Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Thu Mar 31 2016 23:06:31

Amazon Is Bent on Making Room in Its Warehouses

By: Ina Steiner

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First, Amazon throttled back on the inventory it would accept from FBA sellers this month. Now it's temporarily waiving fees for sellers who wish to clear out inventory that's already stored in its FBA Fulfillment Centers. 

In an email to sellers on Thursday, Amazon said the new promotion was designed to "free up space for products that are selling fast."

One doesn't have to wonder if Amazon's warehouses are getting full - the company's Chief Financial Officer said so in January. Here's what we wrote in this January 29th Newsflash article titled, "Amazon Warehouses Burst at the Seams in Q4 2015":

Amazon CFO Brian Olsavsky said it was a strong quarter for FBA sellers. "It did put a lot of demand on our warehouses, and we were full," and he said it exceeded Amazon's expectations. Amazon noted that for the full year 2015, Fulfillment by Amazon (FBA) shipped over one billion units on behalf of sellers.

The signs had all pointed to a busy fulfillment season for Amazon - in one case, one of its fulfillment centers clogged up local traffic to the point the mayor threatened to close down the warehouse unless the company figured out a way to alleviate traffic. (It did, and the warehouse remained open.)

In other cases, sellers complained that goods they sent to FBA warehouses were stuck in limbo, unable to be checked in by Amazon's receiving department.

At first blush, the news Amazon sent FBA sellers on Thursday about its promotion to clean out inventory is good news - it's in sellers' interest to recall inventory that's just sitting on shelves for which they are paying storage fees. And typically Amazon charges a fee for disposing of or returning such inventory.

But it's one more sign to sellers that it may become increasingly difficult to get their goods into FBA fulfillment centers - at least until Amazon builds more. In the past weeks it announced plans for a new 800,000-plus square-foot fulfillment center in Kansas and a new 1.1 million square-foot FC in California.

Here's the gist of the current promotion mailed to sellers:

"You may have slow-moving or low-selling inventory. Starting today, March 31, 2016, FBA is waiving fees for any removal order for return or disposal of your inventory that is currently in U.S. fulfillment centers. This promotion ends April 30, 2016, after which time normal removal-order fees will apply.

"If you remove units as part of this promotion for which you paid a Long-Term Storage Fee in February 2016, we will reimburse 66% of the fee that you paid per cubic foot for those units."




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by: Troy Stiffler This user has validated their user name.

Fri Apr 1 09:52:13 2016

I have a feeling they're also working overtime on account reviews.  I was locked out last week, while they reviewed my account.  My FBA balance is still in limbo.  The whole thing was stressful.

Maybe trying to thin the herd?

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This user has validated their user name. by: The End

Fri Apr 1 18:33:08 2016

Amazon wants to free up space ?
Just be a selling venue, and let the sellers handle it on their own.
FBA should Butt Out.
Problem solved.

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by: Moonwishes This user has validated their user name.
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Mon Apr 4 00:29:43 2016

I don't use FBA but it seems like Amazon made it sound like too good of thing and now they have to slow down the flood. Whether it was not enough storage space or making room for Chinese junk, who knows. I just know I would hate to turn over fulfillment of my orders to some low paid factory worker who doesn't care about my feedback.

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by: Aussie770 This user has validated their user name.

Mon Apr 4 00:46:45 2016

This is one of the big reasons they are pushing seller fulfilled prime. You get all the buy box benefits as if you are FBA, yet you ship the products yourself.

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by: Chicago48 This user has validated their user name.

Mon Apr 4 03:01:46 2016

I'm not big enough to be FBA.  I have a closet that I use as storage for both EB and AMZ.  But who didn't see this storage squeeze coming?

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by: Alex5512 This user has validated their user name.

Mon Apr 4 06:46:32 2016

The problem FBA is having is with goods that are slow moving. It holds up inventory coming in when there is slow moving inventory that is not clearing the space for the new coming in.
The thing is though, a lot of sellers including myself send their slow moving inventory to FBA to clear their Merchant Fulfilled shelves to make room for more inventory for themselves hoping that FBA can move their slow moving inventory.
It has worked for us. Offering Prime shows our inventory to a whole new set of buyers because many buyers only shop with the prime button clicked on and never sees the merchandise that is selling with free shipping or with shipping costs.
We are all trying to education buyers through reviews and other avenues to check out all merchandise because they are missing a whole lot just shopping prime.

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by: Bidonmine This user has validated their user name.

Mon Apr 4 13:52:30 2016

I could see Amazon limiting inventory based on the selling numbers. If a item has a low number like 500,000, they may not allow it to be shipped to FBA.



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