Amazon is coming out with new inventory restrictions at its warehouses in anticipation of the upcoming holiday shopping season push.
In a note to its sellers on Monday, the company stated that it is instituting stricter quantity limits for all third-party merchants that store goods in its U.S. warehouses. Subsequently, all product categories will be affected by the change, with quantities differing on a product-by-product basis.
The new policy, which was first reported by CNET takes effect today.
“Given the unprecedented challenges the COVID-19 pandemic has placed on all of us, we are preparing early to deliver a great holiday season for our customers and selling partners — building out capacity as quickly as we can so we can deliver products customers need and want directly to their doorsteps and help you continue to grow your business,” the note said.
An Amazon spokesperson told CNBC that the quantity limits will “help ensure all sellers using Fulfillment by Amazon (FBA) have space for their products.”
FBA is Amazon’s program that lets individual sellers ship their products to an Amazon warehouse and then Amazon ships the product to customers for a percentage cut out of each sale.
Even with the new limits, most products will have enough space/ time available for over three months of sales. If merchants sell all of their stock, they can send in new inventory any time, Amazon further added. Additionally, the company is also waiving inventory removal fees at its warehouses from July 14, the note said.
Amazon typically charges sellers a storage fee for products that aren’t selling in its warehouses. By waiving the fee, it will allow sellers to more easily remove slow-moving or dead inventory and free up space at FBA facilities.
The changes reflect upon as to how Amazon is preparing for this year’s holiday shopping season, which is likely to be very trying times as the coronavirus pandemic has redefined market sales strategy all across the globe.
Between March and May, Amazon faced issues in the supply chain management which led to delivery delays at its warehouses due to surge in online shopping orders. The company had to prioritize shipments of essential goods such as sanitizer and toilet paper fo shoppers access to the in-demand items due to COVID-19.
However since then, delivery speeds have normalized but as coronavirus outbreaks continue to spread sporadically in the US, Amazon has taken steps to prepare for the possibility of new demand modalities which include delaying its annual Prime Day shopping event.
Prime Day is now expected to take place in the fall, targeting potential sales in the first week of October.