How Sellers Should Tackle Amazon's Latest Inbound Shipping Restrictions

Updated: Oct 4, 2020

Guest Post by AMZ Advisers

Back in March, the COVID-19 pandemic started to spread and businesses, including those online, had to take action. Amazon set its first inbound shipping restrictions during that time and has continued to make changes to adapt to the ever-changing scenario. These limitations took a lot of sellers by surprise, and some of them are still struggling to comply.

Here's a short run-through from AMZ Advisers on how things have changed in the past months, and how sellers can use Amazon’s features to their benefit during these trying times.

The First Shipping Restrictions

Through FBA, Amazon provides warehousing and shipping services to third-party sellers and its larger vendor shipment services.

Everything started with Amazon partially suspending its Fulfillment by Amazon (FBA) program from the middle of March to April 5th.

This decision came from the boom in online shopping after quarantine started. Many buyers turned to Amazon and other online marketplaces to shop for necessary goods. Online orders increased, and thus, a few marketplaces started to become overwhelmed. Amazon was not an exception.

These restrictions would prioritize the restocking and delivery of essential products in high demand. Amazon decided to prioritize the shipment of “essential items,” like groceries, household and medical supplies, baby products and other high-demand products. On the other hand, sellers were no longer allowed to create inbound shipping labels unless the products they were sending belonged to one of the permissible categories.

What happened to sellers with non-essential products?

Sellers whose products fit into the “essentials” category didn’t have to worry much about restrictions, since online orders continued to rise. Essential sellers experienced some shipping delays, but it wasn’t a major issue.

Sellers with non-essential FBA inventory were most affected by the restrictions, with customer deliveries pushed up to a month. Amazon announced it would hire around 100,000 warehouse and delivery workers to keep up with the demand. Around the same time, Amazon announced that on May 15th they would waive long-term storage fees as a way to deal with delays.

The pandemic was and still is unpredictable. Many sellers left out of the FBA program and started to look for alternatives. Diversifying FBA operations with a combination of internal warehousing and outsourced providers turned out to be one of the solutions.

Other sellers decided to help their business by including essential goods in their catalogue. That way, sales would continue to come in, even if not at the same rate they did before.

Amazon FBA Latest Announcements and Promotions

You might be wondering what to do with excess inventory, especially any items that were deemed nonessential and couldn’t be sold due to recent restrictions.

Q3 and Q4 are important times of the year economically and you may be seeking an inventory supplier.

One thing you can do is determine which of your products might fall into the Prime-Exclusive or seasonal categories. (Through Prime Exclusive you can sell your items at discounted prices.)

As part of the overall effort to regain customers’ trust - and as an opportunity for merchants to sell their remaining inventory- Amazon brought into place its Summer Sale 2020, which secretly kicked off on August 6th.

Another opportunity at the moment is through Amazon Fresh and delivery from Whole Foods Market.

Amazon continues to up the amount of grocery deliveries, which translates into new customers coming to the platform. Consider whether any of your products could be sold in this capacity.

In the US, Amazon is preparing early for the holiday season to ensure they’ll be able to cater to both sellers and buyers during peak. Therefore, on July 13th, the tech giant released an announcement to let sellers know that “Most products will have enough space available for over three months of sales”.

These are the most important takeaways of their most recent communiqué:

  • Beginning July 14th, Amazon will waive fees for any removal order submitted for inventory thanks to the Free Removals Promotion. This means that sellers are allowed, for a limited time, to remove products that have not been selling to avoid paying storage fees for them. Visit Inventory Age to create a removal order.

  • The IPI minimum threshold requirement is 500 (400 in the UK). Sellers below this limit will be subject to this new norm effective August 16th, 2020. Click here to learn how you can improve your sales, reduce your excess and stranded inventory.

  • For over three months of sales, Amazon will introduce ASIN-level quantity limits on products in FBA. View the quantity limits for your products here.

These alternatives could help move products and give you a bit of time to plan next steps.

Alternatives to Amazon Inbound Shipping Restrictions

Due to the current situation, many sellers have been forced to practice their patience and resilience when it comes to shipping their products to customers. Sellers are aware that expedited shipping, same day delivery, and one-day or two-day shipping options with any trackable carrier are extremely costly, thus there’s no other choice than to adapt and diversify their options.

Non-essential experienced sellers, have acted as quickly as possible so that their order fulfillment didn’t suffer major disruptions.

These are some actions they took to try to minimize the imminent impact:

1. Fulfilling orders from their own warehouse.

For starters, FBM is something most sellers should consider doing if they plan to sell big on Amazon. This can also come in handy in case you ever go out of stock on FBA. While it sounds like a master plan, keep in mind that it involves a lot of effort, time, personnel and money---but it’s definitely worth it in critical situations like this.

2. Turning to 3PL and 4PL providers.

Third-party logistics (3PL) and Fourth-party logistics (4PL) are both on-demand warehousing options that have helped merchants staying afloat during these difficult times.

The great thing about 3PL providers is that they have their own warehousing and transportation procedures in place. Some examples of 3PL providers are XPO Logistics, C.H. Robinson, Coyote Logistics, and Expeditors International. This model works perfectly for smaller companies.

With 3PL providers you only pay for the warehouse space you need, so it’s pretty convenient. However, many of these providers do not specialize in eCommerce order fulfillment and do not offer customer support. Which can potentially impact your performance metrics.

Fourth-party logistics (4PL), on the other hand, serve as the main point of contact for manufacturers and are better suited for medium-to-large businesses. 4PL’s take charge of the whole operation: packaging, warehousing, and delivery. Additionally, they take over the analysis of carrier performance, management and planning of inventory, project management, and c