Amazon Sellers Are Concerned About Limited Warehouse Space

Several Amazon.com sellers are concerned over a recent policy change, CNBC reported. The policy is meant to help the e-commerce giant save space in its warehouses as it faces a pandemic-fueled surge in online orders alongside the usual peak holiday shopping season.

In August, Amazon announced it would be enforcing stricter quantity limits on shipments from third-party sellers that use its fulfillment service (Fulfillment by Amazon) to package and ship orders. The quantity limits pertain to all product categories and are different for each item. When Amazon made this decision,  it explained that the new quantity limits would help guarantee that all sellers using FBA had space to store their products. The policy was also meant to prevent delivery delays Amazon was experiencing during the first months of the pandemic.

When a product is out of stock, a seller can send in more inventory and wait for it to arrive at FBA warehouses. In the meantime, however, sellers are concerned they're losing out on potential sales.

CNBC reported that sellers claim they understand why Amazon needed to limit the size of shipments into its warehouses, but they feel the policy puts them in a bad situation during a holiday season that’s already proven challenging due to the pandemic. Amazon said it’s limiting storage of its own products, too, in its warehouses, so the policy isn't just affecting third-party sellers. However, sellers feel as if they have no say in how the limits are determined.

Another issue CNBC mentioned was that sellers who sell holiday products do not feel Amazon is taking seasonality into account when deciding quantity limits. While many sellers told CNBC that they expect to finish out 2020 with sales up significantly year-over-year, they believe revenue could be even better if not for the new inventory policy.

Total Retail's Take: Since the amount of inventory that third-party sellers can send in this year is a stark difference from what they would usually have in stock, it's understandable that they're frustrated with Amazon's new policy. On the other hand, the e-commerce giant is so popular with consumers partly for its quick delivery times, so it makes sense that it would look to improve shipping delays any way it can — which also stands to benefit its third-party sellers. It will be interesting to see if any third-party sellers take their business elsewhere in 2021, believing they're leaving too much money table as a result of Amazon's new inventory policy.