Understanding Amazon's "High Days of Supply" Error: What It Means for Sellers and 3PLs and How to Navigate It

Amazon’s marketplace is constantly evolving to help streamline operations, optimize inventory levels, and improve the shopping experience for customers. One of the more recent changes that many sellers are encountering is the "You already have high days of supply for this ASIN in our fulfillment centers" error when trying to create shipments to Amazon.

This error is part of Amazon's ongoing efforts to manage inventory levels, reduce excess stock in its fulfillment centers, and improve its overall efficiency. While these changes are designed to optimize the marketplace, they can create challenges for sellers and 3PLs. In this blog, we'll dive deep into the reasons behind this policy, its impact on sellers, and practical solutions to help you navigate and overcome this obstacle.

What is the "High Days of Supply" Error?

The "high days of supply" error occurs when Amazon’s system identifies that a particular ASIN (Amazon Standard Identification Number) has too much stock in their fulfillment centers relative to its sales velocity. Simply put, Amazon wants to ensure they are not overstocked with products that aren’t moving fast enough.

Amazon uses a metric called "Days of Supply" to determine how much inventory you can send to their fulfillment centers. This metric takes into account the product's sales velocity — how quickly it sells compared to its available stock. If a product’s sales are slow, and you’re attempting to send more units to Amazon, the system will prevent you from doing so until inventory levels drop, or sales improve.

Why Is Amazon Enforcing This?

This policy is driven by Amazon’s Inventory Performance Index (IPI), which tracks inventory health based on sales velocity, excess inventory, and storage utilization. When sellers send large quantities of slow-moving inventory to Amazon’s warehouses, it takes up valuable storage space that could be used for products with higher demand.

By limiting overstocking, Amazon helps:

Maximize storage efficiency in fulfillment centers.
Reduce storage fees for products that aren't selling quickly.
Encourage better inventory management by motivating sellers to send products based on sales trends.

What Are the Consequences of the "High Days of Supply" Error?

Restricted Shipments: If Amazon deems your ASIN has an excessive days of supply, you won’t be able to create shipments for that product until they adjust their inventory levels. This can lead to stockouts, lost sales opportunities, and delays in fulfilling customer orders.
Additional Fees: If you consistently have high days of supply for products that aren’t moving, you may face long-term storage fees, which can significantly affect your profit margins.
Impeded Sales Growth: High days of supply also mean Amazon isn’t giving enough priority to your stock, which could result in fewer visibility and ultimately hinder your ability to scale sales.

How Can Sellers Navigate This Issue?

As a seller, there are several strategies and solutions you can implement to address this issue and avoid encountering the "high days of supply" error.

1. Optimize Inventory Levels

Review Inventory Performance: The first step is to regularly check your Inventory Health Report in Seller Central. This will give you a clear picture of your products' sales velocity and the days of supply for each ASIN. By understanding these metrics, you can make more informed decisions about which products to send to Amazon.
Replenish Inventory Based on Demand: Send inventory to Amazon only for items that have consistent demand. Avoid sending large quantities of slow-moving products and instead, replenish based on actual sales trends.
Use Amazon’s Restock Inventory Tool: Amazon’s restock tool helps you determine the right quantity to send based on past sales data and forecasted demand. Using this tool will help you stay within Amazon’s recommendations for product quantities.

2. Improve Product Listings and Marketing

Increase Product Visibility: Slow-moving items can often be revitalized with better listing optimization. Ensure that your product titles, descriptions, keywords, and images are fully optimized to attract more buyers.
Run Promotions and Discounts: If you have slow-moving stock, consider running targeted promotions or discounts to boost sales and reduce days of supply. Amazon Sponsored Products ads can also help increase visibility and encourage sales.
Consider Seasonal Adjustments: If your product is seasonal, make sure you plan shipments accordingly. Overstocking products out of season can trigger the high days of supply error.

3. Use Multi-Channel Fulfillment (MCF) or 3PL

Diversify Your Fulfillment: Instead of relying solely on Amazon’s fulfillment centers, consider using a third-party logistics (3PL) provider for your inventory management. This can give you more control over your stock and allow you to manage excess inventory without incurring fees from Amazon.
Send Inventory Directly to 3PL: When you run into Amazon’s high days of supply issue, a 3PL, like West Coast Prep 3PL, can handle fulfillment for your orders, ensuring that you don’t face stockouts or delays. They can integrate with Amazon, so you can still sell through the marketplace without Amazon handling the storage.

4. Monitor Your Inventory Performance Index (IPI)

Maintain a Healthy IPI Score: Amazon uses the IPI score to measure inventory efficiency. A low IPI can lead to storage limits, so it’s crucial to maintain a healthy score by managing stock levels and ensuring fast-moving inventory.
Address IPI Issues: If your IPI score is low, take action by reducing overstock and eliminating slow-moving products. The better your IPI, the more inventory you can send to Amazon’s fulfillment centers.

5. Leverage Data Analytics and Forecasting Tools

Use Forecasting Software: Tools like Forecastly, Skubana, and TradeGecko can help sellers predict inventory needs based on historical sales data and trends. This allows for more precise inventory management, avoiding overstocking.
Automate Replenishment: Many e-commerce and inventory tools offer automated replenishment features that ensure you're sending the right amount of inventory based on real-time data and demand forecasts.

How 3PLs Can Help Sellers Navigate the “High Days of Supply” Issue

For 3PLs like West Coast Prep 3PL helping clients avoid the high days of supply error is essential for maintaining smooth operations.

Here's how 3PLs can assist:

Offer Multi-Channel Fulfillment: By providing fulfillment services outside of Amazon, 3PLs can help manage excess inventory, reducing the impact of Amazon’s high days of supply restrictions.
Real-Time Inventory Tracking: 3PLs that integrate with Amazon’s Seller Central allow sellers to track inventory in real time, helping avoid stockouts or excess stock.
Customized Inventory Solutions: 3PLs can work with sellers to develop tailored inventory management plans that align with Amazon’s requirements and ensure optimal stock levels.
Enhanced Reporting: Offering detailed inventory and sales reports will help sellers make data-driven decisions, reducing the chances of overstocking and triggering the error.

Conclusion

Amazon’s "high days of supply" error may seem like a hurdle, but it’s an opportunity for sellers and 3PLs to optimize their inventory practices and improve overall efficiency. By monitoring inventory levels, optimizing product listings, using multi-channel fulfillment solutions, and leveraging forecasting tools, sellers can overcome this challenge and continue to scale successfully on Amazon.

For 3PLs, providing value-added services such as real-time inventory tracking and tailored fulfillment solutions will ensure that your clients stay ahead of Amazon’s evolving requirements, resulting in a more seamless and profitable partnership.