In April of 2021, Amazon announced that it made changes to the stock limits offered to sellers. The transition from legacy stock limits, which are product-based, to stocking limits that apply to the entire vendor account has created a complex and difficult-to-understand situation for many vendors.
In this article, we will share with you the results we have reached as a result of the analyzes we have made on dozens of accounts in various countries from the date of the updates until today.
What Is No Replenishment Limit?
- Amazon’s replenishment limit is not based on product volume.
- Restocking limits are not dependent on the “IPI” score. The formula used in the “IPI” calculation is fed from different data.
- The increase or decrease of the stock replenishment limit is not a result of randomness.
- Restocking limits differ in each country.
- The replenishment limit is not based on gross sales volume.
- Restocking limits cannot be expanded simply by selling more or faster. Stock limits can be increased equally for products with different sales rates.
- The replenishment recommendation in the vendor panel is not optimized for the replenishment limit. Indicates product-based inventory limits, not account-level.
How is Stock Limit Calculated?
Amazon has an algorithm that sets replenishment limits. This algorithm takes the cycle of buying, selling and exchanging goods as the main metric. This metric, also called “Days Of Cover”, indicates how many days of stock are left, given the current sales rate of the goods in stock.
As we mentioned before, it is not enough to just make more sales to increase the stock replenishment limit. The effective use of FBA Inventory plays a big role here. When calculating how many days of stock are left, the starting date is not the day the goods arrive at FBA warehouses, but the day the shipment starts.
If all of your products are selling 3000 units per month and you have 6000 products in the “inbound” state, that is, not yet put up for sale, waiting for shipment or in the warehouses, it can be said that you have roughly 60 days of remaining inventory. This indicates that your inventory effectiveness is between 60-80%. If the number of “inbound” products is halved, this rate will fall between 15% and 25% according to our calculations. Do not forget that the size category that the product is included in will also play a role in the calculation, but the average of the statistical data we have obtained so far brings us to these numbers.
Which Ways Can Be Followed to Increase Stock Limit?
Increase Post Frequency!
Making fewer and frequent shipments or stocking the goods in third-party warehouses outside of Amazon and sending them to Amazon regularly will have a positive effect on stock limits.
Reduce Shipping Times!
- Place the shipping label in the shipping boxes containing the goods in the country where you are selling. Engaging with a shipping company, creating and placing these labels after products enter the country of destination will convince Amazon that the shipping time is much shorter.
- Optimize your shipping plans to keep your remaining daily stock around 30.
- Deleting the shipping plans that you do not intend to send indicates that you are using your inventory effectively.
- Remove items that are in stock for more than 60 days or drastically lower their prices to increase sales speed.