The new Amazon inventory limitations (known as ASIN limitations) that came into effect in 2020, and the cumulative changes to ASIN limits in April 2021, have left many Amazon FBA (Fulfillment by Amazon) businesses in disarray and uncertainty. Since then, Amazon sellers have frantically worked to establish unique methods of managing inventory to keep their products in stock and selling at healthy velocities.
COVID-19 brought with it a surge in online sales, increasing demand on Amazon to astonishing rates. Logistically speaking, this increase, while seemingly positive, led to a trickle-down effect in manufacturing that saw severe delays and skyrocketing freight costs, and left huge question marks for private label sellers producing products overseas.
Notwithstanding the massive issues in freight, Amazon warehouses also dealt with direct impacts of COVID-19 in their fulfillment centers, slowing and in some cases bringing fulfillment to a screeching halt.
Amazon implemented ASIN limitations to address the demand in popular products, while also curbing the storage aspect of its business to products that had favorable sell-through rates. Below is the Amazon notice about the policy.
ASIN Quantity Limits “For select ASINs, FBA limits the number of items that you can ship to our fulfillment centers. These limits help you avoid sending products that have high inventory levels but low customer demand. Items that have been in Amazon fulfillment centers for 365 days or more are assessed a semi-annual long-term storage fee on February 15 and April 15 of each year.”
Although some speculate that Amazon took a crash course in managing its storage capacity, others say the ecommerce platform attempted to find a reasonable alternative to satisfy all parties, including third-party sellers.
There will continue to be massive logistical challenges, and while Amazon will pursue the growth of its fulfillment centers into 2022, its procurement of such facilities will undoubtedly take time.
As COVID-19 restrictions ebb and flow and the push for vaccination increases, ecommerce may also fluctuate with the virus’ hold on our everyday lives. This COVID-related cycle may mean that consumers continue to flock to online sites, or online sales may decrease as the virus is curtailed over time.
Our consideration at GETIDA is that ASIN limitations will continue to be a factor in Amazon commerce late into 2021 and likely well into 2022. Sellers should continue to look to 3PL (3rd Party Logistics) services and increasing sell-through rates to mitigate the impacts of specific ASIN limitations.
Tough business decisions may need to be made to maintain margins and sustain profitability. Sellers should not be blind to these complex decisions and should be willing to do what is necessary to pursue their FBA goals. This may mean intense scrutiny of the product catalog to determine which items are the most viable. Another alternative may be switching to FBM (Fulfilled by Merchant), if the seller is able to manage such a fulfillment flow during peak times.
Above all, 2021 taught us that the possibilities ecommerce offers, regardless of limitations like ASIN limits, means the sky truly is the limit for online sales. With that in mind, ASIN limitations affect Amazon’s business model and its consumers, so striking a balance between ASIN limits and sell-through rates will be advantageous for the ecommerce superpower and its third-party sellers.
Expect the unexpected and anticipate continued changing tides for ecommerce, in particular Amazon.
Yoni Mazor is the CGO and Co-founder of GETIDA. Mazor began developing GETIDA after successfully operating a $20 million yearly Amazon FBA business selling fashion brands internationally. GETIDA specializes in Amazon FBA auditing and reimbursements. By utilizing data visibility technology, GETIDA focuses on discovering and managing financial and inventory-related discrepancies with billions of dollars of transactions managed daily. Mazor also comes with military intelligence experience, having served in the IDF Special Navy Intelligence.