As sellers prepared for the crucial year-end shopping season, Amazon delivered a trick instead of a treat: dramatic reductions in FBA storage limits. This unexpected move has disrupted inventory plans and sparked widespread frustration among third-party merchants.
"Storage Capacity Plummets" as Sellers Enter Peak Season
The fourth quarter represents a make-or-break period for many Amazon sellers, with Black Friday and Cyber Monday sales determining annual performance. However, Amazon's storage capacity reductions have thrown cold water on these ambitions.
"One refresh and my capacity turned red—more shocking than a COVID alert. All my goods are ready to ship, now I'm just depressed," lamented one seller.
The scale and breadth of Amazon's cuts surprised the marketplace. Many sellers saw their storage allowances halved overnight, with some losing up to 70,000 units of capacity. Both high-performing and low-volume stores were affected equally.
"Maybe Amazon thinks we can't sell our inventory, so they're telling us not to send so much," one seller quipped bitterly.
The changes hit hardest for merchants with active replenishment plans. "My capacity was slashed by more than half—my products are already boxed and ready to go. What am I supposed to do now?" asked another frustrated seller.
Strategic Shift Behind the Storage Squeeze?
While Amazon has historically adjusted storage limits, the timing—right before peak season—has raised questions about the company's motivations. Industry observers suggest several possible explanations:
Cost Reduction: After aggressive FBA expansion drove up operational expenses, Amazon may be scaling back warehouse operations amid economic uncertainty and rising interest rates.
FBA Optimization: The move could represent an effort to improve fulfillment center efficiency and inventory turnover, particularly with potential recession concerns.
AWD Promotion: Amazon may be pushing sellers toward its Amazon Warehousing & Distribution (AWD) program, which offers storage solutions outside FBA limits while enabling automatic replenishment.
This follows recent increases to Amazon's peak season storage and fulfillment fees, suggesting a coordinated strategy. Some account managers have cited Black Friday/Cyber Monday preparation periods as contributing to FBA constraints.
Navigating the Capacity Crunch
Some sellers successfully avoided cuts by proactively working with Amazon representatives, particularly those using AWD or Amazon Global Logistics (AGL). For others seeking capacity increases, experts recommend:
- Allowing 7-10 days for application processing
- Carefully calculating reserve fees using Amazon's tools
- Benchmarking against historical approval thresholds
Alternative strategies include optimizing inventory management, diversifying to third-party warehouses, adjusting sales approaches, and maintaining open communication with Amazon.
AWD: The New Frontier?
As FBA constraints tighten, AWD is gaining attention as a potential solution. The program offers several advantages:
- Bypasses FBA storage limits
- Enables automatic replenishment
- Provides cost-efficient warehousing
- Streamlines supply chain operations
However, sellers should carefully evaluate AWD's fee structure, operational complexity, and potential risks before committing.
Amazon's storage policy changes present significant challenges during the critical holiday season. While frustrating for sellers, they also create opportunities for merchants to refine their operations and explore alternative solutions in an evolving marketplace.