Amazon Long-Term Storage Fee Guide: How to Save Big on FBA Inventory Held Beyond 365 Days
As an Amazon FBA seller, efficient inventory management plays a pivotal role in maximizing your profits. Overlooking this crucial aspect can result in significant long-term storage costs that could impact your bottom line. But fear not! In this comprehensive guide, we’ll walk you through everything you need to know about long-term storage fees and provide you with actionable strategies to not only minimize these costs but also boost your overall profitability. Let’s dive right in!
What Are Long-Term Storage Fees?
Long-term Amazon FBA storage fees, now known as aged inventory surcharges, are charges levied by Amazon on inventory stored in its FBA warehouses for more than 180 days. These fees are separate from the regular monthly inventory storage fee paid by FBA sellers and are evaluated on the 15th of each month. The purpose of this fee is to encourage efficient inventory management and prevent the warehouses from being filled with old and non-moving stock. The longer your items stay in the warehouse, the higher the fees you will have to pay.
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How Much Are the Long-Term Storage Fees?
Unlike monthly storage fees, Amazon uses a tiered system to calculate the long-term storage fee, depending on how long your inventory has been in the fulfillment centers: Here’s the breakdown:
- 181 – 210 days: $0.50 per cubic foot (excluding certain categories like clothing, watches, shoes, jewelry, and bags).
- 211 – 240 days: $1.00 per cubic foot (excluding the same categories).
- 241 – 270 days: $1.50 per cubic foot (excluding the same categories).
- 271 – 300 days: $3.80 per cubic foot.
- 301 – 330 days: $4.00 per cubic foot.
- 331 – 365 days: $4.20 per cubic foot.
- 365 days or more: $6.90 per cubic foot or $0.15 per unit, whichever is greater.
Note: Remember to regularly check Seller Central for any changes to this fee structure.
How to Prevent Long-Term Storage Fees?
As mentioned above, long-term storage fees are an additional cost on top of the regular monthly storage fee. Therefore, it is crucial to manage them effectively to avoid excessive accumulation and potential profit losses. Here are several strategies you can use to prevent these fees from creeping up on you:
Manage In-Stock Levels
Effective inventory management begins right at the start, even before your items are listed for sale. Make sure you’re ordering and storing just enough inventory to fulfill customer demand without letting it sit for too long. Keep a close eye on sales trends to anticipate changes in demand and adjust your inventory accordingly. By managing your in-stock levels, you can significantly reduce the chances of your items remaining in storage for extended periods and incurring long-term storage fees.
Evaluate Products That Are Not Selling
It’s crucial to regularly monitor and evaluate the performance of your inventory. If certain products are not selling as expected and have been sitting in the fulfillment center for an extended period, it may be time to rethink their place in your inventory. There could be several reasons why they are not selling – the product could be seasonal, priced too high, or simply not in demand. By understanding the reasons behind the lack of movement for these products, you can make informed choices about whether to keep them in stock or replace them with items that have a higher sales velocity.
Reduce Prices
A simple yet effective approach to accelerate the movement of your inventory is by implementing price reductions. If an item has been sitting for too long in the warehouse, consider offering a discount. Lowering prices can help increase the product’s appeal and encourage more buyers to make a purchase, thereby reducing the likelihood of incurring long-term storage fees.
Take Advantage of Promotional Events
Amazon regularly hosts promotional events that you can take advantage of to boost the visibility and sales of your products. Participating in these promotions can help move your inventory faster, especially for items that are slow to sell. These events include a variety of offerings, such as deals of the day, seasonal specials, and discount events.
Create a Manual Removal or Disposal Order
If certain products are just not selling, it might be time to remove them from the warehouse. You can create a manual removal order for these items, which means Amazon will return or dispose of them for you. Keep in mind that there’s a fee associated with this service, but it might be cheaper than paying the long-term storage fees.
Set Up Automatic Removals
Amazon allows sellers to set up automatic removals for their items. You can set the rules based on the inventory’s age, and Amazon will automatically remove the items that meet this criteria. While this also involves a fee, it’s a convenient way to manage your inventory and ensure that your items don’t sit in the warehouse during the next inventory cleanup date, leading to unnecessary fees.
How to Create a Removal Order for Inventory Stored for More Than 365 Days?
If your items have reached the 365-day mark, it’s time to create a removal order. To do this, follow the steps below:
Step 1: Identify the Items Incurring Long-Term Storage Fees
Access Seller Central in Amazon and locate the Inventory Storage Overage Fees report in the Amazon Fulfillment Reports section. Download the report and tally up the charges to determine the total incurred storage fees for your inventory.
Step 2: Identify ASINs That Have Been in Storage for 365 Days or More
After calculating storage fees for the total aged inventory surcharge across all items, it’s time to identify the ASINs that have been in storage for more than 365 days. You can do this by navigating to Inventory > FBA Inventory. Under Inventory Age, select 365+ Days.
Step 3: Create a Removal Order
To create a removal order, check the box next to the ASIN and select Create Removal Order from the dropdown menu next to Bulk Action.
When Can You Restock After Removal?
Amazon has a 90-day or 3-month restock policy on removed items. This means you cannot restock the same ASIN products you removed from the Amazon fulfillment center within this period. This prevents sellers from using removal orders as a way to bypass long-term storage fees.
Summary
Long-term FBA storage fees can seem like a complicated matter, but with the right knowledge and strategies, you can navigate this part of your Amazon FBA business effectively. Remember, the aim is to keep your inventory moving and to take timely decisions on slow-moving products to avoid these additional costs. Good inventory management will not only save you money on storage fees but also enhance your overall FBA selling experience.
Looking for expert assistance to manage your long-term and monthly inventory storage fees? Enso Brands offers a comprehensive range of one-stop Amazon services tailored to optimize your performance and maximize your potential on the platform. Contact us today and discover how we can help your business thrive on Amazon!
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