Just a few years ago, FBA was the ultimate fulfillment solution: open to everybody, pay-as-you-go and infinitely scalable. Sending inventory into FBA was like sending data into the cloud. You just shipped it into Amazon and there was no need to worry about what happened next. Everything was taken care of for you.
That honeymoon is truly over. It turns out that warehouse space isn’t infinite, and it’s bad for Amazon’s business to allow it to be used that way. Hence the introduction of peak-season storage fees, long-term storage fees, IPI-driven storage limits, ASIN level limits, processing delays running into several weeks, and of course the pandemic-related block on non-essential items.
In this peak online shopping season, which will no doubt be the largest ever, sellers are being hit by one of the hardest limits of all: new products are restricted to a maximum of 200 units stored in FBA. Add in processing delays, and a big spike in sales during the holiday season, it becomes near-impossible to keep a popular new product in stock.
Have you been hit by these limits? Is launching a new product on Amazon using FBA going to be a thing of the past?
Barry & Jason Games
This week, CNBC told the story of a novelty board game seller with several existing products on Amazon and two new games launched this year.
Barry & Jason Games would usually send in thousands of units of a new product, based on their obvious appeal as gift items and the sales performance of their older games. Instead they could only send in around 230 units. As the holiday season got underway, sales reached 50 units per day. Of course, they ran out of stock in less than a week.
Barry & Jason instantly sent more units into FBA, bringing them back up to the limit. But with a 2-3 week processing delay between units being shipped into an FBA warehouse, and then becoming available for Amazon customers to buy, this hot new product will spend most of the holiday season out of stock. Despite high customer demand, and plenty of units manufactured and ready to be sold, it’s impossible to get them into FBA and available to buy on Amazon.
It’s painful to look at a big pile of stock and know people want to buy it, but that you can’t get it to them. Amazon falling flat as a sales channel for two major new products hurts. Barry & Jason have other sales channels, but plenty of other businesses aren’t so lucky.
The alternatives
You probably know that using FBA isn’t the only option for selling on Amazon. But, for many years, it has definitely been the best option. It takes the labor-intensive business of order fulfillment completely out of your hands, with seamless integration into Amazon. Just as importantly, it gets you the Prime badge which provides a huge boost in search ranking and winning the Buy Box.
This is what has made selling on Amazon the number one business model for entrepreneurs and side hustlers for the last ten years. FBA is so ingrained into how this business model works that most practitioners don’t say they are selling on Amazon, they say they are “doing FBA”. They might not be saying that much longer.
If you want to sell on Amazon without using FBA, what are the alternatives? Simply put, you just do your own order fulfillment, or pay another company to do it for. There are plenty of good third-party logistics companies with experience in this.
The bigger question is, how do you get the Prime badge without using FBA? That’s a little more complicated, but a program called Seller Fulfilled Prime is the key. This allows you, or a third-party fulfillment company, to prove that you can ship orders as accurately and efficiently as Amazon and be rewarded with the Prime badge as a result.
Have you been affected?
ASIN quantity limits aren’t new, but they have been hugely ramped up this year. When Amazon announced the changes back in July, many sellers saw the impact it would have on new product launches.
The limits will be eased off in the new year, but will they be back again for the next peak season? So many products have a sales peak in Q4. How are you supposed to launch a product successfully and establish a sales history to match the peak season, in the first half of the year? How many sellers are even able to plan that far ahead?
Have any of these FBA limits impacted your business? What about delays in Amazon getting your inventory processed and ready to buy?
Are you moving away from FBA, for some or all of your products? Have you changed your product launch strategy to do self-fulfillment or use a 3PL?
Let me know your thoughts in the comments below.
If you sell on Amazon, you have to dance to Amazon's tune. When you see that something like this is coming you can't just ignore it and carry on regardless, you have to come up with a strategy to work around it. If US sellers continue to complain about Amazon not being nice to them instead of figuring out how to overcome the restrictions and work within the rules, then there will be nothing but Chinese sellers left. We compete with Chinese sellers and it doesn't take a genius to see what they did with their new product launches after this was announced - they switched to 3PLs. "You have to learn the rules of the game. And then you have to play better than anyone else."
Well you would say that wouldnt you?
"When you see that something like this is coming you can’t just ignore it and carry on regardless" The article stated that Amazon is changing its mode of operation with little notice. How do you "see" something like 6 weeks to get additional inventory checked in? Businesses like mine depend on Amazon to be the same day after day, every day of the year. It is up to Amazon to add resources to avoid bottlenecks. It isn't up to third party sellers to "help" Amazon with their problems. Look, the market is ripe for a valid competitor to Amazon. And its definitely not Wal-Mart. Wal-Mart is the worst of third party sellers. Not sure why Ebay cannot fill in the gaps here.