One of the greatest benefits Amazon offers independent entrepreneurs, businesses, and brands is its Fulfillment by Amazon (FBA) program. With FBA, Amazon takes care of product storage, packing, shipping, and other fulfillment needs for sellers and makes the sellers’ products Prime-eligible.
It’s convenient, accessible, and enormously popular — but it’s not always the right fit for Amazon sellers. Sometimes, alternate options are needed.
2020 Amazon fulfillment concerns
Right now, in 2020, the holidays are fast approaching, and sellers need to be sure they are prepared for a busy holiday shopping season. However, effective August 16, 2020, Amazon has introduced Q4 inventory restrictions to limit storage capacity based on inventory performance, as well as ASIN-level quantity limits (more on these updates below).
Unsurprisingly, these changes have caused some panic and confusion among sellers.
These new restrictions further exacerbate Amazon’s inbound shipment delays along with previous fulfillment issues due to COVID-19. And while Amazon states these changes will not affect most sellers, they potentially create the need for some Amazon sellers to seek alternative fulfillment options.
Why use Amazon’s fulfillment alternatives?
In addition to addressing Amazon’s storage limitations, there are other reasons why you, as a seller, may want to utilize a third-party logistics (3PL) service to fulfill your products.
- You’re looking for lower inventory storage fees, especially during the holidays, when Amazon’s storage fees increase almost four times.
- You’re looking for additional customization services such as product inserts, custom packaging, etc. 3PLs can help deliver your products in your own unique branding instead of Amazon’s.
- You want the support of a dedicated account manager to handle any issues or concerns, instead of having to open tickets with Amazon Seller Support.
- You may find reduced shipping rates with some 3PLs that are much lower than you could find on your own, helping ensure that you maintain the highest profit margin possible.
- Most 3PL’s offer 1-day or 2-day shipping options that can compete with Amazon’s Prime shipping.
So, if your FBA warehouse storage or ASINs are limited, what are your options? In this post, we will review:
- Amazon’s inventory and warehouse storage limits
- How to find your IPI score and what factors affect the score
- How to check for ASIN-level inventory limits
- Amazon’s fulfillment alternatives
- A list of Third-Party Fulfillment Services
Amazon’s inventory and warehouse storage limits
On July 13, 2020, Amazon announced* it was going to be making some changes to ensure the company is prepared for a successful holiday season — for both customers and sellers.
The first update is that Amazon is going to be expanding its capacity to meet the increasing demand and to accommodate more products. While good news for sellers, Amazon’s other updates introduce concerns. They include warehouse storage space limitations and ASIN-level inventory restrictions.
*As of August 16, 2020, these changes have gone into effect.
1. IPI score threshold increased from 400 to 500
Amazon uses the inventory performance index (IPI) score to measure how efficiently you drive sales by stocking popular products and managing on-hand (in-stock) inventory.
The primary influencing factors for this score are:
- Excess inventory
- Stranded inventory
- In-stock inventory.
From August 16, 2020 until the end of the year, if your IPI score falls below 500, your account will be subject to storage volume limits for standard-size, oversize, apparel, and footwear items. I’ll show you how to find this information in the next section.
2. ASIN-level quantity limits
Even if your IPI score is above 500, certain ASINs you sell may be subject to quantity limitations. Amazon is doing this to maximize selection for customers during the holiday season and to ensure less popular products are not taking up valuable space in its warehouses.
For example, if you have a brand new ASIN or a slow-moving ASIN, the maximum quantity you’ll be allowed to ship into Amazon is 200 units. (Normally, there are no ASIN-level inventory limits.)
How to find your IPI score
To determine your IPI score, in Seller Central, hover over ‘Inventory’ and click on ‘Manage Inventory.’ Then, click on ‘Inventory Dashboard.’
Inside your ‘Inventory Dashboard’, you will see your IPI score, as well as other important information regarding your inventory.
Once on the page, click on the Inventory Performance Index graph seen above to go to your ‘Performance’ page. There, you will see the top influencing factors of your IPI score.
As you continue to scroll down, you will see suggestions and ways to improve your inventory performance. Take a look at each section to see if there are ways you can improve your inventory performance (ie. lowering prices, running PPC, or removing inventory).
Lastly, at the bottom of the page, you will see your current inventory storage limits.
With this particular account (seen in the image below), the IPI score is significantly lower than 500 which means this account is subject to FBA storage limits. Also, look towards the bottom of the page and you will see this account is only allowed up to 200 cubic feet of inventory for each of the storage types.
How to check for ASIN-level inventory limits
Before creating a shipment, make sure you check to see if your ASINs have an inventory limit.
To find this information go back to your Inventory Dashboard then click on the “Restock Inventory” tab.
Here, you will see all of your active ASINs. Next, under ‘Days of Supply’, click on the drop-down arrow next to your units.
As you can see in the image below, this particular ASIN has a maximum inventory level of 200 units. And even though this account has a 582 IPI score, it is still restricted at an ASIN level.
If you find yourself with warehouse storage limitations, or ASIN-level limitations, keep reading! I am going to go over some of your options so you can be sure your inventory is ready to go during this holiday season.
Amazon’s fulfillment alternatives to FBA
Q4 is by far the busiest shopping time of year, especially for Amazon sellers. Though, with Amazon’s new FBA inventory and storage limits set, how can you ensure all of your products are in stock and ready to be fulfilled?
Let’s go over some other ways that you, as a seller, can fulfill your Amazon orders this Q4.
1. Fulfillment by Merchant
The number one alternative to using FBA is by fulfilling your Amazon orders from your own location or warehouse. This is known as FBM or Fulfillment by Merchant.
FBM is where you store inventory at your location and ship your own orders vs. storing your inventory in an FBA warehouse and having Amazon handle the picking, packing, and shipping.
On Amazon, especially during Q4, popular items will sell regardless if the orders are fulfilled by Amazon or a seller. If you have room to store extra inventory at your house and are able and willing to pack and ship your orders, then creating an FBM offer on your ASINs would be your best (and cheapest) option.
For your products, you are allowed to create an FBA SKU and an FBM SKU. This means you can have two active offers under one ASIN. That way, if your FBA inventory goes out of stock, there is no downtime and your listing will remain live.
However, if you choose this option then when your FBA offer is out of stock, your FBM offer will be in the Buy Box.
We suggest offering free shipping on any items you fulfill yourself to ensure there isn’t a significant drop in conversions (which would likely happen if you were to charge extra for shipping).
2. Seller-Fulfilled Prime
Seller-Fulfilled Prime (SFP) is basically FBM except with one major difference: the Prime badge. SFP allows sellers to offer 2-day Prime shipping to customers without having to store inventory in Amazon’s warehouses (or pay FBA fees).
To be eligible for SFP, you must first go through a trial period to prove that you can meet Amazon’s standards. During this trial period, your products will not have the Prime badge but you will still be required to deliver these items within two days.
At this time, Amazon is not accepting any more sellers into SFP; sellers interested in the SFP program have to join a waitlist. So, unless you are already SFP eligible, this is not going to be an option for you during the 2020 holiday season.
But, even if you won’t have the Prime badge for the holiday season, it’s still worth putting yourself on the SFP waiting list.
3. Third-Party Storage & Fulfillment
What if you’re experiencing storage or ASIN limits for Amazon FBA and don’t have your own warehouse or location to ship from? A third-party fulfillment company will provide you with a secure place to store your inventory and a service to handle shipping out your orders, just like FBA.
On Amazon, your products will be listed as FBM, except you will be having a third-party ship the orders for you, instead of fulfilling the orders yourself. Essentially, Amazon doesn’t know — or care — who is fulfilling the products if it’s not FBA, as long as they are being fulfilled.
Besides wanting to avoid FBA storage limitations, there are many other reasons to use a 3PL.
Lower storage costs
When using a 3PL, the fees involved are typically pretty straightforward. In contrast, Amazon’s FBA fees can become expensive and also vary depending on the season.
For example, from October to December, Amazon’s storage fees increase almost 4x compared to the rest of the year.
More control over your inventory
As you learned above, Amazon will penalize you for storing excessive amounts of inventory in their warehouses. Some 3PLs will allow you to store as much or as little inventory as you need without charging you long-term storage fees.
If you have products that you want make sure arrive in the condition you intend, using a 3PL can help. On occasion, Amazon may accidentally ship out the incorrect product to your customer causing further issues.
Dedicated account managers
As an Amazon seller, you’re probably aware of how frustrating it can be to get in contact with an Amazon support representative. Most 3PLs will provide you with a dedicated account manager to handle any issues or concerns, instead of having to open tickets with Amazon Seller Support.
Reduced shipping rates
If you are fulfilling your own orders or using Seller-Fulfilled Prime, you likely won’t get the same discount shipping rates as Amazon or a large fulfillment company would.
Shipping costs, especially 2-day shipping, can eat into your margins. So, by taking advantage of third-party fulfillment centers’ rates, you will save a lot of money on shipping.
Ship with your branding
If you’ve ever purchased a Prime item on Amazon, you know exactly when your order has arrived because of the large Amazon branding on each package they ship. By shipping yourself or using a 3PL, you can ship your orders in your own custom branded packaging.
This helps create a better brand experience with your customers.
Not only can you use a third-party fulfillment center to ship out your Amazon orders but you can also use them for any other marketplace or platform you sell on. These companies will get your product to your customers, whether they’re buying from your Shopify store, Walmart marketplace, eBay, etc.
Plus, utilizing a 3PL this holiday season will provide you with more flexibility and control over your inventory.
Third-Party fulfillment centers for your Amazon sales
Luckily, there are many FBA alternatives to choose from today, but each will offer varying services and pricing structures. Therefore, it’s important to do your due diligence and choose a provider that is best suited to your business.
To make this research a little easier on you, we’ve found a few FBA alternatives you can use to take care of your inventory storage and fulfillment needs.
All the companies that I list below will be experienced in shipping orders for Amazon.
A2b Fulfillment supports companies working with Amazon via Vendor Central and Seller Central, all with an excellent track record of compliance and program success.
- Fulfilled by Merchant or Seller-Fulfilled Prime orders
- Small- to medium-sized e-commerce businesses
- Specializes in Amazon and other e-commerce platforms
- Bi-coastal locations that are able to reach 94% of U.S. households in 1-2 days via ground shipping
- Same-day shipping to meet the strict demands of shipping Seller Fulfilled Prime orders
- Offers bundling services
Contact them directly for a quote.
ShipBob is a tech-enabled 3PL which uses proprietary software across its fulfillment network for a cohesive experience. Orders are automatically sent to its warehouses, where inventory is picked, packed, and shipped to your customers.
ShipBob’s fulfillment services help you optimize for time and cost, use the delivery experience to beat customer expectations, and own more of the customer relationship.
- E-commerce sellers on any major platform or marketplace
- Businesses selling direct-to-consumer
- Wholesale order fulfillment
- Will not restrict storage capabilities during Q4 and storage fees will not increase
- Offers on-site customer success reps at each location to help troubleshoot any issues that may arise
- Software integration with Amazon
- Offers affordable 2-day express shipping
Contact them here for an accurate quote.
Red Stag Fulfillment
Red Stag Fulfillment’s packing and shipping services meet the requirements for Seller-Fulfilled Prime and for your merchant fulfilled listings.
- Fast direct-to-consumer fulfillment
- Small- to medium-sized e-commerce businesses
- Fulfilled by Merchant or Seller-Fulfilled Prime orders
- Offers a 30-day free trial
- Does not restrict storage space during the holidays or increase storage fees at busy times
- Fulfillment centers on the east and west coasts
- 2-day delivery to 97% of U.S. addresses
Contact them here to receive an accurate quote.
ShipMonk integrates with your sales channels to make shipping and fulfillment stress-free, so you can focus on scalable growth.
- Multi-channel e-commerce fulfillment
- FBA prep services
- Seller-Fulfilled Prime
- Subscription box fulfillment
- Retail fulfillment
- They offer custom packing prep and bundling services.
- Dedicated account manager to handle any issues that may arise.
- Easy to use software.
- They have the ability to ship 1 up to 10,000 orders a day for you.
- Lower shipping costs for SFP orders to increase profits.
- No long term storage fees.
They offer a variety of services for e-commerce sellers. Contact them on their website to get accurate pricing.
To wrap things up…
There are plenty of great options available today for fast, simple, and affordable fulfillment for Amazon sellers. In some cases, using a third-party fulfillment company may end up being a better option than using FBA, especially if you are eligible for seller-fulfilled prime.
The point is, if you are experiencing some of the inventory or storage issues listed above, don’t panic. You still have time before Q4 begins to figure out what you are going to do.
Contact the companies above or do your own research to figure out what the best solution for your business is.
Let us know in the comments if you have any other questions regarding FBA alternatives!