2022 Amazon Restock Limits Tips and Updates

Free Up Storage Space To Increase Restock Limits

Identify Slow-Moving Products With Excess Inventory

Due to the new Restock Limits by Storage-Type, the fastest way to potentially increase restock limits is:

1. Identify slow-moving products with Excess Inventory.
2. Rapidly sell through that inventory BY ANY MEANS NECESSARY.

RESULT: Not only do you clear slow-sellers that are blocking your best-sellers, but the added sales velocity helps to increase your overall restock limits.

HOW-TO: Use the SoStocked.com Sales Velocity and Days Left on AMZ filters to quickly identify overstocked slow-movers.

Now is the time to start looking at any of your excess inventory. If you haven’t already done it, get rid of slow sellers to free up storage space and improve those metrics. Consider removing anything that’s more than 60 days. We used to recommend 90 days, but since Amazon’s policy change, 60 days is probably safer. You should start keeping more inventory in your local warehouse and less at Amazon.

We have to be prepared for a margin crunch because Amazon is forcing us to take on more expenses. There will be more carton fees because there will be more cartons that we’re not sending directly into Amazon so our third party warehouses are handling them. We’re also potentially looking at more storage fees. It’s time to get smart about how we’re handling things. Removal orders will get the job done quickly but will also cost you.Using a removal order, you can move some of that excess inventory out of FBA warehouses.

A flash sale would be a little slower, but could have some potential upsides in addition to what a removal order would do for you. First of all, it should cost you less; it should be more profitable for you to move it through a flash sale. Second, even though it might take longer (or might not be possible depending on the product), it’s not only going to clear up space, but it’s also going to improve your sell-through rate because Amazon is looking at your total sales and total inventory balance. And that could potentially mean improved restock limits shortly.

As mentioned above, you can also check out Amazon’s new liquidation program: essentially, you can create a removal order, and Amazon will charge you a per unit fee. They’ll send it to a liquidator, and then the liquidator will pay you 5-10% of the value of those units within 60 to 90 days.

Related: Why Amazon Excess Inventory is bad and how to reduce it.

Lower FBA Buffer Stocks

I don’t mean you should lower all of your buffer stock, just your FBA buffer stock – potentially and with caution. We recommend 30 days of FBA buffer stock, but so for those keeping more than than, 45 to 60 days, rethinking that may be in order. Buffer stock is that extra bit of inventory that you always keep; it’s like a false zero.

Before I get down to 30 days, I’m shipping in with enough time for my inventory to arrive before I hit 30 days of stock. However, this is a balancing act. In recent updates, we mentioned that Amazon claims they are trying to improve on check-in times. Thirty days of buffer stock will not do you any good if they’re taking three weeks to book an LTL appointment and another three weeks to check inventory in, so don’t automatically shift to 30 days. I would say slowly creep it down as you start to trust those check-in times. You don’t want to stockout. As those check-in times get faster and faster (fingers crossed), start to creep your buffer stock down while creeping your warehouse buffer stock up to make up for that shift in balance.

And, of course, always have a backup plan. Unfortunately, because Amazon is taking weeks to check in inbound shipments, products stock out while waiting for this check in, and your sales decrease. Because of this, your sell-through decreases, your restock limit goes down, and the sales that would give you the ability to send more inventory decrease while your likelihood of stocking out increases.

Related: The importance and difference between Buffer Stock, Safety Stock and Anticipation Inventory.

Optimize Logistics To Increase Amazon Storage Limits

Smaller Shipments More Frequently

I know we don’t like to hear this one because it could cost more money to make smaller shipments more frequently. But instead of shipping three or four months’ worth of inventory into Amazon, we’re more likely going to have to do it once or twice a month; at the very most, I would say every two months because, in part, more frequent, but smaller shipments will increase your sell-through. And that’s what Amazon wants to see.

They want to see that you’re good at turning your inventory over, and this should trigger Amazon to want to give you more space. It’s ironic: we’re all trying to get higher restock limits, and at the same time, we have to start thinking about keeping our utilization down so we’re not maxing out those limits. Max out your limits, doesn’t seem to be an effective trigger to Amazon to increase those limits, unfortunately.

The benefit of getting your utilization down, getting those restock limits up, and not using all of that space is that you will have the extra space if you do want to launch more products and are trying to scale more quickly.

Additionally, if you’re sending smaller shipments, not palletizing them will potentially help you get them checked faster because it takes less time and is processed a little differently.

Pro tip: If you decide to go with smaller/frequent shipments, consider using SoStocked to remove complexity & gain visibility by keeping track of where inventory is in the process (production, customs, prep center, 3PL, in transit etc…).

Faster FBA Shipping Times

We used to label everything with FBA shipping labels and put it on a slow boat from China. I’m not saying you can’t do ocean freight, but it may not be the best move to label your FBA shipments before you put them on the boat. As soon as you create an FBA shipment that will keep for 30 to 45 days, it’s going to eat up your utilization space, and it’s also going to affect your sell-through – you’ve got potentially thousands of units that are not selling for 45 days. Even worse, ocean inventory may take up the FBA warehouse space that is needed to send local inventory into Amazon. So put them on the boat and then label them when they get to your third-party warehouse.

On top of all this, Amazon checks your sell-through algorithm and may attribute those products as part of your FBA inventory as one factor of their sell-through calculation. Unfortunately, the algorithms can be a little faulty, and thus creating these labels could be harmful to utilization and sell-through.

This is why we recommend that you consider sending your inventory to a third-party warehouse and labeling them to FBA from there. This means extra fees because you have check-in fees at your third-party warehouse as well as labeling fees and shipping fees. As prices are beginning to come down on air freight, it seems that it might start making more sense to send smaller portions by air for smaller products.

Sometimes your Chinese warehouse will let you store things there for free, and then you can send in batches to Amazon if that makes sense for you financially. Run the numbers and see how much it will cost you to store them at your third-party warehouse locally, along with all of those extra carton fees, labeling fees and handling fees, compared to how much air freight will cost you. Never assume that air freight is always the most expensive option now that you have to do this pit stop to your third-party warehouse because of Amazon storage limit restrictions.

Pro tip: To save on some of these warehousing fees, consider increasing the number of units per carton. This will immediately have an impact on your carton fees. You’ll have fewer cartons because you have more units per carton, and each fee will be more evenly distributed across all units for increased per unit profit. We did this on one moderately selling product; we did the math on adjusting from eight units per carton to just 10 units per carton, and it was an $8,000 per year savings! Ask your supplier if it is possible to safely pack your inventory differently to have more units per carton. You may even want your inspection company to check the stability of the change to ensure safe travels before you wholly switch over, but that change should be a quick way to regain some margin.

Lower Shipping Costs Caused By Amazon Restock Limits

An Amazon seller asked: “Restock limits cause me to ship products via air ($15 per unit) instead of boat ($1 per unit). Doesn’t it account for overseas shipment transit times?”

This is so challenging! It’s true, as we discussed above, that if you are shipping inventory into Amazon, the minute that you say you’re shipping it, it will be counted as inventory. It’s not going to look at when the inventory is going to arrive but is going to count it immediately.

If you make a Chinese shipment, you may be blocking your local warehouse inventory from getting in. In this case, it would make more sense to have a 3PL. If you’re paying an extra $14 per unit by air, sending by sea and then having a 3PL store and ship for you will be significantly less expensive.

By sending all of your inventory to your 3PL, and then paying a carton pull fee along with a labeling fee, you’ll be paying those per carton and per pallet fees rather than the high air freight, which should reduce your cost per unit significantly. And even with those extra costs, I can’t imagine (unless you’ve just got some crazy products) it costing you as much as $14 extra per unit to switch to ocean freight and 3PL rather than air shipments.

This way, you won’t have to create the FBA shipments until your inventory arrives at your 3PL, and then you won’t have to do the air freight because you’re not initiating that shipment until they’re only days out from arriving at Amazon from your local warehouse.

Keep Storage Space Limits In Mind

An Amazon seller asked: “My product sales increased last month and I kept max inventory in stock. Why did Amazon lower my restock limit instead of increasing it?”

Generally speaking, if your sales are increasing, you should not have a limit lowered. In this case, some sales may have been rolled off because of your past sales timeline. Amazon tends to look at your sales velocity for the past 30 to 90 days and adjust your restock limits accordingly. It may also factor in future sales patterns based on last year’s sales which could be why some sellers are seeing strange numbers. (It is my belief that Amazon’s current restock algorithm is in its infancy and with next to no feedback from actual sellers – a recipe for disaster as we have seen.)

To illustrate, I will use last year’s Prime Day as an example: Prime Day was on October 13th, 2020. It’s possible that, given this shift in restock limits, the sales from Prime Day simply rolled off, and this shifted the 90-day sales, and sell-through and restock limits were possibly lowered for that reason. It could also be that Amazon is fortunately or unfortunately, factoring in what your sales patterns were from last year.

Another factor that none take any comfort in is that Amazon has decided, at times, just to drop limits at its own discretion. Sometimes platform-wide and sometimes picking and choosing by category or even by metrics unknown to us at this time. They did this in mid-May right before Prime Day 2021 with no prior warning and just a brief email explanation sent out after the fact. It’s likely they will do this again and it’s out of our control, unfortunately.

As another possibility, you could also look at the NARF issue that we discussed earlier in this article to see if the stock is being double-counted, affecting the amount of inventory you’re allowed to send in.

You would additionally want to check space volume limits on your account. Many accounts with lower IPI scores will have a certain amount of space limits. Many accounts actually have unlimited space limits. It just depends on your IPI score and what is happening with your specific account.

If you do have a space limit, you may want to look into seeing if you have overstocked products that are taking up too much room, which means you can’t get your better-selling products in there. Check to see if you can free up some space by removing that inventory. Those selling oversized products will tend to have this problem even more often because these can tend to take up a lot of space with much fewer units and use up your storage volume a lot faster.

However, it is going to cost you to remove inventory. At the time of this writing, each unit is going to cost you between $.25 – $1.90+ depending on size, and disposal, which used to be much cheaper than removal, will now at the time of this writing, actually cost you the exact same in fees.

So when do you actually decide to incur that cost and remove or dispose? If it’s something that you really want to liquidate and get rid of, if space limitations are hurting your inventory strategy, it might make sense to free up that space so that you can continue to prioritize your top sellers. So keep that space in mind because for some sellers it’s not just your per unit limitations; it’s actually space limitations. You want to make sure that you have enough space to keep your top sellers in stock.

Here’s how to check for your space limitations.

• Go into your Amazon “Inventory Dashboard.”
• Next, go to “Inventory Performance.”
• Scroll down to the bottom. You’ll see an arrow that says “Storage Volume” click on it.
• It will open up the panel on the bottom and give you the storage volume limits per storage type: Standard-size, Oversize, Apparel, Footwear, and, where applicable, Flammable and Aerosol.

Another reason to remove or dispose would be if you calculated the removal cost against storage cost and the likelihood of actually selling the product on Amazon and decided it would cost more to keep it than it would to kill it.

Pro tip: Around August or September, Amazon often offers free removal or disposal in preparation for the holidays. It would make sense during that time to take advantage and pull any items for free that you don’t think will sell and that you want to liquidate. This should potentially be part of your annual inventory strategy. Note: Amazon usually won’t let you restock the SKUs you pulled using free removal for the next 6 months or so, so be sure you really do want to pull that stock and not send anything more into FBA for that period of time.

Beware Of Seller Stockout Cycles

An Amazon seller asked: “If I run out of stock and want to maintain my restock limits, do I need to switch to FBM (Fulfillment by Merchant)?”

The short answer is less, but there are a few more solutions that we will provide that aren’t necessarily being talked about too much right now. Let’s explore.

Alright, to start, let’s say your limit is 5,000. You stockout and slowly go down to a 4,000 unit limit. This creates a stockout cycle since you aren’t allowed to send enough inventory this next time around. You stockout again at the lower limit, this time for longer. Consequently, you have a yet lower restock limit. Of course, check-in times have been longer than expected, making matters worse. This is a dwindling cycle because the more you stockout, the lower your restock limits are.

So here are some questions we want to ask and answer:

• If you switch to FBM, are you going to retain those restock limits?
• If you stockout at FBA (Fulfillment by Amazon), but you’re continuing to make sales and sell at a slightly slower rate because you’re not selling Prime, is using FBM going to contribute to maintaining a restock limit?

And the answer to both is YES! Sellers have seen their limits maintained when using FBM. They were able to hold onto that limit or even increase it if their sales increased at that point.

Even if margins are significantly lower with FBM, and shipping is often more expensive, cutting into your margins, it still might make more sense to use FBM. Why? Because you’re not going to get into that awful, dwindling stockout cycle since you will be maintaining the restock limit.

Above all, don’t stock out. If you do, you should be switching to FBM if you can.

If you do stockout at Amazon, you should have a backup to switch to so that you can still fulfill orders. You need another outside fulfillment center. Don’t ever send all your inventory to Amazon! You still need to deliver to your customers even if they don’t check in your inventory. They should not be your only distribution channel, even if they are your only sales channel and you’re not selling through any other platform.

Switching to FBM is essential, the reason being that if you stockout at FBA, the FBM sales will still contribute to your restock limits. Your sales may be lowered just a little because you didn’t have Prime, but you will still maintain instead of stocking out, which hurts and drops that limit.

The other two methods to utilize are:

• Borrowing sales velocity from an overstocked product by doing a flash sale to move inventory on products with excess inventory while you are stocked out on your top product. That will help to boost overall sales velocity so that you can maintain while out of stock on other products.
• Borrow sales velocity from other channels using MCF (Multi-Channel Fulfillment) such as having Amazon fulfill your Shopify sales. The Shopify velocity will add to your Amazon velocity when they are doing the fulfilling so making this temporary switch will also help to up the velocity and maintain the restock limits.

Related: What Is A Stockout And 9 Ways To Avoid It

Adopt Inventory Best Practices To Improve Amazon Restock Limits

Use Daily Adjusted Velocity

You don’t want to forecast demand based on the total number of sales because you’ll be factoring any stock outs into your calculation. Instead you want to do it based on daily adjusted velocity.

If I’m looking at 30 days worth of sales and was stocked out for 10 of those 30 days, I only want to look at the 20 days that I had inventory in stock. That’s what the SoStocked Amazon inventory management software does for you. Regardless of the system you’re using, you should look at your average sales filtering out anomalies like stockouts and sales spikes. This helps to determine what your most likely future velocity will be without muddying your data with stockouts or making huge sales spikes due to a one-time promotion that won’t repeat itself, such as being featured on a morning news show.

See, if non-recurring sales spikes get calculated into your equation, it might cause you to purchase more inventory than necessary.

You also need to be aware of whether you’re looking at last year’s sales. This one can get you into trouble as it’s harder data to keep in your head. You might remember stockouts that happened 30 days ago but you might not remember exactly what happened a year ago. So when you’re doing your Christmas calculations, you need to also factor in your stockouts and spikes during that time. If you stocked out, you want to remove that from your calculation and instead average out what you would have sold if you hadn’t stocked out.

Related: Watch the Adjusted Velocity SoStocked.com demo

Take An Inventory-Minded Approach

We developed the concept of inventory-minded marketing because marketing teams can no longer only be focused on marketing in a vacuum. They have to involve the inventory team in the marketing process to avoid stocking out and, nowadays, to know which products they need to push on to move out of FBA storage facilities. Only by Marketing and Inventory working together will your inventory system become more stabilized, more efficient, and more profitable.

Marketers have to become responsible for understanding inventory and for marketing across the entire catalog. It used to be that marketers could focus on the best sellers, and it was okay to ignore products that didn’t do well. When they sell out, they sell out. But that’s not the game anymore. Marketers have to market all products aggressively and can’t forget about these slow sellers.

It’s a double-edged task now. They have to market hard enough to drive revenue and sell-through but not so hard and fast (and uncoordinated with Inventory) that you run out of inventory. I like to say that a good marketing plan turns bad fast when it’s so successful that it stocks you out. A stockout like that will heavily impact your business. There are specific coordination points that have to be in place between the marketing team and the inventory team.

Download the free Amazon Marketing Plan Template that we have built to help the marketing team and the inventory team coordinate. It will help you to organize a plan for the marketing team to keep the inventory team informed.

You can also learn more about how we structure an inventory-minded marketing program in our webinar “The Inventory Planning Work Party.” It will allow you to visualize how the entire system works together and utilize a “slow-moving products” report and the “liquidation” reports.

Lastly, consider using specific reports to stay on top of your inventory, including:

• Stockout Risk Reports
• Slow-Sellers Reports
• Liquidation Reports
• Overstock Reports

Use Min-Max Restocking

Min-max restocking is a method for setting parameters to make sure you, theoretically, never stockout or overstock. For example, if 30 days is my minimum, I want to keep at least 30 days worth of inventory in stock at all times. I never want to go below 30 days worth of inventory, and I never want to go above 90 days. This strategy helps to automate your orders by calculating the perfect reorder point and quantities, and it’s going to help you pass this task off to your VA so that your VAs know how much and when to send in more inventory. It’s beneficial when you know this new storage type has a lot to do with avoiding stockouts and overstocking.

Start by opening up your Transfer Schedule in the Forecast section of SoStocked. I recommend setting your Min-Max “in Days” because it will fluctuate based on your sales from season to season and as your velocity changes. Set your preferences to never go below 30 days or above 60 or 90 days worth of inventory max. The software will let you know when you get close to that 30 days and tell you to ship inventory so that by the time it’s arriving, you’re hitting that 30 days. Then it’s going to tell you to stock up to your maximum, which is 60 or 90 days, or whatever setting you selected. You’ll then sell through to your minimum, then the software will tell you to re-stock back up to your maximum, etc. Min-Max Restocking is all about automating a good turnover; it provides you with a sound system for knowing what to send and when.

You also need to put sales promotions into that calculation. Let’s say it’s Prime Day, and you’re going to sell 500 units. The 500 units will be added into that calculation so that you’re sending in precisely what is needed at the time that it is needed.

With Amazon’s restock recommendations, it doesn’t predict your future sales events and help you to factor that into your restocking. That’s another story in itself; which is why we’ve built the Inventory Timeline and Min-Max Restocking to work together. Once the marketing team sends all of this information to the inventory team, inventory can plug this information in and get a great visual of through this Timeline, showing them the inventory depletion as time goes on and when shipments are arriving.

Related: Watch the Min/Max Restocking and Inventory Timeline SoStocked.com demos.

Get Good At Simultaneous Forecasting

Simultaneous forecasting is merely the reality that you are usually not doing one but two and sometimes three separate forecasts for each SKU at all times. You are calculating a reorder forecast for when to produce more inventory at your factory, another to determine when to transfer inventory from your local warehouse into Amazon and possibly a third to predict any express/air shipping that needs to be done to prevent a potential stock out.

Especially in Amazon’s new restricted inventory world, simultaneous forecasting is something that you’re going to have to become good at. You need to be watching everything at all times and to know what you have where and when it will arrive.

You need to have calculations for how long it takes for your shipments to arrive at each point in the process. For each product, supplier and warehouse, you need to know:

• How long does it take for my orders be produced
• How long are shipping times from supplier to warehouse or FBA?
• How long does it take to transfer inventory from my 3PL into Amazon?
• How long does it take if I have products being held at my Chinese warehouse?
• How quickly can I get an express order sent in?
• And most importantly, what are my worst case scenarios and how do I recover from them?

You want to be as flexible as possible and at the same time figure out how to mitigate costs wherever you can. You  want to keep inventory at your local warehouse, but you’ll also likely want to keep a good deal of stock with your Chinese supplier in their warehouse where they’ll often not charge you. To reduce some of your storage and handling expenses, consider a new arrangement where your supplier holds some of your inventory for a few months at a time. Sometimes you can arrange to pay your 30% deposit and then pay the other 70% in batches on only the inventory you ship out when or after you ship it. This way, you’re keeping some of that cash flow a little more fluid while they’re holding this inventory.

Factor Amazon Restock Limits Into Forecasting

You probably know that SoStocked was one of the only (if not the only) software to accommodate Amazon restock limits if you were around during the July 2020 IPI limit threshold change. SoStocked’s per ASIN per marketplace calculations hugely helped sellers during that frustrating time.

Given the new 2021 Amazon restock limits, we are working to implement forecast calculation changes across the entire platform to account for this new change. What it would consist of would essentially be to plot out and allocate a certain percentage of inventory storage space per product, categorizing your entire catalog in priority order to ensure you never run out of your best sellers.

Our team is working on this now and very close to completion. We are in direct communication with the Amazon API team to get the much-needed restock limits by storage-typeinformation to make this happen in an automated way. While much of the information is still not yet available via Amazon’s API, we are working on workarounds until it can be fully automated. These workarounds will still save sellers much of the calculation and allocation time and better help them to plan for success and scaling.

All in all, this is another Amazon sucker punch that makes things worse while claiming to make things better, but as we dive deeper into the nuances of the Amazon storage-type algorithm we are recognizing new flexibility and ingenuity that can be developed by way of clever logistics shifts and inventory and marketing strategies which were not previously available to us with the former ASIN-type limits. So all is not dark and dreary.

We must work as a seller community to pivot and adapt. It forces us all to get better at inventory management, especially regarding thinning out our excess inventory. We do hope Amazon adjusts these restrictions for the good of the seller community. Meanwhile, streamlining your inventory management and logistics strategies and getting your FBM fulfillment in place are the two main things to focus on for long-term sustainability in today’s storage-crunched climate.

Future Amazon Restock Limits Updates

A common question I get is, “When will Amazon restock limits be lifted?”

Amazon says that these limitations will change, but that doesn’t mean all of the limitations are going to end. Storage limitations will always be in place to some extent.

In fact, Amazon promised to announce some new changes coming up in December of 2021. We keep a close eye on this, so subscribe if you want us to keep you updated.

We’ll notify you when Amazon Restock Limits change, when we discover new workarounds, and when we create new software features to automate things to make them easier and more manageable for you.