Amazon’s New Terms: Sell or Pay

From July 1, 2018 Amazon may limit access to storage and the possibility to create shipments. Furthermore, Amazon will increase the Inventory Storage Overage Fee. Good news: this won’t affect everyone.

You will be affected by this in case your Inventory Performance Index is below 350 (it is calculated automatically on the Inventory Performance Dashboard). The index is calculated weekly for each seller and the main factor that affects it: your sales. Six weeks before the start of a new quarter, Amazon will send a notification regarding a possible limit to sellers, whose Inventory Performance Index is below 350. In case the index will not increase to the desired mark by the start of the next quarter, those limits will be applied for the next quarter.

If by the start of the quarter your index will increase to 350 or higher or 6 weeks before the start of the quarter the index was higher than 350, there will be no storage limitations for you. And, of course, sellers who have fulfilled these two conditions (the index is above 350 for 6 weeks before the start and by the start of a quarter), these limitations will not be applied either.

Accordingly, every third month starting from July 1, you will be notified of your potential storage limits.

What’s my new limit?

If you affected by this, Amazon will limit the size of your storage (reduce it) and you will not be able to create a new shipment to Amazon until your inventory level drops below your storage limits. What will be the limitation of your storage, you will find out the details in the email Amazon will send you.

For example, the size of your storage is 1200 cubic feet, but if your index is less than 350 for 6 weeks before the start and by the start of the quarter, Amazon reduce your storage to 1000 cubic feet. And, until your inventory level drops below your storage limits, you will not be able to create a new shipment.

In addition to this, you will pay the Overage Fee, which will be charged monthly at $10 for each cubic feet that exceeds the limit of your storage.

For example, your storage limit was adjusted to 1000 cubic feet, but the remaining items in your storage occupy 1100 cubic feet. Accordingly, the inventory currently exceeds your storage limit by 100 cubic feet, so you will incur an Overage Fee of $10 per cubic foot, or $1000 total if no action is taken. You can, however, create a removal order for 100 cubic feet of inventory or sell it on Amazon before the fees are applied (during 1 month).

The Inventory Performance Index is Amazon’s first step in setting a bar on inventory performance. And, at the same time, it increases the seller’s expenses.

By the way, you can calculate all hidden Amazon fees, as well as your expenses and profit automatically with sellerboard – profit analytics and inventory monitoring tool for Amazon sellers. Get 1 month of free access to sellerboard by clicking this link: https://goo.gl/Fu8iu6