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Dec 25, 2023

Amazon’s new capacity management system lets sellers bid for more storage space

Maximizing productivity has become even more important for Amazon as it works to

Maximizing productivity has become even more important for Amazon as it works to reduce billions in added costs, much of which is connected to its warehouse operations. CFO Brian Olsavsky told analysts in October that the company has been operating with "very high" inventory levels primarily connected to Prime sales events, making productivity improvements more challenging.

"There's a lot of extra work when you have space constraints," Olsavsky said.

Since the new reservation feature is auction-based, the cost of additional capacity will likely vary based on the time of year, said Kiri Masters, head of retail marketplace strategy at Acadia, in a LinkedIn post. It will benefit brands who need more inventory space to support new product launches or marketing campaigns, she added.

"This has not been possible in the past," Masters said. "Many brands would be willing to pay to guarantee space for such events, and now they have the opportunity."

The new capacity management system will also provide sellers a monthly capacity limit for how much they can send to and store at Amazon, according to Mehta. This replaces the weekly restock limit and quarterly storage limit, which sellers have said can make it difficult to plan how much inventory to procure and manufacture.

"Like restock limits today, capacity limits consider inventory on-hand in Amazon's fulfillment centers and shipments sellers have created that have not yet arrived," Mehta said.