New Sellers Banned From Amazon FBA for 4th Quarter
Yesterday, Amazon made a change to their Terms of Service (TOS) that sent a shockwave through the Amazon selling community. As of October 10, 2016, new sellers can not send products to the Amazon Fulfillment warehouses until after December 19, 2016. New sellers are banned from Amazon FBA during the 4th Quarter. This pretty much shuts them out from using FBA during the 4th Quarter. New sellers will have to use Merchant Fulfilled (MF) which means they must ship their products to their customers. A new seller for this TOS change is someone who is just signing up for their Amazon Seller Central account. If you already have an account but have not sent a shipment to Amazon using FBA, you will also be affected by this new policy.
Before I continue, I want to clear up some misconceptions. The Professional Account that costs $39 a month has nothing to do with your ability to use Amazon FBA. If you have an individual account and you are not a new seller, you can use the Amazon FBA program. The Professional Account gives you the ability to apply to sell in the gated categories on Amazon such as Groceries, Health and Personal Care, and Beauty.
I know it may seem like the sky is falling if you are new seller, but I would not give up on selling on Amazon. This is still a great opportunity to add another stream of income. We always have to adapt as an entrepreneur. I will outline what your next course of action needs to be depending on your status.
Have An Amazon Account And Never Used FBA
Even if you have an Amazon account but you never used the FBA program, you will be banned from Amazon FBA until after December 19. 2016. You will have to use the Merchant Fulfilled Program which means you will have to ship your products to your customers.
Brand New Amazon Seller
Because you are a brand new Amazon seller, you will be banned from Amazon FBA until after December 19, 2016. You will have to use the Merchant Fulfilled Program which means you will have to ship your products to your customers.
Have An Amazon Account And Used FBA Prior To October 10, 2016
Good News! The new changes to the TOS do not affect you. Continue to ship via FBA.
Why Amazon Would Restrict FBA During 4th Quarter
Last year during 4th Quarter (Q4), some of the warehouses were completely full. I ran into a situation where I had a shipment delivered to a warehouse in Florida right before Christmas that was rejected because the warehouse was full. UPS had to take the shipment back to their warehouse and it was redelivered to Amazon in January.
Several sellers have received the following message:
We are restricting shipments from new-to-FBA sellers to ensure we have the capacity necessary to receive and store inventory and to ship products to customers quickly. If you have not completed your first shipment to Amazon before October 10, 2016, we encourage you to start shipping to Amazon after December 19, 2016. We encourage you to continue selling on Amazon and fulfilling orders directly to customers. We apologize for any inconvenience. If the situation changes before December 19, 2016, we will notify you by e-mail. We apologize for any linconvenience.
Amazon has also increased the monthly storage fees for November and December. Amazon does not want to be our long term storage facility. They want us to send “quick turn” merchandise that will sell quickly.
Should I Cancel My Professional Selling Account?
There are a few things to consider before you decide to cancel your Professional Selling account. If you have been ungated in restricted categories and you switch to an Individual account, you will not be able to sell products in those restricted categories. Also, when you decide to upgrade back to a Professional Selling account, you will have to reapply.
If you downgrade to an Individual Account, you will be charged 99 cents for each item you sell. If you plan to sell more than 40 items a month then an Individual Account will cost you more money than a Professional Account.
Next Steps If You Are Banned From Amazon FBA
If you are banned from Amazon FBA because of the changes in the TOS you may be feeling like it may not be worth it to sell on Amazon at this time. I totally disagree. The best thing to do is to get started right away. Use Merchant Fulfilled until you can switch to FBA on December 20, 2016. We don’t know what other types of changes are coming down the pike.
A lot of FBA sellers use Merchant Fulfilled during 4th Quarter. Sometimes there isn’t enough time to ship the item to the warehouse and get it checked in before the holiday. Also, if an item is really hot, you want to get it sold before there is a lot of competition and the price tanks.
My advice is to get your account set up as soon as possible. If you need help getting started, I have a few slots left for one-on-one coaching. If you are interested, please send me an email, firstname.lastname@example.org.