It’s the best time of the year right now: March Madness! Of course, I happen to be a Michigan State fan, which is a major bummer… but I digress.
Amazon has apparently taken the March Madness mantra to heart, given their recent implementation of the ASIN quantity limits into the book-selling world.
If you’re not up to speed with these new developments, take a quick gander at any of the Facebook forums to see the reactions from Amazon sellers. It’s stealing all of the headlines right now, and it looks a little something like this:
Of course that’s an over-reaction, but these recent changes ARE causing quite a stir. Let’s take a closer look at what’s happening right now.
What we know: Amazon has introduced and enforced a plethora of ASIN Quantity Limits. These have existed for several years now, but as recently as a week or two ago, they’ve become prevalent in the book category. In short, here’s how Amazon describes these limits:
“For a select group of ASINs, FBA may limit the maximum unit quantity that you can ship to our fulfillment centers. These limits are intended to help you avoid sending products that already have high overall inventory levels but low customer demand.”
At surface level, this may seem like Amazon has the interests of its third party sellers in mind by restricting slow-moving products from being sent to Amazon’s fulfillment centers. For example, if a book with a rank of 10 million that had sold a single copy in the past 12 months already had a dozen FBA copies in stock that were selling for under $6.00, it would make sense for Amazon to limit any more copies of that particular title from being sent to the warehouse.
Here’s the problem: Amazon isn’t only restricting super long-tail books from being sent into FBA – they are reportedly rejecting anywhere between 10-30% of ALL books from being sold via FBA! I tried submitting a shipment of 150 books on Saturday afternoon, and 30 of the individual titles were rejected with a message that the ASIN Quantity Limit was in place for those particular ASINs. I sent the exact same ASINs to my buddy to see if he could upload them to his account – but no dice. The same limitations appear to be in place for all sellers, regardless of size or performance metrics. (Note: there appears to be a loophole in place for sellers using 3rd party software to upload their books, such as InventoryLab or ScanPower. It’s unclear yet if these limited ASINs will be placed into Stranded Inventory once they are received at Amazon’s warehouses, however.)
Here’s what doesn’t make sense: Of the ASINs which were rejected, many of them had excellent Sales Ranks (well under a million, in most cases). Furthermore, some of these limited ASINs had no FBA offers in stock at all. Amazon has worked hard to build up their base of loyal Prime subscribers, so it wouldn’t make sense to limit their access to Prime products, would it? These changes don’t seem to be protecting sellers, they seem to be protecting Amazon. Here’s why:
The likely explanation for these changes is that Amazon’s warehouses are stuffed to the gills right now. Even with long-term storage fees in effect, there are so many sellers flocking to Amazon’s FBA program right now that the online retailer simply can’t keep up with the growth. In response, they are playing around with their algorithms for the ASIN quantity limits to see if they can alleviate their storage burden.
My concerns with these limitations: Amazon doesn’t really care about my feelings – much like March Madness doesn’t care that a 15 seed isn’t supposed to beat a 2 seed in the first round – but here are my concerns with these recent changes:
- The lack of communication from Amazon to their sellers is my biggest concern. There was no warning that these changes were going to be implemented. Amazon simply enforced them as they saw fit. For a company that prides itself on customer service, this is a major oversight with a group of sellers that represents a rather large source of Amazon’s revenue.
- The lack of a free market solution to remedy this problem also irks me. If the challenge right now is that Amazon is rapidly running out of storage space, they ought to consider raising their long-term storage fees to force customers to remove slow-selling items. Amazon could also remove the single-item exemption that currently exists with long-term storage fees to further incentivize sellers to not sit on their inventory for so long. Instead of allowing sellers to make decisions on their own (i.e. letting the free market work itself out), Amazon is simply making the decisions for us. Uncool.
- The lack of any API support to identify these specific ASINs is my final concern. Right now, there is no way to know which ASINs will be accepted and which ones will be rejected until AFTER you’ve purchased an item, listed it, and created your shipping plan. If I knew about the limitations BEFORE purchasing a particular book, that would make these changes much more palatable. Instead, I’m faced with the decision on roughly 10-30% of my inventory to sell it Merchant Fulfilled (no thanks), sit on it and wait for these changes to (maybe) blow over, or donate it back to Goodwill and take the tax write off. Any of these options will harm my cashflow and ultimately my margins.
My reaction to all this madness: I’ll admit it – I was extremely frustrated with these changes at first. How could Amazon do something like this and wreak havoc on so many of their third party sellers? But then common sense got the best of me and I calmed down and chose to treat the current situation as an opportunity instead of a problem. I started by drafting a letter to Amazon’s customer support team (you can read that letter at the end of this post), choosing to let my voice be heard by Amazon’s leadership team, merely than just ranting about my frustrations on social media.
On Monday, I took a road trip with my wife into the mountains and we hit up a half dozen thrift shops along the way, filling the back of our car with books. Will we be able to list all of these books via FBA? The way it looks right now, probably not. But the margins are good enough in books that I can manage a handful of duds and still turn a profit. If these changes are here to stay, it’s actually good news for those of us who are willing to adapt and overcome. Bottlenecks in this business are nothing more than an opportunity to thrive while others fail to adapt and drop out of the business altogether. After all, if selling books were too easy, everyone would be doing it. Bring on the changes, Amazon!
Final thoughts: Personally, I think these changes are NOT here to stay. Amazon is likely tweaking some new algorithms or playing around with some shiny new inventory management software, and will restore order to the chaos in the next few weeks. There’s a rumor going around that Amazon will remove all of these ASIN Quantity Limits for books by Wednesday, March 23rd. I’ll believe that when I see it, but I’m choosing to remain optimistic.
Either way, this serves as a potent reminder to not put all of your eggs in one basket. If your entire business exists solely on Amazon, it’s not really YOUR business – it’s Amazon’s business. You’re just playing in their sandbox. Amazon is still the best game in town right now, but take notice of these changes as a reminder to diversify your income streams. If you’re too reliant on one channel for the success of your business, it could all evaporate overnight. Spend some time learning about another sales channel and make plans to earn income apart from Amazon – and perhaps apart from the online world altogether!
My letter to Amazon: For those interested, here’s the entire email I sent to Amazon’s customer service department. Feel free to modify it to fit your own situation and let your voice be heard by dropping Amazon a line!
I’d like to share a few comments regarding a recently-implemented change which limits the number of ASINs that can be sent into Amazon’s fulfillment centers. As a bookseller who relies on Amazon sales to provide for my family, I am deeply troubled by the changes to the ASIN limits that were introduced and enforced without advance notice.
I went to upload a shipment this afternoon and found that 30 books out of 145 were denied due to these new limitations. Unfortunately, there was no way for me to know that these limits were in place for these specific ASINs until AFTER I had purchased the books, listed them, and attempted to build a shipping plan to send them to the Amazon fulfillment centers.
From conversations with other Amazon sellers, I’ve discovered that these limitations apply to everyone attempting to sell via FBA. While I understand that the fulfillment centers are getting overcrowded, and recognize that Amazon needs to do something to alleviate the storage of too many items, I am frustrated with the way this “solution” has been implemented.
First off, there appears to be no rhyme or reason as to which ASINs are being limited. Some of them have great Sales Ranks in the book category, many of them with a rank well under one million. Some of the restricted ASINs only have a handful of offers currently on Amazon, and some of them have zero FBA offers. While I understand the need to limit certain items that are selling, say, 5 copies a year on average and they have 40 FBA offers currently in stock, I do not understand limiting ASINs that have no FBA offers in stock. If Amazon prides themselves on being the “Everything Store” and has invested so much money into building their Prime program and recruiting new customers year over year, it does not make good business sense to restrict FBA sellers from putting products into the marketplace that may well find a customer who would buy it Prime but would refuse to buy it from a Merchant Fulfilled seller.
Secondly, there was no advance notice of these ASIN restrictions prior to them being implemented. Amazon has first class customer service and is widely recognized for that service! But when it comes to another group of your customers – namely, those third party sellers who provide products for sale on your website and provide an enormous amount of income for Amazon each year – your customer service is completely absent in this case. If these ASIN limitations are here to stay, then you owe it to your customers to let us know what is happening so we can adequately prepare for its impact on our businesses. If these ASIN limitations are merely a test, then please accept this feedback as confirmation that this test is NOT a good way to keep your third party sellers happily using your platform to sell their products.
Here are my specific recommendations and requests regarding this situation:
1. Remove these ASIN restrictions at once to allow third party sellers to continue providing products that Prime buyers are increasingly demanding.
2. Instead of limiting these ASINs through strict enforcement and not allowing sellers to send them to your fulfillment centers, consider other free market methods of slimming down the inventory in your fulfillment centers. Raise the monthly storage fees or find another way to encourage sellers to not allow so much inventory to collect dust in your warehouses. This approach would also be met with resistance from sellers, but would allow us to make our own decisions about sourcing inventory rather than having that decision be made for us by Amazon. By limiting the ASINs that you will receive, you will be limiting the items that are for sale and if sellers who currently have these products in stock are smart, they will immediately raise their prices because they do not have the threat of competitive prices to keep their products affordable for Amazon’s eventual customers. By enforcing these restrictions, you are in essence limiting the free market that exists on Amazon.
3. If you won’t remove these ASIN restrictions, please provide a list of these restricted products on a daily or weekly basis and provide access to them through the MWS and/or Product Advertising API. As sellers, we need to know BEFORE we purchase items whether or not we can sell them via the Fulfillment By Amazon program, otherwise we will be wasting our inventory dollars and harming our profitability. The attraction as sellers to the book category is that it is an ungated category, and is the perfect way for a new seller to learn the ropes on Amazon before branching out into other categories. By restricting some ASINs within the book category, you are effectively rendering the entire category as restricted.
All of the above being considered, I am still grateful to be able to “play in Amazon’s sandbox” and sell products in your marketplace. I’ve built a sizable business over the past year and a half that has proven profitable for both me and Amazon. Please consider my feedback carefully, and know that I speak not only for myself but also on behalf of the several thousand other booksellers who sell primarily using the Fulfillment By Amazon program.
I would be delighted to have the opportunity to speak to one of your project managers regarding my concerns at how these ASIN limitations are being implemented and to share how they are adversely impacting my business. I can be reached at the call-back number below.
Thanks for your time and consideration.