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How to Manage Amazon Quantity Limits in 2024

Threecolts
Geri Mileva
Published
March 18, 2024
Modified
May 7, 2024
How to Manage Amazon Quantity Limits

Since 2020, Amazon launched several inventory storage updates that impact FBA sellers. Amazon has imposed quantity limits to ensure FBA sellers don’t exceed their storage capacity and maintain an efficient inventory management system. 

However, managing these quantity limits can be tricky. You must balance your stock levels with customer demands to optimize your sales. Knowing your quantity limits will help you plan your inventory so you avoid stockouts or excess inventory. 

Working within your quantity limits will also help you maintain good Amazon standing and avoid any fines, account suspension, or product delisting. 

Understanding Amazon Quantity Limits

Amazon is more interested in fulfilling your items, not storing them. They want you to sell items quickly and avoid accumulating aging inventory in their warehouses. For this reason, they’ve created inventory limits to control how much storage space your products occupy. 

The Amazon quantity limit differs per product depending on its marketability, historical sales data, and Amazon’s available storage capacity. 

In 2020, when inventory limits were first introduced, Amazon set a 200-unit limit per ASIN. This made it difficult for sellers to launch new products. The 200-unit limit lasts for several days only, especially if you have a fast-selling item. With inbounds taking weeks, a hot new item runs the risk of a stockout, which diminishes its sales potential. 

By 2021, Amazon had removed ASIN-level quantity limits and introduced storage-type inventory limits. This means that each storage type had a maximum inventory storage space available. There are 6 storage types: standard, oversize, footwear, apparel, flammable, and aerosol. Amazon will automatically identify items and categorize them based on their characteristics. Storage limits per type are not interchangeable.

By 2023, Amazon introduced Capacity Manager, which forecasted a seller’s storage limit to be three months into the future. Instead of weekly restock limits and quarterly storage volume limits, sellers were given a single monthly capacity limit. Sellers can also bid for more storage space. 

Amazon is constantly changing its policies on quantity limits, and this is to be expected as the e-commerce giant optimizes the flow of products on its platform. FBA sellers take advantage of Amazon’s fulfillment services, not warehousing services, so it’s reasonable that these fulfillment areas have limited space. 

By setting quantity limits, Amazon encourages sellers to efficiently manage inventory and aim for fast-moving products. It costs 70% less per unit to ship via Amazon FBA, so it makes sense that Amazon attracts millions of independent sellers. However, they don’t have the space to store all of these seller’s inventory. 

What is my Amazon Inventory Storage Limit?

Your total capacity limit is the maximum number of units you can store in Amazon’s FBA warehouses. It’s measured by cubic feet and is regularly reviewed and adjusted. The capacity limit includes items currently stored at Amazon, inventory on its way to Amazon, and any shipments prepared but not yet shipped to Amazon.

To find your capacity limit, log in to Seller Central. Go to Inventory > Inventory Performance. Look for Capacity Monitor at the bottom of the page. 

Amazon’s inventory storage limit depends on several factors:

  • Type of Seller Account
  • Age of Seller Account
  • Product Type
  • Inventory Performance Index (IPI) Score

Type of Seller Account: Individual sellers have a fixed 15 cubic storage limit. This value doesn’t change and isn’t subject to storage limit increases. Professional selling accounts are subject to FBA capacity limits depending on the age of their account and their IPI score. 

Age of Seller Account: New professional sellers who are active for less than 39 weeks aren’t subject to storage limits. This gives new sellers more time to establish their sales volume and for Amazon to determine their capacity limits. 

Professional sellers who are active for more than 39 weeks will get capacity limits adjusted based on their sales volume and Amazon’s available storage capacity. The IPI score determines these limits, and the higher your IPI score, the higher your limit is.

Product Type: Standard-size, clothing, oversize, and footwear items are all subject to different storage volume limits. 

IPI Score: Sellers who maintain a good Inventory Performance Index (IPI) that’s within or above the required threshold can get more storage limits. 

What happens if I go over my inventory limit?

When you get your storage limit, it’s recommended to just stay below the limit for your storage type. If you send more inventory beyond this limit, you risk your items getting rejected and charged with an Inventory Storage Overage Fee. This usually costs $10 per cubic foot for the over-limit items. 

Your IPI score will also take a hit, which is a red flag for Amazon to decrease your storage limit, causing further challenges.

What is the Amazon IPI Score

The IPI score heavily affects your FBA capacity limits. The higher the IPI score, the higher your quantity limits will be. The IPI score is a rating between 0 and 1000, which reflects how well you manage your inventory. 

The typical quarterly threshold is 400 or 450, which you must meet or else risk reducing your storage limits. A score of 350 is a bad sign because it indicates ineffective inventory management and could lead to lower storage limits or product restrictions. A score of 550+ is a good indicator that you’ve mastered your logistics and warehouse management. 

The IPI score is a rolling average that takes 2 to 12 weeks to increase. You can find your IPI Score at the top of the page where you see your Capacity Limit. Go to Seller Central > Inventory tab > Manage Inventory > Inventory Dashboard > Performance window.

What is the Amazon IPI Score

The scores are updated weekly, and 24-hour performance is one of the top influencing factors.

The following factors are used to calculate your IPI score:

  • Excess inventory: Having stale inventory that’s not selling will lower your IPI score and accumulate monthly storage fees. An item has excess inventory when it has more than 90 days supply based on forecasted demand. 
  • Sell-through rate: This is the proportion of units sold and shipped over the past 90 days, which is over the average number of units stocked in Amazon’s fulfillment centers. You want this to be as high as possible since it indicates a fast-selling product. 
  • In-stock rate: This is the percentage of time your products have been in stock in the past 30 days, with items that sold more in the past 60 days given additional weight. You should maintain a high in-stock inventory by ensuring fast-selling items have the highest number of units stored with Amazon.
  • Stranded inventory: This is the inventory stored in Amazon but without any active listings due to listing issues. You must keep this at 0% by ensuring listings meet Amazon’s guidelines. Stranded inventory also incurs FBA storage fees, which you’d want to avoid. 

The above factors are not weighed equally. Excess inventory and sell-through rate matter most, with in-stock rate and stranded inventory playing a minor role in the overall IPI score. By managing the above factors, you can achieve a higher IPI score, which strongly influences capacity limits.

Right now, the minimum Amazon IPI score is 400, but this has increased to 500 during the pandemic. Amazon can change the IPI threshold at any time, so it’s best to aim for a higher score, such as IPI 600, to ensure you’re always within Amazon’s guidelines. 

How to Increase Amazon Quantity Limits

If you need more storage space or you want to prevent your storage limit from getting smaller, then there are several strategies for increasing and maintaining inventory limits. 

  1. Request additional capacity through bidding

You can always request extra storage space by placing a “reservation fee.” This is a bid against other sellers, and the one with the highest reservation fee will get priority for a bigger space. When the additional capacity is granted, the reservation fee is offset by earning performance credits from the generated sales due to the increased capacity. 

As long as the inventory sells through, the seller won’t have to pay the reservation fee. But if you don’t sell enough and you submitted a high bid for the storage space, then expect to pay a lot for the extra storage. Amazon suggests an average bid of $2 per cubic foot, but bids have been known to reach as high as $5 per cubic foot.

This strategy is ideal if you’re launching a brand-new product that you believe will quickly sell. However, you have to be able to convince Amazon that you’ll achieve a high sell-through rate and compete with other sellers bidding for the same storage space. You should also be wary that if you don’t sell enough to get enough performance credits, you’ll end up paying a huge extra storage fee.

Increase Amazon Quantity Limits - Request additional capacity with bidding
  1. Continue improving your IPI score

The best way to increase your quantity limits (or ensure it stays the same) is to work on your IPI score. As mentioned, the IPI score measures your sell-through rate, in-stock inventory, stranded inventory, and excess inventory. 

When Amazon sets your quantity limits for the coming quarter, they will look at your recent sales volume and your previous year’s seasonal sales volume. They will also look at the available fulfillment center capacity, and those with higher IPI scores have a better chance of getting higher storage limits.

To improve your IPI score, you should:

  • Get rid of excess inventory. Retrieve any SKUs that have gone out of style or any seasonal products. If you don’t expect to sell the item in the next three months, pull it out.
  • Use Multi-Channel Fulfillment (MCF) to serve your website orders from your Amazon inventory. This will help move any aging items.
  • If it makes sense with your financials, discount products to sell them faster rather than retrieving the inventory from Amazon. 
  • Optimize product descriptions and other listing details to increase the sell-through rate. 
  • Review your sales data and send more stocks of profitable and fast-selling items. Consider sending small shipments of these fast-moving items so they sell out as soon as the next shipment arrives.
  • Fix any stranded inventory that has lost inventory items that were either misplaced or rerouted. 
  • Be wary of your product returns and keep it below a set minimum. To avoid returns, you should invest in product quality to ensure customer satisfaction.
  • Aggressively launch new products so they sell fast and qualify for more storage space. However, only ship in small batches when you’re initially testing the market reception of a new product.

Generally, by following best practices to improve your sales, customer service, and product quality, you’ll be able to maintain a high IPI score and increase your storage limits. The key strategy is to improve your sales and send a signal to Amazon that your products deserve more storage space.

If your IPI score is low or only 50 points higher than the acceptable threshold, you have to be more aggressive in raising it. Invest time in pruning excess inventory and improving your sell-through rate, as these are the major factors affecting your IPI score. 

  1. Automate your inventory planning

If you’re selling multiple products with Amazon, planning and managing inventory can get challenging. You don’t want to overestimate or underestimate the inventory needed to reach your sales target and meet customer demands. 

Using an inventory manager tool to automate inventory planning will help you predict how much inventory you need based on your sales trends and forecasted demand. You can avoid costly errors with manual planning and keep your IPI scores within Amazon’s requirements.

You’ll also avoid getting stuck with minimal storage capacity for the seasons when you need huge storage space the most. 

  1. Cancel any open shipments and create removal orders

Amazon counts open shipments as part of your storage limit. If you have any open shipments but don’t plan on sending them to Amazon anytime soon, cancel them immediately. You’ll instantly free up inventory space from being counted towards your limit. 

Another quick way to clear space is by asking Amazon to dispose of your inventory. You can do this by placing a removal order, which typically costs $1 per pound. When combined with the inbound fees and other associated fees for sending the item to FBA, you’re throwing a lot of money just to get extra storage space. It’s not an ideal situation, and you’re better off joining the Amazon liquidation or donation program. 

Cancel any open shipments and create removal orders
  1. Send items to Amazon Warehousing and Distribution (AWD)

If you don’t have warehouse space, you can take advantage of Amazon’s secondary warehouses, which were built to store inventory for Amazon sellers. There are no storage limits in these warehouses, but you have to pay several fees for storage and transportation. They are also limited to standard-size items only. 

However, you can expect that Amazon will automatically replenish your inventory in their FBA warehouses, which will improve your Buy Box standing since Amazon knows you always have inventory available. 

  1. Consider a third-party fulfillment partner

Working with a 3PL (third-party fulfillment center) can help manage your storage space until you get sufficient storage from Amazon. You can hire a 3PL to store some of your inventory and even handle FBM orders until your FBA account can handle more inventory. 

You can also rent or use your own warehouse near an Amazon fulfillment center to handle excess inventory or slow-moving items while you work on improving your IPI score to be eligible for higher quantity limits. 

If you sell a large product assortment, you can combine an FBA and FBM strategy. Use Amazon FBA for fast-selling, high margins, and small dimensional size items while keeping low-profit, slow-moving, and big items to FBM. 

  1. Take advantage of Amazon’s liquidation and donation programs

You don’t want items gathering dust in Amazon’s fulfillment centers, and neither does Amazon. You can get rid of these items by selling them in bulk or donating them to charity. 

Amazon’s FBA liquidation program accepts returned items in acceptable condition to be sold in bulk to third-party buyers. Their goal is to help you recover value from returned and excess inventory. All you have to do is submit a liquidation request through your Amazon Seller Central. 

Amazon also works with non-profit organizations like Good360, which can distribute excess goods to people in need. You can send any inventory that’s not fit for liquidation or resale to be donated to these organizations. While you won’t earn from these items, you’d still free up storage space and improve your quantity limits.

Improve Inventory Limits by Increasing Sales

Amazon quantity limits are here to stay. When they were first launched, sellers hoped it was a temporary thing that would someday go away. However, as Amazon continues to invite more third-party sellers into its platform and improves its FBA program, you can expect that Amazon will continue to impose storage limits. After all, it supports Amazon’s thrust to encourage fast-moving items, which leads to higher sales. 

There’s no telling when Amazon will introduce new inventory policies or reset quantity limits. Keeping your IPI score high and improving your sales are the best strategies you can follow to ensure you get the highest storage capacity possible. 

While you can’t do much about your inventory limits, you can influence your sales performance and improve your sell-through rate. Tools like SmartRepricer and SellerRunning help you price your products competitively, so they always win the Buy Box. 

You can also cultivate a strong customer base and build brand loyalty using customer service tools that provide efficient customer support and increase customer satisfaction. 

Ultimately, focusing on things you can control, like sales and customer service, will earn you bigger storage space while boosting your business.

Browse through and read our other blog posts that are data-driven insights with our very own proprietary data and learn more on Mother's Day trends and best practices, Easter sales, price elasticity of demand, Amazon FBA fee changes, Amazon product title optimization, winter seasonal products, Amazon end of year sales, Valentine’s Day trends and best Amazon fulfillment centers by location and throughput.

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