Amazon restricts warehouse storage to prepare for holiday shopping rush
Selling partners account for more than half of all items sold in Amazon's stores globally
The online retailer announced a new fulfillment center in Little Rock, Arkansas, which will reportedly open next year and create more than 1,000 full-time jobs.
Amazon has notified its sellers that the company will impose new inventory restrictions at its warehouses to prepare for the holiday shopping rush.
"Given the unprecedented challenges the COVID-19 pandemic has placed on all of us, we are preparing early to deliver a great holiday season for our customers and selling partners—building out capacity as quickly as we can so we can deliver products customers need and want directly to their doorsteps and help you continue to grow your business," the company said.
An Amazon spokesperson told FOX Business the move will "help ensure all sellers using Fulfillment by Amazon have space for their products" and that sellers can replenish their inventory at any time.
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Amazon will now enforce strict quantity limits for all third-party merchants that store goods in its U.S. warehouses. All product categories are impacted by the change, with quantities differing on a product-by-product basis.
According to the company, merchants who use Amazon's warehouses will be given enough space for over three months of sales. The company said sellers store an average of 1.5 months of inventory.
In this Aug. 3, 2017, file photo, a worker pushes bins at an Amazon fulfillment center in Baltimore. (AP Photo/Patrick Semansky, File)
The company will also raise the threshold for its Inventory Performance Index requirement, a metric based on how well sellers "balance inventory levels and sales, fix listing problems that make your inventory unavailable for purchase, and keep popular products in stock," to ensure all products have space available during the holiday season. Sellers who fall below the new 500 minimum score will be subject to storage limits effective Aug. 16 through the end of the year.
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In addition, Amazon will waive inventory removal fees starting Tuesday for any products that have not been selling.
"While no one has a perfect playbook for how to respond to COVID-19, our commitment to supporting your business has never been more steadfast," the company added. "We will continue to make adjustments to best support your business and keep you informed along the way. We appreciate your partnership as we improve the efficiency of our fulfillment network to prepare all selling partners for a successful peak season."
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Since the coronavirus pandemic hit, Amazon said it has had to make "fast adjustments," including hiring more than 175,000 employees. The company also plans to invest approximately $4 billion on COVID-related initiatives to meet the surge in online demand during the pandemic and protect the health of its employees.
The company has also reportedly pushed back its annual Prime Day to October in response to the pandemic's impact on Amazon's supply chains.
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In Amazon's note to sellers, the company said it is on track to open 33 new fulfillment centers in the US this year, which will increase storage capacity by nearly 35 million cubic feet compared to last year. The company also plans to have invested more than $30 billion to build capacity, tools, services and programs for sellers by the end of 2020.
The announcement noted that selling partners continue to account for more than half of all items sold in Amazon’s stores globally.