August 23, 2019

Commingling inventory is risky strategy may save some change, but it threatens your account and increases returns

By: Lesley Hensell

Amazon FBA sellers should not be commingling inventory.

It’s rare that I make a definitive, blanket statement about how to sell on Amazon. I’m a firm believer that there are many ways to skin the Amazon selling cat. Plus, different sellers have varying levels of risk tolerance.

But commingling allows me to break my “what’s best for you” rule and declare that commingling is a bad choice for any and all FBA sellers.

What is commingling?

Amazon sellers may choose to have Amazon fulfill their inventory. They ship items to Amazon’s  Fulfillment Centers via the FBA (Fulfilled by Amazon) program.

When inbound FBA shipments are created, some ASINs offer two options: use the product’s existing UPC or attach an FNSKU sticker:

  1. The product’s existing UPC is the barcode that already exists on most manufactured products. If a seller chooses this option, their inventory is commingled. https://sellercentral.amazon.com/gp/help/G200141480  (log in required)
  2. FNSKU stands for Fulfillment Network Stock Keeping Unit. It consists of an alphanumeric code and matching, unique barcode. This is how Amazon links a specific unit of inventory to the exact seller who sent it to the warehouse. When a seller is prepping FBA inventory, they print an FNSKU sticker for each item.

When FBA inventory arrives at the Amazon Fulfillment Center (FC), it can be handled in one of two ways:

  1. Commingled inventory is all put together in a bin, no matter who the seller of record might be. When an order for Seller A’s unit of inventory arrives, it may be fulfilled by any of the commingled units Amazon has on hand – from any seller.
  2. Stickered inventory is segregated by seller. When an order for Seller A’s unit of inventory arrives, it is supposed to be fulfilled specifically from Seller A’s available stock. (More on the exceptions later.)

Why avoid commingling?

You’re a good seller. You work hard to ensure your inventory is authentic and in great shape. So why risk your orders being fulfilled with a bad seller’s inventory?

Here are real-world examples I’ve personally seen as the result of commingling:

  1. Counterfeit games were sent to the FC, and my client’s units purchased from the manufacturer were fulfilled with fakes.
  2. Off-brand fakes were sold in place of name-brand items. These off-brand fakes were a products that plug in, but did not have UL certification. At least two units caught on fire, resulting in a safety suspension for my client.
  3. Tubes of lotion that do not include safety seals were fulfilled from another seller’s inventory. These lotions were not shrink-wrapped, polybagged or otherwise prepped. They leaked everywhere, resulting in complaints for my client.
  4. Shoes that were likely counterfeit (poor stitching) and sometimes had signs of wear were fulfilled in place of my client’s legitimate inventory.
  5. Chinese sellers flooded a clothing listing with fakes, where decals peeled off easily. This resulted in ASIN suspensions for my client.

And that’s just off the top of my head. There are hundreds of ways to get in deep, deep trouble – with customers and with Amazon – when you commingle inventory. In addition, sellers risk high return rates for poor-quality items.

But what about de facto commingling?

Alas, even for sellers who sticker every item, there is “de facto commingling” at the Amazon warehouse. For example, let’s imagine that Seller A has a unit of Kleenex in a California warehouse. Seller B has the same unit of Kleenex in a Texas warehouse.

A customer who lives in Florida purchases the Kleenex from Seller A. Amazon may choose to ship the Texas Kleenex to the customer, and then put the California inventory on a truck to Texas to replace it.

This is just one of many reasons de facto commingling occurs. But make no mistake – your account is still much better off if you prevent as much commingling as possible by stickering your items.

Riverbend Consulting navigates online retail. Get your Amazon account reinstated, sell with confidence, and increase your bottom line. Contact us.

Lesley Hensell is Partner at Riverbend Consulting, she offers practical know-how to improve retail performance. Lesley’s experience with Amazon compliance gets accounts back up fast.