If you are a FBA seller on Amazon, you know how important it is always to have inventory stock on FBA. To avoid stockouts because of delivery delays, you must understand how the Amazon Fulfillment Center (FC) processes and transfers your inventory and monitors its status.
Have you ever seen your Amazon inventory marked as “Reserved”? It is a common occurrence in the world of FBA, but there are some nuances that you have to keep in mind. Ready? Join us as we talk about the inner workings of FBA and what lies behind the “Reserved” status.
Quick intro. What is Fulfillment by Amazon (FBA)?
Fulfillment by Amazon (FBA) is a popular service used by Amazon sellers, which allows them to outsource the fulfillment of customer orders. FBA allows sellers to ship their products to customers at a competitive cost. Besides, fulfillment centers process and manage these orders for the Amazon seller, thus enabling them to focus on other areas of their business.
What Is The Fulfillment Center At Amazon?
Amazon Fulfillment Centers (FCs) are warehouses that store and ship products to customers. They handle all aspects of fulfilling orders, including receiving, stocking, picking, packing, shipping, and returns. To enhance inventory management, Amazon collects stock from the warehouse. Afterward, your FBA inventory goes through different stages, such as FC processing and FC transfer.
Amazon FC Processing
Fulfillment center processing, or FC processing, refers to the process of receiving goods from a seller, stocking them in a fulfillment center, and preparing the inventory for shipment.
The FC processes orders immediately upon items arriving at the fulfillment center. When Amazon receives inventory at the fulfillment center, it scans and verifies its contents before storing them in the FBA warehouse.
What Is FC Transfer?
Moving goods from one Amazon fulfillment center to another is called FC transfer. This helps Amazon improve its FBA inventory system and ensures that there is sufficient stock close to buyers. Currently, Amazon has 1,137 fulfillment centers of various types located in the United States.
When an Amazon seller sends their inventory to a fulfillment center, they select which specific Amazon FC location it should be sent to so that it can be delivered to customers quickly. Amazon FC transfers goods to other warehouses when they have run out of inventory at a certain location or when there is an increase in demand for the item in other regions.
Please note that once you have created a shipment in FBA, you will not be able to directly manage inventory, but you can monitor inventory progress by tracking its status.
What Does Reserved Inventory Mean?
Amazon Reserved inventory is the term Amazon uses to refer to products that are held for a specific reason. There are various reasons why your inventory may become reserved status: it could be because products are awaiting shipment to the customer or Amazon warehouse locations, or it could be that Amazon is running an inventory check on your products. Regardless of the reason, the status “Reserved” means the product can no longer be sold until its status changes back to “Available”.
To keep track of your items, utilize the Amazon Seller Central account. Depending on the inventory stage, you may observe a specific status associated with the item.
Amazon Reserved Inventory Report From Your Seller Central
You can check what is wrong with your product, how many products are available, and how many are in Reserved status with the Reserved Inventory Report. To access the report, follow these simple steps:
Log in to your Amazon Seller Central account
Go to Reports
Click on Fulfillment
Proceed to Reserved Inventory
Here you can see the reserved status and reserved quantity.
Read: Amazon Seller Reports Guide: All Reports Explained With Links
3 Reasons For Amazon Reserved Inventory Status
The reserved inventory cannot be sold and shipped until the issue causing the reservation has been resolved. At the same time, it can take up space in FBA warehouses, and you have to pay for its storage.
To help prevent any potential issues, it is important to understand why inventory might become reserved and what steps must be taken to resolve it. Three possible reasons why your items might be marked as Reserved are listed below.
Customer order
Your FBA inventory can be reserved due to pending orders. When a customer orders from your store on Amazon, the products are set aside or “Reserved” to prevent other customers from buying them. These reserved units remain in that status until the payment is processed and the product has been shipped to the customer.
If the customer cancels their order and the product has not yet been shipped from the Amazon FC, then the reserved units will be returned to sellable inventory levels.
FC Transfers
The FC transfer status indicates that products are being moved from one fulfillment center to another in order to place the inventory closer to customers so that they can be shipped within one or two days.
However, these products are still available for purchase if no other units are ready for immediate fulfillment. Your customers may receive a back-ordered message with a future ship date. Usually, transferring takes 1-5 business days, but in some cases, it can take up to 30 days.
FC Processing
Items in FC Processing mean those that are being held at the fulfillment center for purposes such as verifying item dimensions, authenticity, weight, or other additional processing requirements.
This process usually takes about two business days, but it could take a longer check-in process if there is a backlog of inventory or if there are any issues requiring further investigation.
How Does Amazon Reserved Inventory Affect Your Amazon Business?
Although reserved inventory has certain limitations, it should not affect your business too much. In addition, FC Transfer and FC Processing help sellers minimize their overall expenses by reducing storage fees associated with reserved inventory and maximizing the use of available space within the Amazon fulfillment centers.
By transferring inventory between fulfillment centers, you can ensure that their stock is being used efficiently and that they are not overstocking in an individual fulfillment center. However, having too many units in reserved status can have the opposite effect.
Loss of revenue
If a product is out of stock, you won’t be able to fulfill customer orders in a short time and will push them to look for alternatives with your competitors. To avoid lost sales and profits, it is crucial to keep a regular check on reserved inventory reports.
Extra costs
Any Amazon reserved inventory means you are paying for storage space and potential fulfillment fees on unsold items, which leads to extra costs.
Read more: Amazon FBA Fees Explained: What You Should Know In 2023
Reduced rating
If you have a lot of inventory marked as “Reserved” and cannot be shipped immediately, it may negatively affect your product detail page conversion rates. Long shipping times can discourage customers. When conversion rates are low, it can signal to Amazon that your product is less popular, potentially causing a decrease in organic ranking.
Loss of competitive edge
Lack of necessary FBA stock at the Amazon fulfillment center can lead to losing your competitive advantage.
Insufficient stock may cause customers to find your product from other Amazon stores that are quicker and cheaper. This could lower the chances of customers buying from you in the future.
Unsatisfactory customers
Finally, if you are not stocking the right amount of inventory in the right fulfillment centers, customers may experience shipping delays or stockouts.
This can affect customer satisfaction and lead to negative reviews or lower ratings for your products. So you must make sure to use Amazon FC processing
and FC Transfer properly to keep inventory levels within acceptable limits.
Do You Like to Comprehend More About Your Amazon Inventory Levels?
Having reserved inventory is a typical part of the Amazon FBA process. You don’t have to take any action regarding it, but it’s important to understand that keeping products on reserve can lead to possible issues. Be prepared and take preventive measures. To achieve this, you must track your inventory status regularly for effective Amazon inventory management.
Automated Software My Real Profit helps Amazon sellers track FBA inventory in real-time. Using Inventory Analytics, you can monitor key metrics about your inventory and get a clear idea of your stock levels, showing you the exact quantity of sellable, reserved, and pending inbound inventory. Furthermore, My Real Profit will give you insights into which products are your best sellers, as well as those that are overstocked or have been sitting in inventory for too long.
To get a complete overview of how your Amazon business is performing, use our Profit Dashboard. Our accounting software for Amazon sellers combines data from 15 reports, such as the storage fees report, date range report, inventory report, PPC reports, and others, to create this all-in-one table on an accrual basis.
Let’s summarize
Sometimes, items in your Amazon FBA stock may be reserved and unable to be sold because people have ordered them while the Amazon FC is processing or transporting them to other warehouses.
To ensure that you have enough items to sell, you should constantly monitor how many units are available and reserved. Having a small number of Amazon reserved units won’t harm your business; however, if there are a lot of unavailable products, it can result in low inventory levels and lost sales and income.
Stay one step ahead of the competition by keeping an eye on FBA inventory levels through automated tools like My Real Profit. With it, you can take necessary actions on issues before they become problems.
