Imagine the peak season approaching, your best-selling products ready to fly off the shelves, only to be told there's no warehouse space available. Even more frustrating? To secure additional storage, you must participate in a bidding war where the highest bidder wins. This is the reality Amazon sellers now face under the platform's latest inventory capacity management policy.
Amazon Global Selling recently announced a comprehensive overhaul of its storage management system, effective March 1. The core change allows sellers to request additional storage capacity through a "Storage Capacity Manager," with approval largely dependent on how much they're willing to pay per cubic foot in "reservation fees." The policy has ignited fierce debate among sellers, with many criticizing Amazon for what they see as another revenue grab.
Four Key Policy Changes: Simplified, Flexible, Transparent, Expandable
The updated policy introduces four major changes:
Simplified Limits: The complex "restock limits" and "quarterly storage limits" have been replaced by a unified "Amazon Logistics Storage Capacity Limit" that governs both replenishment quantities and storage space.
Monthly Adjustments: The Inventory Performance Index (IPI) will now be assessed monthly rather than quarterly, allowing sellers to adjust inventory strategies more responsively to market changes.
Capacity Forecasting: New tools provide visibility into next month's storage capacity and projections for two months ahead, enabling better planning.
Capacity Expansion: Sellers can request additional space through the Storage Capacity Manager, with up to five applications per month to accommodate sales peaks.
The table below highlights key differences between old and new policies:
| Feature | Old Policy (Pre-March 1) | New Policy (Post-March 1) |
|---|---|---|
| Limit Type | Restock limits, quarterly storage limits | Unified storage capacity limit |
| IPI Assessment | Quarterly | Monthly |
| Capacity Forecast | Not available | Two-month projection |
| Additional Capacity | Not applicable | Requestable via manager |
The Controversial "Bidding System" for Additional Capacity
The most contentious aspect is the "reservation fee" mechanism in the Storage Capacity Manager. This functions like a deposit where sellers pledge funds to secure extra space. Approval prioritizes sellers offering higher fees per cubic foot until capacity is exhausted.
Importantly, this fee isn't immediately charged. Amazon assesses actual sales performance - sellers meeting sales targets earn performance credits (15 cents per dollar sold) to offset the fee, while underperformance results in deductions from the deposit.
This effectively creates a bidding system where deeper-pocketed sellers gain advantage, raising concerns about fairness and increased operational costs, particularly during peak seasons when capacity is scarce.
Seller Reactions: Frustration and Resignation
The policy has drawn sharp criticism from sellers who view it as another profit-driven measure. "First keyword bidding, now storage bidding - Amazon's greed knows no bounds," commented one seller. Others noted the compounding pressures of rising advertising, operational, and now storage costs without corresponding price flexibility.
Some sellers acknowledge the rationale behind managing finite warehouse resources, though most question whether this approach fairly balances platform and seller interests. Amazon has implemented safeguards - if later applicants secure space at lower rates, earlier approved sellers receive adjusted fees.
Differential Treatment for New vs. Established Sellers
The policy distinguishes between:
New Accounts (under 39 weeks active): Exempt from storage limits
Established Accounts: Allocated capacity based on IPI scores and sales history
Capacity limits consider both in-stock and in-transit inventory, measured in cubic feet. An Amazon survey revealed nearly 80% of sellers oppose the changes, with some considering testing whether exceeding limits proves cheaper than participating in the bidding system.
Adapting to the New Reality
The policy demands more sophisticated inventory management. Key recommendations include:
Optimizing Inventory: Improve turnover rates and reduce stagnant stock to boost IPI scores
Accurate Forecasting: Leverage historical data to project demand and avoid overstocking
Strategic Bidding: Balance reservation fee bids to secure necessary space without overpaying
Policy Monitoring: Stay informed about ongoing adjustments to Amazon's systems
While presenting challenges, the changes also create opportunities for sellers who can adapt quickly. Those who refine their inventory strategies and bidding approaches may gain competitive advantage in Amazon's evolving marketplace.