Amazon won’t accept FBA inventory from new clients until after the holiday rush
October 11, 2016 01:37 PM
If you’re an online merchant looking to start using Fulfillment By Amazon (FBA) to store and ship merchandise, you will have to wait until Dec. 19 to start.
Amazon.com Inc. is restricting merchant access to its warehouses during the busy holiday shopping season. In a message posted today by a new FBA user on Amazon Services Seller Forums, the user says he received the following message after notifying Amazon that he wanted to send in his first FBA shipment:
"We are restricting shipments from new-to-FBA sellers to ensure we have the capacity necessary to receive and store inventory and to ship products to customers quickly. If you have not completed your first shipment to Amazon before October 10, 2016, we encourage you to start shipping to Amazon after December 19, 2016. We encourage you to continue selling on Amazon and fulfilling orders directly to customers. We apologize for any inconvenience. If the situation changes before December 19, 2016, we will notify you by e-mail."
An Amazon spokesperson confirmed the policy change to Internet Retailer.
Sending inventory to Amazon warehouses is a critical step for products to be eligible for the two-day delivery service coveted by Amazon’s most loyal shoppers— those paying $99 a year for Prime memberships. Shoppers can filter search results to show only products that are eligible for two-day shipping, giving those items an advantage over those that take longer to be delivered.
Amazon usually has cut-off times for merchants in select categories, such as toys, to get inventory to warehouses in advance of the holidays. This year, however, for the first time the restrictions on new sellers apply to all categories of items.
The move is the latest step Amazon has taken to make more efficient use of warehouse space during the peak shopping season. Amazon announced earlier this year that it would adjust the storage fees it charges sellers using FBA—lowering them in October and more than doubling them in November and December—as it looks to make sure the inventory merchants ship into its fulfillment centers is inventory that moves quickly. Those fee changes kicked in Oct. 1.
Amazon makes more money from the commission it takes on each item sold on its marketplace—usually 15% of the sale price—than it does for storing products, providing an incentive to ensure its warehouse space isn’t cluttered with products that don’t sell during the holidays.
Warehouses swollen with inventory from third-party merchants in Q4 pushed up the company’s operating costs last year, prompting a building spree this year in preparation of even more orders and inventory. Amazon had said it would open 21 new warehouses in the first nine months of this year, compared with 10 in the same period of 2015.
Amazon does not say how many merchants use Fulfillment By Amazon, which has been around since 2006, but the service has grown substantially in recent years. Amazon in January said the number of sellers using Fulfillment by Amazon grew more than 50% in 2015, following year-over-year growth of 65% in 2014.
40.6% of the value of goods sold on Amazon’s marketplace by ChannelAdvisor Corp. clients in September was handled through Fulfillment by Amazon, up from 33.7% a year earlier. ChannelAdvisor is the most-used vendor of marketplace management services among e-retailers ranked in Internet Retailer’s Top 500 and Second 500 Guides, according to the 2017 Leading Vendors to the Top 1000.
About half of the items sold on Amazon come from merchants who pay the company in exchange for access to its more than 300 million online customers. Merchants can list items on the website and handle packaging and shipping themselves, or they can pay more to send inventory to Amazon warehouses, where it is stored, then packed and shipped by Amazon workers when orders roll in.
Merchants using FBA automatically get their products flagged as eligible for fast Prime shipping. 46 million items are Prime-eligible, up 29% from 36 million a year ago, according to an assortment analysis published today from R.W. Baird analysts. That growth rate is higher than the 19.5% growth of SKUs where Amazon is the seller of record, indicating “ongoing healthy adoption” of FBA by merchants. The Baird analysis estimates 50 million households in the United States are Prime members, up from 40 million a year ago.
Bloomberg News contributed.