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Amazon restricts warehouse space for third-party sellers

In anticipation of a record festive period for ecommerce, Amazon has begun restricting warehouse storage for third-party sellers.

In recent years, “going Christmas shopping” has been a favourite tradition for many. However, in 2020 gearing up for a long day of retail shopping on the high street might be a thing of the past.

Brick and mortar stores are seeing increasingly low turn-outs after reopening their doors post-lockdown. Many consumers are now choosing to shop online rather than facing queues and unpleasant shopping restrictions.

As a result, online retailers are preparing for a record-breaking year. Amazon is no exception.

The retail giant is instituting quantity limits on warehouse space for Fulfillment by Amazon products.

The restrictions being put in place by Amazon include:

  • Inventory Performance Index threshold change – the new IPI minimum threshold requirement is 500
  • Quantity limits – for those below the IPI limit of 500, storage volume limits are being introduced throughout the end of the holiday season
  • Free removals promotion – for those who are facing the quantity limits and need to downsize their warehouse storage, the usual removals fee will be waived

Amazon claims that these changes are to “ensure [they’re] ready to best serve all of [their] selling partners and customers” as they prepare to meet increased demand this holiday season.

However, business owners on Amazon’s online forum fear that these changes unfairly target smaller sellers and will discourage the launch of new products.

Amazon seller United_Red says this shows that Amazon doesn’t care about your business “unless you are [a] 6 figure seller”.

This change comes on the heels of many problems faced by Amazon during the coronavirus crisis, including out of stock products, price gouging, shipping delays and disruptions in the supply chain.

The imposed restrictions took effect from mid-August 2020 for US warehouses. Similar restrictions for European-based warehouses are anticipated but have not been announced.

This is “just another reason to invest in your own business and not do Fulfillment by Amazon,” said another user on the Amazon seller forum, suggesting that small businesses using Amazon should diversify their sales platforms.

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