Ecommerce Bytes has a story about how Amazon is dealing with storage capacity issues in its Fulfillment By Amazon (FBA) program - it is simultaneously putting limits on what vendors can store in its warehouses and turning the problem into a new source of revenue.
The story says that Amazon has announced "a new system for sellers it says will give them more control over managing their capacity. It is combining weekly Restock limits and Storage limits together into a single new 'FBA capacity limit' that will apply monthly … FBA capacity limits are influenced by sellers’ IPI scores (Inventory Performance Index), as well as other factors such as sales forecasts for their ASINs, shipment lead time, and Amazon fulfillment center capacity."
The story says that "Amazon will also display capacity limits in cubic volume 'which better represents the capacity sellers’ products use in our fulfillment centers and transportation vehicles,' but Amazon will continue to show inventory usage in units, providing an estimate of how many units specific cubic volume capacity limits are likely to permit."
And here's the revenue opportunity: "Another major change is how sellers can request more capacity once the new system is in place. Marketplace Pulse called it an auction system – 'Amazon will allow sellers to go beyond the allocated warehouse space by bidding for more,' it wrote … 'With our new Capacity Manager, sellers can request additional capacity based on a reservation fee that they specify. Requests are granted objectively, starting with the highest reservation fee per cubic foot until all capacity available under this program has been allocated'."
Ecommerce Bytes notes that "when additional capacity is granted, sellers’ reservation fees are offset by earning performance credits from the sales they generate using the extra capacity. Performance credits are designed to offset up to 100% of the reservation fee, so sellers don’t pay for the additional capacity as long as their products sell through."
- KC's View:
I'm not begrudging Amazon's desire to get paid for its logistics and warehouse capabilities. I just think it is interesting the degree to which it seems to be looking for every opportunity at the moment.
Y'think Andy Jassy wanders around Amazon's various buildings checking the couches to see if spare change has fallen between the cushions?