigate the challenges, optimize your inventory, and ensure a successful holiday season on Amazon.
Contact us today to take your Amazon business to new heights!
