While adjusting PPC bids and retail prices, the majority of Amazon sellers overlook a crucial aspect of their business: inventory management. In addition, sellers may not even consider Amazon FBA reserved as a time-saving tool.
You will suffer severe rankings damage if your item goes out of stock on Amazon. The operation of receiving your products and distributing them to other Amazon fulfillment centers, as well as preparing them for sale and shipment, takes time. Your products will be displayed as "In Stock" during that period but will eventually become available. It may take a few days for shoppers to receive your product, which could negatively impact your conversion rates, which is known in Amazon-speak as "Unit Sessions Percentage." Nevertheless, it is still possible for your goods to incur some damage even after a slow insertion into the FBA warehouses.
In order to maintain your inventory levels, it is essential to keep an eye on them. Let's take a closer look at Amazon's FBA inventory assimilation stages and what they mean for your business.
Let's discuss what reserved inventory is in FBA and answer the question of why Amazon reserved my FBA inventory.
What is Amazon FBA inventory reserved status?
Wondering why Amazon FBA reserved inventory dialogue box is appearing? There are 3 reasons why Amazon FBA inventory shows reserved status.
- The first is "Reserved – FC Processing." This means that Amazon has received the FBA inventory and is in the process of assimilating it. You cannot purchase your goods the same day that you ship them to Amazon's fulfillment centers or FBA warehouses. It is in the status "Reserved - FC Processing." so Amazon Reserved Inventory is defined as a shipment that has been unpacked, scanned, and sorted.
The tax nexus of any business is usually established by its inbound Fulfillment Center, but this is not always the case. Occasionally, Amazon sends parts of your inventory to one of its fulfillment centers other than the one you choose. Amazon, however, does store indeed and distribute your products in other multiple warehouses for distribution and storage.
- The second is "Reserved - FC transfer. Your goods will be redistributed, which will mean you will lose valuable availability time. You should not expect Amazon to move your goods from one warehouse to another in a fixed period of time. This process can take anywhere from three to eleven days, depending on the season and other factors.
- The third is "Reserved – Customer Order." Furthermore, it expresses the number of units that are reserved for customers who have placed orders that are more than the number of units available. As you can see from your Order List, these reserved units have the same number of pending orders that you currently have.
However, it would help if you kept in mind that the quantity reserved for customer orders is not necessarily fulfilled. There is a possibility that the payment method used by some customers might not be processed.
What are the effects of Amazon FBA reserved inventory on your bottom line?
The FBA reserved inventory affects your utilization, so you need to pay attention to it.
Amazon is operating many of its warehouses at full capacity, so the company is running at full capacity. As a result, they have decided to count your reserved inventory against your restocking limits to avoid overcrowding their facilities.
Let's say you have a capacity of 2,000 units in your inventory and you have sold 1 000 units in the last five days, but Amazon only shipped 400 units to customers. So there would be 600 units left in inventory that have been sold but not shipped.
Therefore, the minimum shipment quantity you can ship could be calculated as 1,000 units less the number of unsold units at FBA. Let's say they are 400 units plus 350 unshipped customer orders. Thus, if you have reserved inventory, you will only be able to ship 250 units of inventory because the inventory that you will be allowed to ship will be based on your restock limits.
5 Best Ways To Manage Your Amazon FBA reserved Inventory Levels
Following are the proven ways to get rod of Amazon FBA reserved inventory warnings:
- Make the most of your storage space
In addition to reserved inventory, utilization percentage can be influenced by several other factors as well. High utilization rates typically indicate that pending orders require additional processing due to congestion in storage. The reason may be the authenticity of the item, the size, payment problems, slow sellers, stranded items, or excess items that are not selling as well as your best-selling items.
Amazon will not be interested in giving you more storage space until your inventory levels are healthy again, and for that reason, it won't give you more storage space. Would you like to know how much storage you have used? If so, here is the formula you can use to figure it out:
Utilization Quantity/ Restock Limit x 100 = Utilization Percentage
The following steps should be followed to determine these numbers:
- Navigate to the Inventory Dashboard.
- Click the "Inventory Performance" tab.
- Select "Restock Limit" from the menu.
You need to identify your "Utilization Quantity" and your "Restock Limit," which is also known as your "Total Inventory Level."
The IPI score and storage capacity limitations are consequently affected by your utilization rate. You should aim to have a maximum utilization rate of 30% in the ideal world since this indicates excellent turnover rates and sale-through rates. As Amazon is awarding you 3 months' worth of space, 30% utilization would indicate a turnover of inventory on a monthly basis.
The profound reduction in Amazon's restock limits has forced many sellers into having to max out on their restocks. Due to these factors, some individuals are having difficulty maintaining an 80%-90% utilization rate.
You may, however, have achieved a high level of utilization if your restocking limits were not drastically reduced and you sold through inventory at a good rate. Therefore, Amazon will typically grant you additional storage space, thereby enabling you to sell more through FBA.
- Make sure your inventory is checked in as quickly as possible.
You may suffer significant financial damage should your inventory not be delivered on time to Amazon FBA warehouses. FBA inventory often takes up to a week to be processed by Amazon, received, transferred to other fulfillment centers, and stocked for sale. Due to COVID delays as well as labor shortages at warehouses, expect the check-in process to take considerably longer.
Customer orders that are not received within one to two business days may affect your conversion rate; they will abandon your page, resulting in lost sales. Therefore, you need to use UPS Freight as soon as possible to reduce inventory holding times. Whenever there is a gap in the schedule, they are able to ship in goods whenever a gap appears in their contract with Amazon.
Amazon is forced to contact UPS Freight during a gap in the schedule and request that they send any extra stock needed to complete the order immediately. Additionally, checking in your FBA inventory is generally faster as a result of the agreement between the two companies.
- Put in place a removal order
In addition, if you have had difficulty selling your stale inventory or need to free up space quickly. Consider using removal orders if you have difficulty selling your inventory or need to free up space quickly.
In creating a removal order, you're releasing some valuable storage space, which can then be used to store a better product. It is likely that these products will not appear on a reserved inventory list due to product issues.
The following are the steps to be followed in order to remove your inventory from FBA.
- Click on "Manage Inventory," then select "Edit" from the dropdown list, and then click "Create a Removal Order.".
- Select "Return to Address" on the "Removal Order Details" page. Type the address you want your items delivered to on the "Removal Order Details" page.
- Remove fulfillable and unfulfillable items by creating a removal order ID or allowing it to be generated automatically.
- The removal order must be reviewed and submitted as soon as possible.
- Make use of FBM to avoid Amazon FBA reserved
Establishing a third-party fulfillment center allows you to be prepared for stockouts, particularly during sales seasons. In addition to being able to switch from FBA to FBM immediately, having a backup warehouse assures that your Amazon restocks limits do not suffer. FBM sales are included in Amazon's algorithm for determining to restock limits as part of the sales velocity taken into account when evaluating restock limits.
You can store your additional shipments in your warehouse if FBA doesn't accept them. From there, you can ship your orders. This will ensure that if you have problems getting inventory into FBA, you won't be stuck not selling or fulfilling.
- Delete any shipping plans that are no longer needed
The inbound shipment percentage also affects your utilization percentage, just like Amazon Reserved Inventory. It is possible that you might have an odd number of unused shipping plans on hand if your usage rate is higher than average.
The inventory KPI for Amazon that is the most critical is the rolling 90-day KPI for the inventory. Those open and undeliverable shipments will be taken into account in your average utilization for the following three months, adversely impacting your Sell-Through Rate. Amazon likely includes these inbound shipments when calculating your sales-through rate, so the sooner you delete them, the better.
If you're over your restocking limit, you can't inbound any more stock. Amazon doesn't charge for overutilization yet, but who knows what they'll do in the future. Therefore, you may want to delete any unnecessary shipments as soon as possible. Please get in touch with Seller Support in case you are unable to delete them, and they will be able to remove them for you manually.
Considerations for restocking Amazon inventory in terms of time management
In the event that Amazon alerts you that your Amazon FBA inventory is low, it is not as simple as simply re-ordering. The time will have passed by that point, and it may be too late to place another order.
- Method of shipping
Shipping via sea, air freight, or air express is a viable option if your supplier is located in China. You can also ship your goods by train if you are selling on Amazon's European marketplaces. There are about 13 to 17 days of shipping on the water required to transport goods from mainland China to the United States. A typical air freight shipment may take between 5 and 7 days, while an express shipment may take 3 to 5 days.
- Allowance for extra time
Please remember that there is an extra time requirement: shipping your product from your supplier to a port in China and then delivering it to a USA port. As soon as it arrives at Amazon's warehouse, it must first pass through customs inspection, be palletized, and then move from there. In addition to that, even when your shipping courier is contracted, for whatever reason, Amazon chooses to turn him/her away on the scheduled day of delivery.
- During busy seasons, shipping is delayed.
Remember the Chinese New Year, which happens to fall on a month when the entire country shuts down practically for the entire month. In the United States, the shipping times can be longer during high shopping seasons in the winter, such as Black Friday.
- Factors outside our control
Please be aware that your supplier's lead time may change, as well as the reliability of your shipping carrier. In addition to this, there may be a delay in the inspection of your goods by a third-party independent. The average delay between the moment an order is placed and when it is ready for listing on Amazon is 80 to 110 days, depending on all the factors.
Conclusion
Having understood what reserved inventory is and why it occurs on Amazon FBA, you should know how and when it happens. You can make use of the tips in this article to restructure your operations in a way that minimizes the Amazon FBA reserved inventory problems you face. You will be able to ensure your inventory is transferred to Amazon upon order placement. It may be difficult for you to send in more stock during this time. Send inventory to another distribution center and decide to switch to FBM at that time.
Consider evaluating your products based on their velocity and profitability across your full catalog if you're trying to avoid this as much as possible.