Executive Briefings

Amazon Limiting Fulfillment Networks to Existing Merchants Ahead of Holiday Season

In an attempt to deal with potential network capacity issues this holiday season, Amazon is limiting the use of Fulfillment by Amazon (FBA) warehouses and services to existing sellers between now and Dec. 19, the company confirmed. This means new sellers would have difficulty using FBA to fulfill last-minute Christmas orders.

The move may cause concern about capacity in Amazon's 90-plus U.S. distribution and fulfillment centers ahead of the peak season. Amazon typically gives merchants cutoffs for different product categories such as toys in order to ensure holiday delivery, but has reportedly never put such a blanket restriction in place.

"We are restricting shipments from new-to-FBA sellers to ensure we have the capacity necessary to quickly receive and store inventory and ship products to customers," the company said in a note to sellers. "If new FBA sellers have not completed their first shipment to Amazon before October 10, 2016, we encourage them to start shipping to Amazon after December 19, 2016. If the situation changes before December 19 we will notify them by email. We encourage sellers to continue selling on Amazon and fulfilling orders directly to customers."

Colin Sebastian, an analyst with Robert W. Baird, said Amazon has been somewhat picky in terms of pre-approving sellers in certain categories and closely monitoring reviews to gauge their reputation, but this move was unprecedented.

Earlier this year, Sebastian noted, Amazon forced sellers to take back unsold merchandise, sometimes even paying for return shipping. “It was a first step in trying to clean out these fulfillment centers of slow-moving merchandise,” he said.

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The move may cause concern about capacity in Amazon's 90-plus U.S. distribution and fulfillment centers ahead of the peak season. Amazon typically gives merchants cutoffs for different product categories such as toys in order to ensure holiday delivery, but has reportedly never put such a blanket restriction in place.

"We are restricting shipments from new-to-FBA sellers to ensure we have the capacity necessary to quickly receive and store inventory and ship products to customers," the company said in a note to sellers. "If new FBA sellers have not completed their first shipment to Amazon before October 10, 2016, we encourage them to start shipping to Amazon after December 19, 2016. If the situation changes before December 19 we will notify them by email. We encourage sellers to continue selling on Amazon and fulfilling orders directly to customers."

Colin Sebastian, an analyst with Robert W. Baird, said Amazon has been somewhat picky in terms of pre-approving sellers in certain categories and closely monitoring reviews to gauge their reputation, but this move was unprecedented.

Earlier this year, Sebastian noted, Amazon forced sellers to take back unsold merchandise, sometimes even paying for return shipping. “It was a first step in trying to clean out these fulfillment centers of slow-moving merchandise,” he said.

Read Full Article