If you sell on Amazon through Fulfillment by Amazon (FBA), you’re going to have to ship your products to a fulfillment center. But here’s this thing, there’s a limit to how much inventory you can have at an Amazon warehouse at a time.
Amazon storage limits, also known as Amazon inventory limits are Amazon’s way of regulating how much inventory sellers can store at a fulfillment center. However, as with everything else on the marketplace, Amazon storage limits are constantly changing and may be difficult for sellers to keep up with.
Before now, Amazon mainly used weekly restock limits and quarterly storage limits, but as of March 1st, 2023, the retail giant ditched both for monthly FBA capacity limits.
Want to learn all about Amazon’s new FBA capacity limits? Read to the end.
Related: 5 Tips for Managing Inventory on Amazon
Table of Contents
What are Amazon Storage Limits or FBA Capacity Limits?
As explained earlier, FBA capacity limits (the new Amazon storage limits) are fixed monthly limits that determine how much inventory sellers can send to and store at fulfillment centers.
Unlike the previous weekly restock limits, Amazon expects that the new FBA capacity limits will help sellers manage inventory better and with more control too.
The new Amazon inventory limits or FBA capacity limits will be reset on the third week of every month, and sellers will also get estimated inventory limits for every storage type, for the next two months.
The new Amazon storage limits policy also allows sellers to bid for additional storage for any month, up to three months in advance.
But here’s the catch; your FBA capacity limits are largely dependent on your Inventory Performance Index (IPI) score.
Here’s how it works —- the higher your IPI score, the higher your storage limit, and the lower your IPI, the lower your Amazon storage limits.
What is the IPI Score?
The Inventory Performance Index score is a score that shows how well you manage your stored FBA inventory. It measures how much of your stored products are sold and how much of them are left in storage. This score ranges from 0 -1000 with 0 being the lowest and 1000 being the highest.
The minimum threshold for your Amazon IPI score is 400, if your score falls below that, you’re likely to have your inventory limits reduced.
Your IPI score also depends on a number of factors and since your storage limit depends on your IPI score, it is imperative for you to know the factors that influence your IPI score.
Factors that Influence Your IPI Score
Below are a few of the major factors that influence your IPI score.
Your FBA sell-through rate
Your sell-through rate is obtained by calculating the total amount of product units sold and shipped to customers within 90 days, this value is then divided by the average number of product units that remain at the Amazon fulfillment center within that 90 days.
If your sell-through rate is low, Amazon reduces your Storage limit. Amazon provides data on each product category that has a low sell-through rate, as well as ways you can increase your see-through rate.
By improving your Sell-through rate, you can improve your IPI score thus increasing your Amazon storage score.
In-stock Inventory
This metric measures the speed at which you bring high-demand products back into stock. By maintaining an updated in-stock inventory you will be able to improve your IPI score.
Stranded Inventory
The stranded inventory tracks how many products you have left at the Amazon fulfillment center due to listing problems resulting in the loss of an active order for such products.
Amazon usually alerts sellers when they have stranded inventory and provides information on how this issue can be resolved. By fixing the issue of stranded inventory, you can make more sales and your IPI score goes up.
Excess Inventory
This is one of the most important factors that could make or break your IPI score as a seller. Amazon usually provides sellers with information about product demand and how much product should be restocked in sellers’ Inventory at Fulfillment centers.
If the amount of product restocked surpasses a 90 days supply without being sold, then such a product is considered as excess inventory.
You can check if you have excess inventory and how much excess inventory you have in stock by clicking the manage excess inventory page on your inventory dashboard.
You will also find information on how you can reduce your excess inventory thus increasing your IPI score on this page.
It’s important to keep track of your IPI score so you can work on improving it when it’s going down before it brings your storage limit down further.
To access your IPI score you need to sign into your Seller Central account, select the inventory page and click on Inventory Planning which appears in the drop-down menu. By clicking on the performance bar that appears next you’ll be able to access your IPI score.
Related: Top Causes of Amazon Stranded Inventory
Who Does the New FBA Capacity Limit Affect?
Individual sellers are entitled to an inventory storage limit of 15 cubic feet, however, this capacity limit is fixed and cannot be increased.
FBA sellers with professional seller accounts that have been active for 39 weeks or more will be subject to the storage limit while newer Amazon sellers with professional accounts that haven’t been active for up to 39 weeks will not have storage limits.
The reason is that new sellers will not have an IPI score as there has not been enough time for Amazon to track their inventory performance. The IPI score is usually issued 15 weeks after a seller sends the first inventory to the fulfillment center.
New FBA Storage Management Features
Understanding the features of the new Amazon storage limit system will help you come up with the best ways to adapt so that your business can thrive.
Let’s take a look at some of these new features:
- Estimated storage limits to help sellers make inventory plans at least 3 months in advance: Amazon will be providing sellers with an estimated storage capacity for 3 months in advance. This is to guide sellers when managing their inventory and prevent issues like excess stock and low sell-through rates. This estimate will be based on factors like the IPI score and sales forecasts.
- Capacity limits will now be measured in volume as opposed to the unit which was formerly done: Before now, Amazon calculated inventory in units. But with this new system inventory, inventory will now be measured by Amazon in volume. However, sellers will have the option of leaving their inventory usage in units if that’s what works better for them. In this case, Amazon will provide an estimate of how many units makes up your assigned inventory volume.
- A single, month-long storage limit: Amazon FBA sellers will no longer be required to pay close attention and keep track of their weekly restock limit and quarterly storage limit, as these will be combined into “a single, month-long FBA storage limit per storage type”.
Can I Get More Storage Space?
What comes to mind when you hear “Amazon storage limits” or “Amazon inventory limits”?
You most likely wonder what happens if you need more storage space. Well, here’s the thing — the reward for fast-moving inventory or great inventory management is more storage space. But if you still need more storage space, the new FBA capacity limits provide the opportunity for you to request additional storage capacity.
Sellers can request additional capacity but they will have to pay a reservation fee. This fee is used as a bidding process against other sellers, with those who submit the highest fees receiving priority.
When additional capacity is granted, the reservation fees can be offset by earning performance credits from the sales generated from the additional capacity.
These credits are designed to offset up to 100% of the reservation fee, meaning that sellers will not have to pay reservation fees as long as their new inventory sells through. It is important to have a high sell-through rate in order to take full advantage of this system.
To request additional storage space:
- Go to your Amazon capacity manager
- Select ‘Create a new request’
- You’ll be required to indicate the month in which you want your storage limit to be increased.
- You’ll then be required to state the amount of additional storage capacity you are requesting for.
- The next step is to enter the reservation fee you are bidding on.
- The last step is to enter an expiration date for your storage capacity request. You can then submit your request and wait for Amazon to approve and grant your request.
Does The New FBA Capacity Limits Come With Any Fees?
Yes, the new FBA capacity limits two other fees apart from the typical FBA storage fees. Both fees are outlined below.
Overage Fees
Sellers who send inventory that is more than their capacity limits to a fulfillment center will incur overage fees. This fee is calculated based on the highest confirmed limit assigned to the seller by Amazon over a given period.
The aim of the overage fees is to restrain sellers from storing excess inventory and to nudge them to manage inventory properly. Sellers who try as much as possible to avoid overstocking are unlikely to incur overage fees.
Reservation Fees
You have to pay reservation fees when you bid for additional storage space. You will have to tell Amazon how much extra storage capacity you need for a specified period and also set the maximum reservation fee you are willing to pay for the additional storage capacity.
Sellers can make up for the reservation fee by taking advantage of a 15% performance credit ($0.15 per $1 in sales) earned from selling through the extra capacity.
This performance credit can be used to completely offset the reservation fee, so there is no cost for the additional capacity as long as it is used efficiently.
How Do I View My Amazon Inventory Limits?
It’s important to keep an eye on your inventory limits especially since it changes from time to time depending on your IPI score. This will help you avoid overstocking or any FBA capacity limit fees.
Checking your Amazon inventory limits is quite straightforward, just follow the steps outlined below.
- Log into your seller central account
- Navigate to the inventory tab and select ‘Manage inventory’.
- Click on ‘manage FBA shipments’.
- Go to the end of the page and click on restock limit. At this point, you should be able to see your storage limit available for various storage types.
How to Increase Your Amazon Storage Limits
There are two major ways to increase your storage limit. The first is to work on improving it using certain strategies that will be discussed here. The second is to request more storage limits.
The major factor that determines your storage limit is your IPI score. So you need to pay close attention to this and enjoy that it is always above 400 which is the minimum score if you want to maintain a high Amazon storage limit.
We’ve discussed some of the factors that affect your IPI score above. We’ll now take a look at how you can improve your IPI score as well as increase your Amazon storage limits.
Attend to listing issues in an effective and timely manner
One major listing issue that sellers may encounter is stranded inventory, so you need to keep your eyes out for this. In a situation when this occurs you must ensure that it is attended to promptly.
To achieve this you should check your stranded inventory level regularly, ensure that the inventory level between sold and on-hand inventory is always balanced and that the excess inventory level is always low or absent together.
Avoid long-term storage fees
Avoid storing inventory at fulfillment centers for more than a year. If you do, you incur long-term storage fees and this may hurt your IPI score, and lead to a reduction in your Amazon inventory limits.
Reduce excess inventory
It’s been stated previously that excess inventory is one of the top factors that can make or break your IPI score so you want to try and reduce it as much as you can. If you can avoid it even better.
The first step to achieving this is to keep track of your excess inventory level. Amazon usually provides information on how you can reduce your excess inventory level.
A common recommendation is usually to create an Amazon outlet deal. This will enable you to sell excess inventory.
Increase your sell-through rate
If your inventory is not being sold then your IPI score is going down, it’s that simple. To prevent this you need to improve your sell-through rate.
Amazon also provides important information that you can use to improve your sell-through on the inventory age page.
These recommendations usually include running ad promotions on Amazon, utilizing better and high-quality product images as well as using keyword research to optimize product listings.
Automate inventory management
Since your IPI score is directly hinged on inventory management, another strategy to increase it is to automate your inventory management. Effective Inventory management play a huge role in achieving success when selling on Amazon but it can also be very challenging especially when you carry it out manually.
To solve this problem, consider using inventory management software like the ZonBase profits tool.
The ZonBase profits tool offers an inventory forecast feature that allows you to monitor your inventory levels and get notified when you’re running low on stock. By setting notifications when your inventory gets to the minimum, you can avoid stockouts and maximize your Amazon inventory limits.
The tool also predicts an estimated restock date based on your sales history to help you plan your order restock process well ahead of time.
You can try out the profits tool for free for 7 days when you sign up for a free trial of ZonBase.
Use third-party fulfillment centers
Third-party fulfillment centers are independent fulfillment centers where you can store your inventory.
If your storage limit is low you can work with a third-party fulfillment center to hold the rest of your inventory while you send the required amount to Amazon fulfillment centers. Another benefit of using third-party fulfillment centers is that most of them offer lower storage fees.
FAQs on FBA Capacity Limits
- What’s the minimum limit for Amazon FBA?
There’s no minimum inventory limit for products you can send to Amazon fulfillment centers. There is however maximum inventory limit depending on your Amazon storage limit.
- How can I increase my storage limit?
The best way to improve your storage limit is to improve your Amazon IPI score. We’ve discussed some strategies you can use to achieve this above.
- What determines my storage limit?
Some factors that determine your storage limit are your IPI score and sales volume.
- Can the storage limit be changed?
Yes, your Amazon storage limits can change from time to time. So you can check your storage limit on your seller account to be sure what your new capacity limit is.
Conclusion
Inventory management is a crucial part of your Amazon business, hence it is important to stay updated on Amazon’s policies as regards storage limits.
More importantly, focus on maintaining good seller metrics like a high IPI score and good sell-through rates. Also, avoid overstocking and try as much as possible to utilize inventory management tools as this makes it even easier to maximize your FBA capacity limits.
If you sell slow-moving goods, try not to ship too much inventory to fulfillment centers because, you’re likely to incur long-term storage fees if they sit for too long.
