To avoid huge FBA overage fees, we can do this

Since Amazon began to implement new warehousing rules not long ago, sellers whose inventory performance index (IPI) is below 500 points will have their storage capacity restricted. Sellers who got the news immediately created new shipping plans to replenish their stocks before their storage capacity was restricted. The Amazon agent operation editor also learned that some sellers are considering using SAO operations to break through the shipping restrictions.

As the peak sales season approaches in the second half of the year, it is understandable that everyone is anxious to restock, but those behaviors that violate the platform rules are not advisable. Recently, the operating editor learned from the seller circle that some sellers who violated the rules and restocked a large amount of goods were charged huge excess fees by Amazon FBA. Faced with the huge excess fees of FBA, the sellers can only arrange to move warehouses as soon as possible. I believe that the loss of this operation will not be small, and it is not worth the loss.

(Screenshot from a seller’s backend)

If you want to avoid huge FBA overage fees, the only way is to operate according to the platform rules, strive to improve inventory performance indicators, avoid storage capacity restrictions, and avoid falling into a vicious cycle of storage capacity restrictions and paying "overage fees".

Everyone should check whether their storage capacity is limited in time and understand whether the IPI score meets the standard. Query location: the lower right corner of the backend homepage, or click to enter Inventory > Inventory Planning > Performance to view. If you find that the storage capacity is limited, our first task is to improve the inventory performance index to the standard value. Let's follow the Amazon operation editor to see how to improve the inventory performance index.

Several major factors affect inventory performance:

1. Redundant Inventory Percentage: This is the percentage of Amazon Logistics products that are considered redundant. Click "Reduce Redundant Inventory" on the right to see which products are redundant.

For these products, you can make them more popular through price cuts, free gifts, promotions, or direct removal, so that they are no longer redundant products and the proportion of redundant products can be reduced;

2. Amazon Logistics Sales Rate: that is, the number of goods sold / average number of goods in stock. The higher this value, the better. This requires sellers not only to sell more goods, but also not to store too much inventory in FBA;

3. The percentage of Amazon inventory with no sales information: that is, the percentage of Amazon logistics products that currently have no sales information. If there are problems with product information, they must be repaired in a timely manner. If a product becomes unsaleable inventory in FBA for various reasons, it needs to be cleaned up or removed as soon as possible;

4. Amazon Logistics In-Stock Rate: The percentage of time that Amazon Logistics products have been in stock in the last 30 days. Analyze inventory changes in advance and replenish out-of-stock products in a timely manner to ensure that online products will not be out of stock for a long time. For products that are no longer for sale, choose not to be prompted to replenish.

From the above factors that affect inventory performance, it can be seen that the distribution model is difficult to work on Amazon. To improve the inventory performance score, we can operate from the following points.

1. Clearing out excess inventory

Excess inventory refers to the number of inventory items that exceeds the number required for 90 days of supply. If we find that this area is not performing well, we need to find ways to clear the excess inventory as soon as possible. Suggestions include:

1. Discount promotions

You can set up coupons with larger discounts on the site, and promote sales through celebrities outside the site.

2. Significant price cuts

You can directly reduce prices significantly and pass on the benefits to consumers to increase sales.

3. Increase advertising

Increase your advertising budget and bids, and combine discounts or lower prices to increase sales.

4. Move warehouse or abandon goods

If you need to move the warehouse, you can contact a third-party overseas warehouse to move all or part of the goods out. Clear out the inventory that has been stored for more than 90 days as soon as possible to make room for more popular products.

2. Increase sales rate

In addition to increasing the sales rate of redundant products, the sales rate of other normal products also needs to be increased. Methods include but are not limited to discount promotions, price reduction promotions, advertising, and other methods can also be used to improve listings.

3. Timely replenishment of FBA best-selling products

Check the [Replenish Inventory] data and arrange replenishment of goods that need to be replenished as soon as possible to ensure that there is sufficient inventory of best-selling products in the store, so as to prevent them from being out of stock and avoid the impact of out-of-stock.

I believe that through such operations, the inventory capacity performance index will reach the standard after a period of time. Amazon has raised the inventory performance index to 500 points, raising the FBA threshold. On the other hand, it has also further encouraged sellers to continuously improve efficiency, select high-quality products, and enhance operational capabilities.