Breaking news! A large number of Amazon sellers have seen a sudden drop in inventory capacity

Recently, many Amazon sellers have found that their inventory has dropped sharply, ranging from a few thousand to tens of thousands, almost in half. Some sellers wonder: "Is the peak season coming?" In addition, since sellers are preparing to replenish stocks for the peak season, the reduction in inventory is unexpected for sellers. Some people sighed: Amazon really knows how to choose the time!

Sellers’ inventory capacity has dropped sharply!

In the past two days, some sellers found that the replenishment limit of the shipment they just created was red in the afternoon. Later, more sellers reported this situation. Some sellers' inventory capacity was reduced from 60,000 to 20,000, and some sellers had a few thousand left, but due to the sudden reduction in inventory capacity, the capacity has been exceeded. There are even sellers whose inventory capacity of more than 100,000 has been reduced to half.

Since Amazon has not made any major moves to adjust its inventory capacity for a long time, this news sparked heated discussions among sellers.

Seller A: The storage capacity has been cut in half. What are you going to do, Amazon?

Seller B: This is because they are afraid that we won't be able to control the urge to ship goods once the peak season arrives. They have good intentions.

Seller C: Outrageous! Mine has changed too, what should I do?

Seller D: They cut storage capacity every year during the peak season. It’s too much to do this!

Seller E: Tens of thousands of warehouses were gone overnight...

Based on the current feedback from sellers, the reduction in inventory capacity is mostly between 50% and 80%.

"There was no notification, otherwise the goods would have been shipped earlier, and there would not be such a situation now. I am afraid that there will be an additional fee," said a seller. Most of the sellers affected this time said that they would like to wait and see for a few more days. However, many people have considered replenishing their stocks through overseas warehouses, air transportation, etc., but they are also considering how much the cost will increase.

Some sellers who chose to stay calm joked: "We have already exceeded the inventory, so we'll have to wait and see how other people's orders explode during the peak season!" Some are happy while others are sad. Some sellers' inventory capacity has been cut in half, while some sellers have not been affected by this incident. The overall inventory capacity is still growing slightly, which really makes other sellers envious.

At first, some sellers analyzed the reasons for the sudden drop in inventory capacity, thinking that it might be because the peak season was approaching and Amazon was going to start making adjustments again. Others believed that it was due to Amazon's own efforts to control costs.

Later, some sellers said they received an email from Amazon’s logistics team later in the day, stating that the replenishment restrictions were for sellers with standard and apparel storage types. Part of the content is as follows:

We will adjust the replenishment limits so that all sellers can store at least four months of inventory in Amazon Logistics. All sellers using Amazon Logistics will receive limit updates, but after this update, approximately 5% of Amazon Logistics sellers will temporarily not be able to replenish more products because their inventory levels are already high.

Our records indicate that your current inventory levels (including units in transit) are within our estimated four-month inventory limits, so these limits do not impact your current ability to replenish your products ...Replenishment limits are determined by a variety of factors, including the seasonality and peak sales cycles of your products, forecasts for your ASINs, new selections you've introduced, promotions you have scheduled, and the processing capacity of Amazon's fulfillment centers.

The seller who received the email said that the notification came a little late.

Industry insiders said that the reduction in storage capacity has little impact on large sellers. In contrast, small and medium-sized sellers, especially small sellers, often have some "deficiencies" in replenishment channels and cost investment, and the side effects brought about by the large reduction in storage capacity will be magnified.

It is understood that some sellers have reduced their inventory capacity since last month, but the decline is small and has not attracted much attention. Compared with last month, this time the reduction in inventory capacity involves a wider range of sellers and the reduction is larger. In addition, the time point is getting closer to the peak season, which disrupted the stocking rhythm of a number of sellers.

Some sellers said that Amazon should not just be preparing for the peak season this time. The sudden scanning of numbers, downloading links, and adjusting storage capacity in the past two months may be brewing some new moves. "Amazon has recently laid off tens of thousands of people, and many warehouse expansions have been shelved. Amazon has to control costs." said a seller.

As the seller said, Amazon has indeed taken a number of big moves in warehousing services in the first half of this year.

Amazon puts multiple warehouse expansion plans on hold, reduces staff

In early August this year , Amazon revealed that nearly 100,000 of its direct employees were laid off in the first and second quarters of this year, most of whom were employees of its warehouses and distribution centers. The main reason for the layoffs, in the words of relevant persons in charge, was due to the company's slowing growth and excess labor capacity. By the end of the second quarter, Amazon's number of employees had dropped by 6%.

Amazon Chief Financial Officer Brian Olsavsky said on a conference call that like other companies, Amazon is considering slowing down hiring due to inflation and macroeconomic uncertainty, but some hiring is still continuing, such as in cloud computing and advertising business departments.

In addition, an Amazon official also said that in the first half of this year, Amazon's delivery capabilities have been significantly improved, and the number of employees hired has met the needs during the epidemic, but currently it is necessary to control costs and pay attention to profitability.

It can be seen that in this situation, layoffs are one of the ways for Amazon and other companies that are or have already laid off employees to control costs.

In addition to the reduction in the number of warehouse employees, Amazon's warehouse expansion plans in many places have been shelved recently. In order to reduce costs, Amazon also adopted the strategy of stopping, cutting and renting in the first quarter of this year. It suspended warehouse construction plans in some markets, cut a number of warehouses that were previously expanded but not highly used, and sublet or stopped renting warehouses.

Public data shows that Amazon has postponed or canceled the construction of 13 distribution centers since 2022. This has also affected the company's warehouses in California, Florida, Tennessee and other places in the United States. It is not surprising that Amazon's series of actions in warehousing have made sellers associate it with inventory capacity adjustments.

However, the suspension of Amazon's warehouse expansion plans is only temporary.

According to foreign media reports, Amazon has begun planning to build several large warehouses, and the company expects to add about 250 new warehouses this year. In addition, Amazon is planning to build its first sortable distribution center in Niagara, USA, and is planning large logistics centers in Southern California and Colorado.

It is understood that Amazon's planned distribution center in Niagara Township covers an area of ​​about 3.1 million square feet. In addition, the company has also been approved for a $550 million warehouse construction request in the local area. It can be seen that Amazon's overall expectations for the second half of this year are positive.

Data shows that Amazon has 1,200 distribution facilities in the United States alone, with a total area of ​​nearly 380 million square feet. If Amazon's existing plan can be implemented smoothly, it will not only achieve new breakthroughs in warehousing, but also have a positive impact on sellers.

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Storage capacity

Sudden drop