Reached your threshold with Amazon’s restock limits? Try these 4 steps instead
If you’re a seller on Amazon, then it’s likely that you will have felt the pain of Amazon’s new restock limits at some point or another over the past few months. There are plenty of horror stories online, but the crux of the issue seems to be that Amazon has greatly reduced the inventory thresholds for its sellers, and is continuing to sporadically change those goalposts even after sellers have reduced their stock.
When I first tried wrapping my head around these restock limits back in June, there was very little evidence in terms of how Amazon was calculating its thresholds. But since then, we’ve identified a general rule:
Amazon is basically gauging what 12 weeks worth of a forecast looks like for each seller, and is giving those sellers thresholds based on 12 weeks’ worth of cover.
On the surface, this makes sense, but there are two main issues:
- It’s not consistent globally
- It’s not consistent in specific categories
These inconsistencies have made it incredibly difficult for sellers to plan ahead and send in higher levels of stock ahead of key trading periods. At the time of writing, 4 of the top 5 posts on Amazon’s FBA seller forum all relate to restock limits, but it looks like they’re here to stay – unless Amazon can come up with another method of clearing up space across its fulfilment centres.
However, even if you can’t change those restock limits for good, you can still make them work in your favour by following these four simple steps:
1 – Reduce your stock
First and foremost, you need to get below whatever threshold Amazon has set you. There are two ways to do this, one of which is definitely better than the other.
The first is to request a stock removal. Without trying to generalise, stock removals cost money, they take time and they leave you with a pile of stock that you’ll need to find a new home for, so we’d only ever recommend this option as a last resort.
The second option sounds obvious: SELL IT. You sent that stock to Amazon for a reason, so don’t let it go to waste. If it isn’t shifting quick enough, create a promotion and give it a boost. Even if you’re selling at a loss, you’ll sell through the product quicker and you’ll soon identify which products have the potential to be a bestseller.
Most importantly, you’ll also improve your threshold due to the very fact that you’re selling more stock, making your life easier in the long run.
2 – Review and reduce your product range
Amazon has always wanted sellers to offer the widest range of products to their customers, but that diversity of choice is no longer feasible under these new thresholds. Sure, it can be nice to have T-shirt options ranging from XS to XXXXL, but how many of those fringe sizes are you actually selling, and how much storage space are they taking up? Are you actually creating any more revenue simply by having a wider range available?
Finding the balance between inclusivity and efficiency is important. If you don’t offer enough choice on your product pages, there’s nothing to stop a customer from looking elsewhere. Equally, if you offer too many products and go after too many categories, you’re going to spread yourself too thinly – both in the front and the back.
Thankfully, there are some workarounds available to you. Amazon has different stock pools for different types of products, so make sure you are effectively utilising the space you are given. For instance, apparel companies receive a separate threshold quantity specifically for footwear. If you can take advantage of it, do so. If you can’t, can you branch out your product range in order to do so?
3 – Keep things in stock
Although Amazon may have reduced the number of units you can send into fulfilment centres, they will also penalise you if you go out of stock. The metrics aren’t entirely clear on this subject just yet, but it’s possible that you will receive harsher penalties if you drop below a certain percentage of FBA in stock rate. The best way to deal with this grey area is to avoid it entirely, but it’s evident that the higher those percentages are, the better the threshold looks.
The only time we’ve ever seen consistency with these thresholds is on the 1st August earlier this year, when the majority of thresholds increased across the board. It was almost as if Amazon was gearing up for Q4, suggesting that the early thresholds were designed to clear the decks following Prime Day.
Whatever Amazon’s intentions, one thing is clear: take the thresholds with a pinch of salt and stay below the upper limits. Because what happens in three months’ time if Amazon changes them again?
4 – Follow the 80/20 rule
Amazon may have restricted you from having your full product range available through FBA (Fulfilment By Amazon), but other fulfilment methods are still open to you.
Split your stock 80/20. That top 20% of your products which always sell through need to be in FBA, but for that remaining 80% of slow moving stock, consider other options such as merchant fulfilled (MFN) or seller-fulfilled prime (SFP). That way, you can still offer your full product range within Prime delivery times, but you’re paying less in terms of Amazon storage fees and you’re actually creating more space to store your best products.
We wouldn’t really have suggested this approach in the past, but times have changed, and Amazon is in fact making SFP far easier. The approval process is now much less restrictive in the UK, and there are more delivery partners available too. For many sellers, SFP could be the answer to avoiding the larger headaches which these restock limits have brought.
Somewhat ironically, Amazon is putting its sellers in quite a small box. They’re asking sellers to constantly be in stock while simultaneously lowering their thresholds. Although it is far from ideal, these restock limits are forcing brands to be more efficient and more mindful of what they want to achieve from Amazon.
So, if you really want to beat the thresholds, start off by making your Amazon business as efficient as possible.