Aloha, Amazon seller!
If you are interested to know everything about FBA storage fees and want to find out topical tips to save your money, read this article to discover informed what long-term storage fees Amazon charges and how to avoid them where possible.
All of you know that selling products from your store brings you money. That’s why you sell. But there are a lot of fees on Amazon that burn your profit to your disappointment. If you sell FBA, Amazon charges you tons of fees, some of them being hidden, and a big lump of those fees are Amazon FBA storage fees. The longer you keep your products in Amazon warehouses, the higher are those fees.
Therefore, you need to move products away from the Amazon warehouses as quickly as possible to save funds on the FBA inventory storage fee, otherwise, your profit margin will go down. If you have products that don’t sell for a long time, so-called “sitters”, you need to implement every possible effort to sell them and avoid extra fees.
SageSeller offers you a number of easy-to-implement and productive tips on how you can give the product an impetus. If you follow them - it can decrease your Amazon FBA storage fees. Read our tips in the blog below.
What are Amazon Storage Fees FBA?
Amazon charges fees for the inventory storage each month, but if your inventory has been sitting in the Amazon's fulfillment center for more than a year, they will charge a monthly long-term storage fee on top of inventory storage fees.
Monthly Inventory Storage Fees
Amazon charges monthly inventory storage fees for the space your inventory occupies in its fulfillment centers. Monthly storage fees are calculated on your daily average volume in cubic feet, based on the size of a unit that is properly packaged and ready to ship in accordance with FBA policies and requirements. Fees vary based on product size and time of year.
These fees are charged on the monthly basis, usually between the 7th and 15th day of the following month. The fees are charged per usage of storage, based on the daily average volume for the space your inventory occupies in fulfillment centers. Rate is based on product type, size-tier, and time of year.
Inventory that has been stored in a fulfillment center for more than a full calendar year, that is, over 365 days in a row, is charged a monthly long-term storage fee on top of the monthly inventory storage fee. Long-term storage fees are assessed using an inventory snapshot on the 15th of each month.
Amazon assesses inventory age based on a first-in, first-out (FIFO) principle. That means that if a unit has arrived in the fulfillment center recently, Amazon will still deduct that unit from the oldest inventory in stock.
Long-term storage fees are charged monthly, usually between the 18th and 22nd day of each month, per unit stored.
In order to detect the ASINs subject to long-term storage fees, you can apply Amazon’s Use Manage Inventory Health feature. It will show all ASINs to which long-term storage fees apply, and those that would be subject to long-term storage fees within 60 days. The Recommended Removal report also shows items that are subject to long-term storage fees.
To avoid long-term storage fees, you can submit a removal or disposal order for inventory before the cleanup date. In that case, your inventory won’t be charged a long-term storage fee, even if it isn’t physically removed before the cleanup date. The deadline for submitting a removal order is 11:59 p.m. (PT) on the 14th of the month.
To calculate Amazon FBA storage fees an yourself, you can also use an Amazon FBA storage fee calculator.
Why Does Amazon Charge Sellers FBA Storage Fees?
Whether you're referring to Amazon FBA monthly or yearly fee, Amazon keeps its protocols. That's because some sellers overstock and indefinitely store products in fulfillment centers.
Since FBA storage space is used, it becomes an issue for Amazon and other sellers, because fast-selling products and active sellers will not get storage space from Amazon. That's why inventory storage fees have appeared.
Thanks to this, Amazon provides quality services to all of its customers and can protect other sellers.
Long-term Amazon FBA commission may affect the business of some sellers, as it's expensive. Below, we have provided a few tips on how to avoid these fees.
Simple and Effective Tips to Avoid FBA Long-Term Storage Fees
There are many methods of how to avoid the fees. Also, you can follow some main tips listed below.
Check Out the Products that are Prone to Getting FBA Storage Fees
First, remember and be attentive in which products are more prone to be charged. That's what you should do, or you will be charged long-term fees or monthly inventory storage fees.
You can use the inventory health reports before the inventory cleanup. In such a way you could estimate how many items and units are inclined to getting charges. And before August 15th, make sure that you know what your estimation is.
Before starting to calculate, there are several things you should consider.
- The price is not the factor for calculating the FBA fee.
- For sellers with over 30% in their feed, they should take note of their margins.
- The given fees are based on units; these will differ according to the catalog.
Pat Petriello, the Head of Marketplace Strategy at CPC Strategy, said that the 30% is used as the basis for items to check if they're still profitable in your FBA account.
Сheck your inventory health in the Seller Central. Log in, go to Reports> Category>Fulfillment> and then Inventory.
Increase Your Sales Velocity
Next step, if you're worried about your total cubic foot or cubic feet calculations, then, before August 15th, you can reprice all of your items. It will increase your sales velocity and help you reduce your fees drastically.
Consider changing the price of products and see how customers will be buying them. It is an effective strategy that you can spend all day on.
Apply for a Removal Order
The next important tip is to submit a removal order. You should also to read about the recent changes made by Amazon.
The suggested removal order gives an interface to the seller's account. It will help manage items that are prone to an FBA fee.
If you are going to apply for a removal order, do it before August 15.
The removal order will be placed in your account, and Amazon will not involve these items for calculating the payment for the long-term inventory fees and will return it to you by bulk. Usually, you need to wait for inventory within a week or two. It's depending on how much you're requesting from them.
To get a removal report at the Seller Central log in, then move on to the Reports category, Fulfillment, Inventory, and then the Recommended removal page.
Also, look the additional tips below.
- Announce a Flash Sale
It's related to repricing your items, and you can have a sale. Finally, you will clean up your warehouse, earn some extra money, and reduce the Amazon fees.
You can make any idea for a sale because there will always be people who want to buy something cheaper.
- Restock on Time
Please note that the payment is withdrawn two times a year: in February and August. So, try to resupply your stock every six months so that there are no fees for them while they are not being bought.
- Spread Awareness
Don't forget about advertising. Use all possible distribution ways to promote your product. Your sales will increase if everyone knows about it. Family, friends, social media are great for a start.
The better the advertisement you have, the more products you will sell. And then, the fewer items you have in stock, the less fee you will pay.
Get Rid of Your Items
One final piece of advice - you can get rid of your items. You can send them back to yourself. Or, if you don't need them, pay Amazon to get rid of them. It's expensive, but it's cheaper than paying for the long-term inventory storage fee.
Amazon is a good platform for your business - if you are an Amazon seller, you will find good customers. But this is not always easy to handle business here.
Among many problems for sellers, the main ones are marketing their items and paying the fees. The storage fees are one of the difficult charges.
But you can avoid all these problems. Our article covers ways to reduce inventory fees, so take note of them.
Increase Your Product Reviews to Grow Sales
It's important to get reviews for your products because customers make a buying decision based on reviews you have.
The more reviews you have got, the more likely people will buy your products.