Seller Strategies Episode #4: Amazon Storage Limits
Staying Ahead of Storage Fees
Before we dive into the latest seller strategy tip, we want to bring your attention back to Long Term Storage Fees. Amazon’s policy is changing this week, and we don’t want it to take you by surprise! You can refer back to this post to get the scoop and make sure your stock is secure.
In the spirit of navigating Amazon’s ever-changing storage policies, we are tackling their storage limits this week. As we advance into the 4th quarter, there is a lot to consider before you end up paying top dollar for prime reality space.
First Things First
Amazon sent out an update earlier this year that introduces the Inventory Performance Index or IPI, to determine storage limits. This essentially provides each seller with a score (0-1000) that will ultimately affect how much inventory you can store and how much you will pay. It’s meant to speed up the shipping process during the upcoming holiday season to make things more efficient.
Basically, you want to have the right balance of inventory and expected sales. If you have too much inventory, chances are greater that you’ll get hit with fees and need to move stock from the warehouse. What newbie sellers may not realize about Q4 is that warehouse space ultimately gets tighter and inventory gets more expensive. Tis the season for the busiest shopping months of the year!
Ervin found this out the hard way and ended up paying a per unit fee that blew his budget out of the water, and this is how you can prevent a similar setback.
Too Much Inventory?
If your IPI score is under 350, you will need to downsize your warehouse inventory, and you have some options.
- Find a third party logistics warehouse.
Even better if it’s situated near an Amazon fulfillment center so that you can easily replenish stock when the time comes. Typically you will pay per pallet (cheaper than Amazon) to store your inventory on a month-to-month basis.
- Downsize your product!
Maria offers excellent advice that she took into account when she was communicating with her supplier. She was able to breakdown her product into multiple, smaller pieces that moved her product from the Oversized to the Large category. A small difference that resulted in a ton of savings in both storage and shipping fees.
- Optimize your listing.
Don’t forget, you can always rework your listing to get your sales moving faster to avoid a low IPI score. It may not yield the quickest result but it’s worth a try!
The most important factor here is staying on top of your inventory management and performance, and having a back up plan in place in case you need to move stock. It’s not an ideal situation, but it’s the reality of the Amazon game.
Our experienced sellers have been in your shoes and they are constantly learning new ways to stay ahead of the curve. Do you have any storage tips or tricks working for you? Let us know in the comments, and we’ll see you next week!