Amazon FBA Rejects ASINs Shipped by 3rd Party Sellers

In what has been a shocking experience for many sellers, this week Amazon began randomly refusing to allow shipments of certain ASINs to FBA.

Late this week, merchants began receiving this error message while trying to process their FBA shipments:

“You are already at the maximum inventory allowed for this product, due to capacity or other restrictions. This product must be removed from this shipment.”

A quick call to Seller Support confirmed that this is not a system glitch.

Seller Support confirmed that Amazon is now restricting shipments of specific ASINs into FBA due to low sales thresholds:

Our FBA Business Team has classified this as a product that does not meet our sales threshold to be sent to the Fulfillment Center. Due to this, a restriction has been placed on the product that will not allow it to be sent to the Fulfillment Center until it meets the sales threshold. We offer the option to sell the product as merchant-fulfilled until the sales threshold is met. Unfortunately, we are unable to offer exceptions to this policy at this time.”

However, many sellers are reporting that fast moving items with with Amazon Best Seller Ranks of 5000, 3000, even 1500, and with very little/no inventory in FBA are also randomly being rejected for FBA shipment.

In some cases, sellers aren’t able to send in any quantity of a specific ASIN. In other cases, they are told to reduce their ASIN quantity.

Today I found this new policy page online:

For a select group of ASINs, FBA may limit the maximum unit quantity that you can ship to our fulfillment centers. These limits are intended to help you avoid sending products that already have high overall inventory levels but low customer demand.

Other than the error messages that started showing up for merchants out of the blue, Amazon has not notified sellers of this new policy.

The Difference Between Rejected ASINs and Amazon’s Long-Term Storage Policies

Amazon FBA warehouses are bursting at the seams. After actively promoting the FBA program to 3rd party merchants for the past several years, and seeing rapid adoption, Amazon ran into a problem…

Warehouses are stuffed to the brim with billions of units of seller inventory. And unfortunately, a lot of it is stuff that doesn’t sell. It just sits and sits.

Amazon FBA Warehouses have quickly become Amazon FBA Storage Units.

To help with FBA inventory levels, back in 2011, Amazon implemented a 12 month Long-Term Storage fee. Any inventory that sat unsold in a warehouse for 12 months would pay a hefty fee to remain there. (1 unit per ASIN could remain in the warehouse and not be charged a fee.)

In 2015, Amazon shortened the Long-Term Storage duration to 6 months. Now sellers were paying a fee on any inventory that sat in FBA over 6 months.

But even that didn’t clear out the warehouses.

Then without warning, on August 3rd, 2015, TWO DAYS before this policy went into effect, Amazon announced that sellers who recalled inventory inventory between August 3, 2015 and August 14, 2015 (in order to avoid Long-Term Storage fees) would not be able to resend that inventory to Amazon until December 1, 2015.

This meant that any sellers who planned to recall inventory and send it back in for Thanksgiving, Black Friday or Cyber Monday sales, could not do so.

Up until this point, sellers would recall inventory to avoid Long-Term Storage fees and then turn around and send it right back in.

This was a good strategy for sellers, but defeated Amazon’s goal of cleaning out their warehouse.

However, the current rejected ASIN situation is not tied to this Long-Term Storage policy.

Rejected! Without Warning

Ever since holiday 2015 when Amazon’s warehouses were bursting at the seams, I’ve been predicting that prior to Q4 2016, Amazon would place storage limits on the length of time that low-turn (slow-selling) SKUS could stay in an FBA warehouse.

And it makes sense really.

It didn’t take much to see that with a finite warehouse capacity, Amazon would need to reduce the number of slow-turn ASINs to free up room for product that sells quickly.

But what I DIDN’T anticipate was that Amazon would implement this without warning.

No warning for merchants so they could prepare for this upcoming change

No overstock SKU lists to check before sourcing inventory

No guidelines for sales volume to check against

No rhyme or reason in the way Amazon ASINs are being rejected

No way to check to see if an ASIN is restricted PRIOR to sourcing inventory

Hello Amazon! This is an unacceptable way to treat your customers, 3rd party merchants, who generated 40% of your sales in 2015, and who fulfilled orders to customers in 185 countries via FBA!

From an Amazon Press Release January 5,2016

“2015 was a big year for sellers on Amazon. In fact, sellers added more new selection and shipped more items than in any previous year. We’re excited to build on that momentum as we continue to innovate on behalf of sellers and customers.”

2015 Amazon Services Growth

Marketplace and FBA

Active sellers worldwide using the FBA service grew more than 50 percent year-over-year.

Using the FBA service, Amazon sellers from more than 100 different countries around the world fulfilled orders to customers in 185 countries.

Cross-border sellers worldwide using FBA grew more than 100 percent year-over-year.

Because after promoting FBA adoption to 3rd party sellers year-after-year with NO inventory turn guidelines, it is brutal to start rejecting SKUs without prior notice.

For 3rd party merchants, those rejected ASINs represent thousands or tens of thousands of dollars of inventory that they can’t sell.

The offer to Merchant Fulfill inventory, is not an option for most small sellers who don’t have the space, time, team or bandwidth to ship it themselves.

Not to mention the FBA Advantage. Not only does Amazon put FBA products in front of their best customers, the Amazon Prime members, FBA products also have an advantage when it comes to winning the Buy Box, as well as conversion to sales!

So even if you CAN ship your own merchandise, the chances of it selling are are now lessened.

What You Can Do Right Now

If you haven’t run into this problem yet, there’s a chance that you may not… right away at least. Not all merchants are getting the FBA ASIN restriction error message.

If you have run into this problem, the only thing you can do at this point is:

Give it a few days and try to ship your inventory in again

Merchant Fulfill your inventory

Sell your inventory on another channel

One thing you MUST do is write to Amazon and give them feedback on this new test. (Even Seller Support is recommending sellers do this.)

Don’t yell or swear (as much as you might want to). Calmly explain the issues this presents to your business and request that the program be suspended until guidelines and preparation time can be provided.

At this point, I think this program is here to stay, but it doesn’t hurt to ask Amazon to reconsider.

Clear Out Non-Performing Inventory and Start Sourcing Faster Turning SKUs

I’ve long been a proponent of running a lean, fast-turning inventory.

This stems from my previous experience as a retail buyer for a large department store and two small boutiques.

In brick-and-mortar retail, if you tie up your cash in inventory that sits on the shelves for months and months, you go out of business.

And ever since the economy tanked in 2008, brick-and-mortar stores keep even less inventory on-hand. Turns have gotten so fast, that retail inventory is barely on the shelves long enough to stay in season.

The long-tail, 12 month (or more) turn of products is a byproduct of the world of ecommerce. And it’s not a way to run a healthy, financially fit business.

New consumer goods should NOT sit in an Amazon warehouse (or your warehouse) unsold, for 2, 3, 4 months at at time.

If your inventory is not selling units daily, weekly or several units a month, that inventory is not turning quickly enough.

Inventory that doesn’t sell for 30 days, needs to go

Inventory that sells one unit every 60 days needs to go

Inventory that sells a few units or less every 90 days needs to go

Unless you sell one-of-a-kind collectibles (and even those have a shelf life) your products should be turning over (selling) every 90-120 days. Meaning if you bring in 100 units of product on January 1st, those 100 units should be SOLD by April 1st. ( a 90 day turn).

The best inventory turns every 30 days.

90-120 days is pushing it.

And who knows what Amazon’s turn requirements are now? Because they haven’t told us.

The Business of FBA Has Just Changed

So where do we go from here? First, start with clearing out non-performing inventory and begin to start thinking about how you’ll retool your sourcing. This is something I’ve been working on with my AMP program members, long before these ASIN rejections started up this week.

Next, write to Amazon and give them your feedback.

Finally, I’ll be updating my blog with the latest information, so check back here.

Once we know more from Amazon, you’ll be able to put together a new plan for your FBA inventory.

Have questions or comments? Want to give Amazon your thoughts? Post them below.

And PLEASE SHARE THIS POST with your fellow Amazon sellers. Because Amazon is not telling sellers about this new program/test, as part of the Amazon seller community, we need to get the word out to our fellow merchants!

-Lisa

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