The Ultimate Guide to Amazon Storage Fees
Amazon storage fees are something that every Amazon seller should be educated about. If you’re careless, these fees could drastically reduce your profit margins or even make you lose money on your product.
This guide will cover everything there is to know about Amazon’s storage fees, including how they are calculated and how to avoid them.
What Are Amazon FBA Storage Fees?
Amazon sellers must pay storage fees to keep their products in Amazon’s warehouses. Monthly inventory storage fees and long-term storage fees are the two different types of Amazon FBA storage fees levied by Amazon.
Monthly Inventory Storage Fees
You must pay a monthly storage fee to Amazon in exchange for the space your products occupy in their fulfillment facilities. This fee is calculated by estimating the daily average volume of cubic feet that your items occupy.
The fees are based on the product size tier and the season that sellers store their products. This means that Amazon charges a greater storage fee during busy seasons in comparison to the off-season.
The monthly inventory storage fees are as follows:
January – September – $0.83 per cubic foot
October – December – $2.40 per cubic foot
January – September – $0.53 per cubic foot
October – December – $1.20 per cubic foot
Monthly Inventory Storage Fees for Dangerous Products
If you use FBA for items that Amazon deems to be “dangerous products,” you’ll have to pay a little bit more each month for storage. The general definition of a dangerous product is something that must be handled with caution and stored with other hazardous products. To sell such products, sellers must be signed up for the FBA Dangerous Goods program. The monthly inventory storage fees for dangerous products are as follows:
Standard-size Items:January – September – $0.99 per cubic foot October – December – $3.63 per cubic foot
Oversized Items:January – September – $0.78 per cubic foot October – December – $2.43 per cubic foot
Long-Term Storage Fee
In addition to monthly storage fees, Amazon FBA sellers may also be required to pay long-term inventory storage costs for items maintained at the company’s fulfillment centers for more than 365 days.
Amazon does an inventory cleanout on the 15th of February and the 15th of August. At this time, inventory that has been kept in fulfillment centers for more than 365 days is subject to a long-term storage tax of $6.90 per cubic foot or $0.15 per unit, whichever is higher.
To learn how long your inventory has been stored at the fulfillment center, go to Seller Central, select the Inventory tab, and click Manage Inventory. Take a look at the Inventory Dashboard. When you reach the FBA Inventory Age Report, scroll down and click View Details. The age of each product’s inventory is shown here.
Tips To Avoid High Storage FeesHigh storage costs are one of the greatest issues that FBA sellers deal with. You can use the advice below to prevent facing this issue:
1) Plan AheadBy planning ahead, you can avoid paying expensive storage fees. When you first start out as a seller, start with a limited number until you get a feel for how quickly your products are selling. You can also set up an “automatic removal” for products that do not sell. If you don’t remove your inventory, it will still be there and it will have an impact on your Amazon seller fees.
2) Watch Your Inventory Storage RestrictionsSending excess inventory to Amazon’s warehouses may result in high fees. Depending on the type of seller account you have, you can be subject to floorspace limitations that, if violated, will result in overage charges. Keep track of this in Seller Central’s inventory performance dashboard since this overage fee is determined by how much space you actually used up after reaching your limit.
3) Utilize Promotions for Free RemovalPeriodically, Amazon offers promotions that entitle FBA sellers to free product removal from its fulfillment warehouses. During this time, removal order fees are not charged. Although these promotions are not offered often, if it is, we suggest utilizing them.
4) Discounting TechniquesThe least expensive and stressful way to reduce your storage fees is to sell FBA products at a discount. This is a smart move, particularly if inventory demand is weak and the products are occupying space at the fulfillment centers. In order to save money on storage costs, it can occasionally make sense to sell your products even at a loss. After all, high storage fees can lead to lost revenues. So wouldn’t it be better to recover some of the money and reinvest it in something that will be in more demand?
5) Remove or Liquidate the InventoryIf all else fails and the date for inventory cleanup is quickly approaching, think about liquidating some or all of the at-risk inventory. Consider making a removal order to have the products destroyed or returned to you. The only way to determine whether or not this technique makes sense is to calculate it. The estimated expenses for long-term storage can be seen in the Inventory Health report. If these costs are high enough that holding the items in Amazon’s warehouses would cost you money, consider liquidating them.
There you have it. We hope that this guide has provided you with all the knowledge necessary to understand Amazon’s storage fees. You can keep your business lucrative and avoid paying expensive storage fees by following the tips we provided above.