Since 2007, Amazon’s warehouse has exceeded 100 million square feet, an average increase of 35% per year. However, the current warehouse storage space is still tight, and it is difficult to meet the needs of millions of sellers on the platform.
In the case that the new warehouse can’t be put into use immediately, Amazon has to think about other tricks. The new FBA regulation is Amazon’s initiative to address warehouse congestion, which is designed to force sellers to better manage inventory and eliminate products that cannot be sold.
From July 1, 2018, for those sellers whose goods cannot be sold out for a long time, Amazon has to limit their storage space.
Performance is not up to standard, sellers use FBA restricted
The new rules are based on a new set of metrics, called the Inventory Performance Index, with performance scores ranging from 0 to 1000 points, and Amazon will evaluate each quarter.
If the seller’s performance is less than 350 minutes before the start of the new quarter, Amazon will send a potential warehousing restriction notice. If the seller performance is still less than 350 points at the end of the quarter, Amazon will use the corresponding warehousing restrictions in the next quarter.
According to the new FBA policy on stock restriction of warehouses, inventory exceeding the warehousing ceiling will result in additional warehousing costs of $10 per cubic foot per month. Of course, monthly warehousing fees will still have to be paid by the seller. Where applicable, the platform will Long-term storage fees are charged. In addition, the seller’s new product can not enter the Amazon warehouse until the inventory level below the storage limit.
Naturally, if the seller’s performance score reaches 350 points or more, the storage space is not limited, and there is no need to pay the inventory warehousing overcharge.
Up to now, regardless of whether the seller can effectively manage inventory, it can rent unlimited storage space. However, after the implementation of the new regulations, some sellers will surely be affected.