Experienced Amazon FBA sellers will no doubt be aware of the previous restock limits and storage limits, but as of 1st March 2023 these have been combined into the new FBA Capacity Limits metric.
And that's what we're going to cover today. The all-new Amazon FBA Storage Limit (now called capacity limits, as you're about to discover).
The system has been designed to not only give sellers more control over their storage capacity limits, but it also offers future projections when it comes to capacity limits as well as the opportunity for sellers to purchase more storage capacity if they need it.
Let's take a look at how it works and how you can ensure that you have sufficient capacity limits to run your Amazon FBA business.
What is Amazon's New FBA Capacity Limit?
As I mentioned already, the new FBA capacity limit policy came into effect as of March 1st 2023. Amazon's restock limits and storage limits have officially been merged to become the new FBA capacity limits.
The FBA capacity limits are now measure by volume, in cubic feet. If you're wondering how to calculate cubic feet, here's the formula:
- Multiply length x width x height in inches to get the volume.
- Divide the volume by 1,728, which is 12 cubic inches.
Example: A unit measuring 47 x 12 x 10 inches divided by 1,728 = 3.3 cubic feet.
Inside your FBA dashboard in seller central, you'll see a tab labeled Capacity Monitor.
When you click to expand this tab, you'll be shown your current capacity usage for standard-size, oversize, extra-large, apparel, footwear, aerosol, and flammable inventory.
You can click to each of these storage type tabs to see specific information for each type. The capacity outlook table also gives you projections for the next 3 months.
With the new FBA capacity limits, there are no longer weekly restock limits. Sellers will receive a month long capacity limit, which is announced on the third week of the month, plus you will get estimates for the following two months as mentioned above.
When it comes to checking your seller central account for your capacity limits and current usage stats, you'll find them on the inventory management page or your send to amazon page.
Now let's move on to discussing how capacity limits are determined and how you can request additional capacity if you need it.
How Does Amazon Determine the New FBA Capacity Limits?
Firstly, Amazon has set limits depending on the type of seller account you have:
Individual Selling Accounts have a capacity limit of 15 cubic feet. There's no opportunity to increase this limit unless you change to a professional selling account.
New Professional Sellers, meaning you've been an active FBA seller for less than 39 weeks, do not have any capacity limits. This means new sellers have some time to establish a bit of sales history so Amazon can determine the type of capacity limits that might be suitable for you.
Professional Selling Account holders will receive their capacity limits based on a variety of factors, with the main two being your IPI (inventory performance index) score and Sales Performance.
In summary, a professional sellers' capacity limit is determined by things such as:
- Your IPI score
- Sales performance
- Seasonal and peak selling periods for your products
- Amazon's fulfillment center capacity
It is important to note that capacity limits for products that fall under the FBA Dangerous Goods classification are handled completely separately.
How Can I Request to Increase my FBA Capacity Limit?
If you're a professional seller then you will be able to request additional capacity limits. This is done inside your Capacity Manager section of your seller central account and you will need to bid for the additional capacity.
The process for submitting a capacity limit increase request is as follows:
- Make sure you've gone into the correct category ie standard-size, apparel, footwear etc.
- Choose the period for which you want a capacity increase
- Enter your requested volume in cubic feet
- Enter your bid, which is called a Maximum Reservation Fee
- Choose the expiration date for your request
A few things to note regarding your request:
- Your request for additional storage space is going to depend on the fulfillment centers' available capacity.
- Your bid can be offset with performance credits that you have generated from selling inventory that is using additional capacity.
- If you exceed your capacity limits, you will be blocked from creating shipments to Amazon and you may be charged overage fees.
What is Inventory Performance Index and How Does it Work?
Every Amazon FBA seller has an Inventory Performance Index score (IPI) which can be found inside seller central.
Your IPI is a measure of how well you manage your FBA inventory. This metric is only applicable to sellers with a professional selling account.
Inside your seller central account you'll see an overall rating on the left, and a scale showing the influencing factors on the right.
Further below these charts, you will be shown different metrics based on certain factors which indicate how you can improve your performance. You IPI takes into account both recent and historical performance and it is updated on a weekly basis.
Here's the major factors that impact your IPI score:
Excess inventory: If you've got products in stock that have not sold for more than 90 days, Amazon considers this stock as excess inventory and it will negatively impact you IPI.
FBA sell-through rate (STR): This is a percentage based on the number of units sold in the past 90 days, divided by the available number of units available in fulfillment centers. This essentially measures how fast your are selling through your inventory within a given time frame.
Stranded inventory: Avoid having stock in the fulfillment centers that do not have an associated active listing. Not only will it cost you money, it will increased your stranded inventory percentage which negatively impacts your IPI.
FBA in-stock rate: Having enough stock items to cover 30-60 days of sales, ie, not running out of inventory, is essential to keep the money rolling in. Amazon likes to see your popular products always in-stock so customers can continue to make purchases.
Things that DO NOT impact your IPI score:
- New ASINs wont impact your IPI score for the first 90 days
- Pending removals and liquidation orders
- New FBA sellers or those that have not been active in the past 13 weeks
Summary - FBA Capacity Limits
It's challenging enough trying to learn the ropes of Amazon FBA, even without all of these changes, but i'm still confident that changes like the new FBA capacity limits are for the better and will make our lives easier in the long run.
Did I gloss over a specific detail about the new capacity limits, or did I miss something completely? I rely on your feedback to keep providing you with the most up-to-date Amazon content, so please feel free to reach out if there is something that needs further clarification.
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Thanks again for your continued support, hope you enjoyed this one.
