What Are Amazon's Velocity Limits?by Erik Arvidson
Amazon’s “velocity limits,” which are applied to both buyers and sellers, are designed to protect customers against orders being placed that can’t be fulfilled. These limits are intended to prevent nefarious sellers from committing fraud, and to stop buyers from purchasing a large number of items they may not be able to afford. Sellers can increase their velocity limits over time if they establish a strong sales history and positive buyer reviews.
Amazon defines “sales velocity” as both the number and dollar amount of a seller’s transactions in a month-long period. According to Amazon’s "Help" section for sellers, the sales velocity limits vary according to seller, and the company doesn’t reveal specific limit amounts. However, according to the book “Sell on Amazon,” by Stephen Weber, when a new seller registers with Amazon, they will be given an initial velocity limit of a few thousand dollars. This limit might be lower if Amazon is unable to verify a seller’s registration information.
Amazon sellers who reach or exceed their velocity limits may have their limits increased by Amazon. The company will evaluate a seller’s account, and while this review is ongoing, orders that exceed the existing velocity limits will be shown as “pending” in that seller’s account. If Amazon decides to raise a seller’s velocity limits, those pending orders will be available for shipment. In addition, if a seller doesn’t have positive buyer feedback to support their sales volume, their account might be placed under review by Amazon. According to “Sell on Amazon,” a seller’s velocity limit may be decreased if there is suspicious information in that seller’s account.
Under the Amazon buyer velocity limits, a buyer is limited to an individual transaction of $2,475 from an Amazon Marketplace seller. Those transactions that exceed the $2,475 limit are automatically cancelled by Amazon and a notification email is sent to all parties involved. The buyer velocity limits are similar to the fraud detection policies of major credit cards, which may contact a credit card holder by phone to confirm a major purchase.
The velocity limits are intended to increase the confidence of buyers to make transactions on the Amazon website. The Seattle Post-Intelligencer reported in a March 2005 article that Amazon set the buyer velocity limit at $2,475 after reported problems of sellers committing fraud against buyers. Under Amazon’s "A-to-z" guarantee, a buyer can receive a reimbursement from Amazon of up to $2,500 of the purchase price of an item that was not delivered by the seller or which was defective. This guarantee covers purchases made on the Amazon.com website for Amazon Marketplace or Merchant items. It also covers buyers who use Amazon payments for qualified purchases from a third-party website.