|Tue Nov 11 2014 14:29:47|
Amazon Warehouse Ties up Merchant Inventory at Peak Season
By: Ina Steiner
A problem at a new Amazon Fulfillment Center in Moreno Valley, California is tying up merchants' inventory during the peak selling season and may be causing cash flow problems for FBA sellers.
Merchants began reporting delays in their FBA shipments to the warehouse known as ONT8 in mid-October. A seller started a thread on the Amazon discussion boards on October 16th, writing, "I have an FBA shipment sitting at a Post Office in Moreno Valley, CA for the past week." He said he believed the facility was still under construction. Others believe the problem is due to inexperienced staff at the new center.
Later that same day, the seller said his package had been checked in and received in full very quickly, but he wrote on October 29th that he was experiencing problems with another shipment sent to ONT8.
Other sellers said they too were having problems with ONT8 - shipments not being received and in other cases, ONT8 only showing partial units of the same order being received. In another thread, sellers described ONT8 as a black hole and some called it the "Bermuda Triangle" of fulfillment centers.
I spoke to a self-described "medium-sized" seller on Monday who told me his LTL (Less Than Truckload) shipment has been sitting at ONT8 for "2 weeks and counting" showing as delivered but with none of the items checked in.
"Because of my planning, I've been able to avoid running out of stock," he said. One strategy - he ordered more inventory and had it sent to ONT8 via small parcel delivery (SPD instead of LTL) where it was received and checked in.
Asked how the holdup at ONT8 impacted his cash-flow, he said his supplier offers Net 30 terms so he pays 30 days after the merchandise ships, he said. He has enough cash to run his business and meet payroll, however, "we do have the cost of money, and it's not insubstantial."
Other sellers who posted on the Amazon board were not so sanguine.
"We have a pallet that arrived on OCT. 1st that is still waiting," wrote a seller. "Over 25K in inventory sitting somewhere waiting... why is Amazon shipping to a warehouse that isn't ready yet?"
Another seller described their experience, writing in part on Oct. 20, "ONT8 is a mess right now. We had an LTL shipment deliver (using Amazon's partnered carrier) on October 14. As of this morning the shipment still showed "In Transit" in Seller Central, even though the carrier delivered on October 14 and obtained a signature confirmation."
And another seller wrote on Oct. 22, "ONT8 is a mess to say the least. 2 weeks to check in simple UPS shipments. This is going to kill us this Christmas if it continues. We are as well seeing a extremely high amount of "missing" inventory. Its like someone starts to check it in then just walks away."
On October 28th, an Amazon moderator acknowledged the delays, said it had implemented process improvements, and had seen recent receiving times improve. She advised sellers that no action was necessary on their part, and apologized for the disruption to their business.
"We request that you wait until these delayed shipments to ONT8 - which will be in "In Transit," "Working," "Shipped," or "Delivered" status while awaiting processing - are in "Received" status before submitting any research requests for units that appear to be missing from inbound, including through the Shipment Reconciliation Tool. Waiting until your shipment is received will allow us to research with complete information."
But sellers continued to report problems, such as the seller who wrote on November 2nd, "We have 15 shipments sitting there showing delivered since 10 days now, 2 have been confirmed lost. Amazon does not even cover any profits, they'll cover you minimum for the product. so dissapointing specially around this time of the year. We are losing sales every single day!"
Most of Amazon's warehouses in the U.S. are considered Fulfillment Centers, but three are Replenishment Centers that accept large orders and are used to replenish inventory at other Fulfillment Centers. In addition to the new ONT8 warehouse in Moreno Valley, California, AVP1 in Hazleton, Pennsylvania and CVG3 in Hebron, Kentucky are Replenishment Centers.
The seller I spoke to yesterday said for shipments sent to an FBA Replenishment Center, 80 - 100% may remain unavailable (in reserve) even after being checked in, since Amazon uses it to send to other warehouses, though typically 10 - 20% is made immediately available for sale.
Today, a seller started a new thread on the Amazon boards titled, "Great News for ONT8 Sufferers":
"Today CVG3 is back!! We no longer need to send our large quantities to ONT 8 or only send less than 18 to get another FC. Who knows how long this will last so you'd best get your shipments started. Stupid ONT8 received my one shipment and still has it back ordered on the listing for 2 WEEKS! So even if you have your products waiting to be received, you had better send more now. Yay for the holiday season not being ruined like it was about to be."
But another seller wrote, "Careful what you wish for. I've had a two pallet shipment sitting at CVG3 since Oct 14th waiting to be received."
The problems at ONT8 aren't new ones for FBA sellers, who have had to deal with FBA growing pains. For instance, back in 2011, Amazon actually had to impose limits on how much inventory FBA merchants could store in its fulfillment warehouses due to the popularity and fast growth of the program.
We sent an inquiry to Amazon yesterday and await their response.
If you're an FBA seller or are using a fulfillment service, let us know what issues you're facing and the pros and cons of outsourcing fulfillment as the holiday season has been ramping up.