Amazon sellers are experiencing whiplash as the e-commerce giant first warmed them with expanded shipping options, only to deliver a crushing blow with dramatic reductions in FBA storage capacity during the critical holiday season. As peak sales period reaches its height, merchants now face stock shortages, forced price increases, and shrinking profit margins.
Unprecedented Storage Cuts Leave Sellers Struggling
Numerous sellers report these storage reductions are more severe than ever before, with even high-performing accounts seeing limits. Some merchants with IPI scores above 600—traditionally exempt from restrictions—found their replenishment capabilities severely constrained. One seller described their storage allocation plummeting from over 90,000 units to just 20,000 within months, creating critical inventory challenges.
IPI Scores Lose Relevance in Amazon's New Calculus
The sudden policy shift has left sellers questioning Amazon's motives. Historically, Inventory Performance Index (IPI) scores directly correlated with storage allowances, but this relationship appears broken. Even accounts maintaining scores above 400 face restrictive limits, suggesting Amazon is pursuing new strategic objectives.
Industry analysts speculate this push may aim to drive adoption of Amazon Warehousing & Distribution (AWD), the company's bulk storage solution. However, reports indicate even sellers using AWD face FBA restrictions, complicating this theory.
Seller Survival Strategies
Experienced merchants suggest several tactics to mitigate the crisis:
- Formal capacity requests: Sellers can petition Amazon via email, presenting detailed sales data to justify increased allocation. Some report successfully gaining over 1,000 additional units through this method.
- Transparency Program leverage: Participants in Amazon's Transparency anti-counterfeit initiative may request allocations through dedicated account managers, who reportedly have greater approval authority.
Amazon's Inventory Control Agenda
Unlike previous years when storage limits eased post-Christmas, Amazon continues tightening capacity in mid-December. This suggests a deliberate effort to improve warehouse efficiency and promote AWD adoption.
Seasoned sellers emphasize monitoring inventory turnover rates after December 15th, as these metrics will critically impact Q1 2023 IPI scores. High scores may preserve AWD access even with FBA restrictions, while low performers risk losing all Amazon storage options.
AWD Emerges as Contingency Option
With FBA capacity constrained, Amazon Warehousing & Distribution gains relevance. The service allows bulk storage at lower costs than FBA, with staged replenishment to fulfillment centers. Key advantages include:
- Reduced storage costs for seasonal or slow-moving inventory
- Improved inventory management flexibility
- Just-in-time FBA replenishment to prevent stockouts
- Simplified logistics operations
However, AWD introduces new complexities, including additional fees, dual inventory management requirements, and heightened operational demands.
As Amazon reshapes its fulfillment ecosystem, sellers must adapt through strategic inventory optimization, IPI score maintenance, and careful evaluation of alternative solutions like AWD. Those who navigate these changes effectively may emerge stronger when policy adjustments eventually arrive.