I've seen this "It's a people problem, not a storage problem" theory floated by multiple people, in multiple channels. Here's my competing theory: "It's not about the people, it's about the DOCKS." 👇👇👇 * Throughout the year, Amazon FCs have to load-balance Inbound receiving and Outbound freight. Put differently, if a given FC has 30 docks, X docks will be dedicated to Inbound at any given time, and 30-X docks will be dedicated to Outbound. Most of the year (i.e., Q1-Q3), an Inbound:Outbound ratio of 1 is sort of the Goldilocks ratio for FC ops, given consumer demand on Amazon. But, unsurprisingly, the Goldilocks ratio changes in Q4. In Q4, consumer demand spikes, and now Amazon has to ship out FAR more units than in the prior 3 quarters. In order to meet demand, and maintain the Prime delivery promise, you have 3 variables to play with: 1) Space 2) Labor 3) Docks * Space is a constraint in the short- and medium-term. Amazon can build or lease more FCs, but there's maybe a 12-18 month lead time to stand them up and make operational. But, as people have noted, Amazon isn't lacking in Space. * So if Space isn't the limiting factor right now, it must be Labor. Not enough people to pick, pack, and ship products is a problem. But Labor is a more elastic constraint. It's solvable in the short term and Amazon has been able to effectively scale up its FC workforce in the past through higher pay, incentives, etc. Also, remember that Restock Limits were also a problem last Q4, but Labor wasn't. So I discount Labor as the main root cause here. * On to Docks then... Just like Space, it's a constraint in the short- and medium-term. If you have an FC with 30 Docks...you have an FC with 30 Docks. The only way to get more Docks is to build/lease more FCs. So when you suddenly need to ship out more products to meet spiking consumer demand, you now need to dedicate more of your fixed number of Docks to Outbound. The only way you can do this though, without filling up your parking lot with Inbound truck trailers waiting weeks to be unloaded, is to restrict Inbounding further upstream. That is...by preventing sellers from sending those trucks full of products to the FCs in the first place. Hence...(aggressive) Restock Limits. Amazon is simply managing Inbound:Outbound activity at its FCs. More Docks dedicated to Outbound = Fewer Docks available to receive Inbound product. * So that's my theory. Informed by maybe a little bit of experience managing FC ops in the past. None of this makes the Restock Limits less sucky. None of this excuses the way that Amazon (repeatedly) bungles Restock Limits in terms of the seller experience. But it's a "why". And sometimes at least understanding the why helps people cope. Or, sometimes it inspires more informed and solution-oriented dialogue about a problem (which is sort of my goal here). *** #amazon #amazonfba #amazonsellers
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On Saturday my restock limits were 50,000 On Monday my restock limits were 20,000 Today it's 14,899 Amazon is understaffed? Because they sure as heck are not out of room. I broke this news Tuesday: https://lnkd.in/gQiiQQTt #amazonnews #restock #restocklimits
Since Amazon has opted to significantly reduce their forward coverage inventory on high volume products over the past month, I expect the seasonal swing to an outbound dock focus will result in significantly higher OOS instances during holiday peak.
I think youre close but heres a step further Cynical me says reduced storage limits is a way to balance the FC short term storage and the long term storage and get top sellers to start paying for that at the same time Assume even with high FBA storage fees amazon makes more money from processing an order than from product sitting in their shipping FC’s A FC that can fill 100k orders a day for example may not hit that if the selection of products stored within it doesnt make that many sales and it costs money to keep doing transfers. Plus the main cross dock FC’s like hazelton, robinsville, ont8 cant hold product lomg term as theyre so busy so it has to leave those asap. So if you look at this as a “utlization metric” the goal is to keep the expensive and highly staffed FC’s that pick and pack orders running as close to max capacity as possible If they force stuff in to AWD they can keep the fulfillment FC’s stocked with the fastest turning product in the amounts needed and less of the slower stuff and get sellers to pay for the trucking too.
I still can't get my head around the fact that they doubled the network. Doubling the network means double the docks as well. Now all those docks aren't going to be in 1-Day zones, but still. The labor market is so tight right now it's the big obvious thing. ;-) Amazon can scale its labor but not for the amount of new facilities they added. They can't because of the profitability constraints they are facing. Interesting point of view and discussion!
On Friday my business was in the Buy Box Eligibility program. On Saturday it wasn't. ZERO issues with my long standing account - have been selling for over 10 years and had the Buy Box for the last 36 months. Oh, and guess what? If you try to open a case about it, Amazon stops you the second you tell them it's about Buy Box Eligibility and just says (I'm paraphrasing) "Yeah you're just screwed pal. We're not going to tell you what's wrong and expect you to stay in business after the 95% plummet in sales. Or not. We don't care either way"
You can also get more from your docks with appropriate inbound and outbound mechanisation to stretch the limits Premarked cartons/ASN, conveyor based receiving and move to putaway for inbound, and mechanised outbound move, sortation to carriers and other outbound mechanisation. Yes you might have to trade trailer fill for speed on the outbound with mechanisation, and you will have to ask your bigger inbound partners to do more work to make the goods more receivable.
Great summary of what is (likely) the driving factor of the reductions that no one is talking about. Hard to understand if you haven’t been on the inside/managed FC Ops. Not sure how many new buildings are getting stood up right now, but that was a challenge in 2020. A lot of launches (Mainly Delivery Stations) happened in late September to early November. If something similar is happening but those buildings arent getting ramped up fast enough, that will impact Amazon’s capacity planning projections.
This would also help explain the really slow receiving of shipments into inventory I have seen over the last 3 weeks across multiple accounts.
Jon Derkits if this is the case it seems grossly irresponsible of Amazon not to communicate with sellers months in advance so they can plan. This question really challenges your theory or show gross incompetence on Amazons part Amazon
another great post!
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1yDoes a jeff@ email help? We opened one case for a brand and it seemed to have worked but the other brand we really need it for is where we are having trouble