Amazon Restricts New Sellers from FBA Q4 2016

In what may be the first time ever, Amazon Restricts New Sellers from FBA Q4 2016. This is a huge deal, both for new sellers that have wanted to jump into Amazon but hadn’t yet gotten around to sending in inventory.

All accounts indicate that Amazon has done this without any advance notice. Specifically if you haven’t sent your shipment in by 10 October, you won’t be able to send a shipment in until 19 December. Of course the initial reports of this came out late on 10 October, with more official reports coming out on 11 October. There’s already a short thread on Reddit of folks that are unhappy about this development.

Only so much Fulfillment Center space

The Bloomberg article references Amazon’s fulfillment center (FC) expansion–21 new warehouses this year through September 2016. The fact is, Amazon’s warehouses have been full for quite a while. This has been indicated by Amazon restricting shipment of products that sufficient quantities already existed in FCs, increasing FBA Storage fees, with even more changes, all geared toward getting slow selling units out of centers. After all, how could these cool little robots operate without having some space to move around?

Good for established sellers?

A lot of established sellers see this as a good thing. Fewer sellers to compete with for Amazon Prime buyers. In theory, this helps, especially considering ProPublica’s study saying that Amazon’s pricing algorithm favors Amazon and Prime Sellers over Merchant Fulfilled. For long time sellers, this is not a huge surprise. However, with the right undercutting, Merchant Fulfilled sellers can get the buy box, although that usually comes at a much lower profit. The likely increased number of Merchant Fulfilled sellers could shift the balance for the algorithm, but, it might not.

Still reason for concern for all sellers

This action, along with previous no-notice changes, such as brand restrictions are cause for concern. I’ve made the argument that Amazon is similar to Airline Frequent Flyer programs, in that they have all the power, and we have little leverage. The fact is, more and more, it is important to remember that things can change at any time. This is a very concerning reality, especially as many ramp up for Q4.

Wrapping Up

This is not the best of news for new sellers who have been looking at getting into utilizing Fulfillment by Amazon. The fact that Amazon restricts new sellers from FBA without any advance notice is awfully concerning for many. Hopefully this is the last of a string of less than positive actions, but, I suspect that there is still more to come. The real question for me is, whether these actions will help Amazon get the overfilled fulfillment centers under control.

What do you think of these latest developments?

4 thoughts on “Amazon Restricts New Sellers from FBA Q4 2016

  1. This is great for prime members. Early on Amazon won millions of customers with lower prices, then got people to join prime making Amazon their first (sometimes only) stop, and then started raising prices.

    If units aren’t moving, it’s because there aren’t enough buyers at the quoted prices. If sellers are forced (due to competition from other sellers) to accept lower prices, then the consumers win.

  2. It sounds like the established sellers aren’t turning things around quick enough. It would be more efficient to increased the progressive storage fee.

    • @ABC – Amazon has been introducing more and more aggressive storage fees. I think, this also helps reduce Amazon’s risk of other supply chain issues, such as the increased fakes and knockoffs we saw earlier in the year. Its not ideal for new sellers, but, they at least waited until after 1 October to enact the change.

  3. @Russ: It’s not necessarily Amazon itself that’s raising prices. It’s US, the sellers. If I use my time, effort and money to find products that people like at the very best discount, you can bet that I want the very best ROI for my efforts. Fewer sellers, and only established ones, means that my competition has a better understanding of the foolhardiness of undercutting prices, and are more likely to be willing to share the Buy Box. Leading to the prices staying a bit higher.

    But you can still nearly always get prices well below retail, or big box sellers like Best Buy, etc. I am conscious of my potential buyer when I buy products, and when I price them. But I’d rather pay storage fees than to jump down $50 on a $300 item just because that’s where the Buy Box is. Fewer sellers = better educated or at least more knowledgable sellers, and ones who’ve suffered the regret of too aggressively pricing in order to get their inventory gone.

    I’ll forego a little profit, to match a price. But for items that I know, or reasonably can assume will rebound, I certainly will not. Swimsuits in October? I’ll leave them in a box in my basement, and wait to sell in May and June. But down jackets in September? No way. I KNOW those will be rebounding.

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