Are you worried about these new developments in Amazon long-term storage fee?
As a seller, you have worked tirelessly to make a name for your brand and we understand that a sudden email from Amazon mentioning a hefty storage fee on your stocked products can be quite unnerving.
But let’s take a moment to calm ourselves down because the Amazon long term storage fee is avertable.
Here we have a comprehensive guide for you to avoid paying the Amazon long-term storage fees on your stocked products.
Before we dive into the methods to help you escape this dilemma, let's understand Amazon FBA's long-term storage fee plan.
With FBA services becoming increasingly popular, Amazon adopts an alternative solution to reduce the load on its fulfillment centers and reorganize its inventory. The primary goal is to increase efficiency. To serve the purpose, Amazon charges a long-term storage fee to its sellers for their products stocked in centers’ inventory for more than 365 days.
Of course, many sellers are unaware of the storage fees. We don't want you to lose profits on Amazon FBA, though.
We understand that your first concern might be to know whether or not this storage fee is applicable to your product or not.
In the past, Amazon has removed its stock on a semi-annual basis, i.e. mid-February and mid-August. This referred to goods that were in stock for a span of more than 6 months. There have been some recent modifications, though.
The latest policy has liberated you from the concerned fee if your item has not been in the fulfillment center for 365 days or more. Sounds good… Doesn’t it?
In addition, instead of a semi-annual clearance, Amazon will conduct a clearance on 15th of each month, which can be beneficial as you do not have to pay a lump sum for your products after every 6 months.
If you still want to determine the products applicable to the Amazon Long-Term Storage Fee, you can view it in the Recommended Removal Report.
Are you not sure what is the Inventory Age for your products or what Storage Fee Amazon is going to charge you?
Because we have got you covered.
As mentioned earlier, Amazon FBA has revised its policies, and that has affected changes in the pricing as well.
The previous Amazon Long-Term Storage Fee standard was:
Let's look at exactly how costly these rates turned out to be:
If we assume a toy with a standard size of 11(in) × 8(in) × 2(in) = 0.10 cubic-foot, Amazon FBA would have charged you 0.10 × $11.25 (semi-annual rates) = $1.125 if the toy were in your inventory for six months.
Additionally, after a year in storage, these charges would have risen to $ 2.25.
Astonishing isn’t it?
The good news is the revised changes does not look so bad.
The revised changes in the standard rates of Amazon FBA long-term storage are:
We have so far established that Amazon FBA will charge a storage fee for the products stored at Amazon's fulfillment center for more than a year.
Amazon has set the minimum long-term storage fee per unit at $0.15 per month for smaller items compared to the previous $0.50 every six months.
Wait... Is that an undercover addition to the standard long-term storage fee?
NO! It’s either the minimum fee or the standard fee, whichever is greater.
Are you wondering about how Amazon FBA system calculated the estimated long-term storage fee you saw earlier in Inventory planning?
Well... it is not as complicated at all. All you need to do is multiply your product dimensions and then multiply the result with the standard storage rates. You can then compare it to the minimum storage fee and determine your estimate. It is easier than it sounds though.
From the above table, for example, we can see a parcel containing a single book of size 8 (in) × 6 (in) × 0.5 (in) = 0.013 cubic-foot costs 0.013 (size) × $6.90 (standard rates per cubic-foot) = $0.10 long-term storage fee. It’s less than the minimum prices. Therefore, the seller will be charged the minimum rates.
On the contrary, in this table, we see a Toy of size 11 (in) × 8 (in) × 2 (in) = 0.10 cubic-foot costs 0.10 (size) × $6.90 (standard rates per cubic-foot) = $0.70 in storage fee. These charges are bigger than minimum per-unit prices of each toy and will be charged to the seller.
Of course, after calculating Amazon FBA long-term storage fee for your items, we understand how you get even more anxious. After all, it is quite an expense against the value of your product that can be reinvested in the business.
And let us be clear about something:
Amazon FBA is a popular shipping service that has taken years to develop and Amazon will not risk its valuable sellers on a non-profit business platform.
It's okay to worry about the prospect of losing your profits, and we have a solution to help you avoid these long-term storage fees and save your profits.
Prevention is better than cure.
It is as simple as that.
We are here to help you strategize your business on Amazon FBA so you can avoid paying hefty charges for overdue storage of your products.
One of the biggest perks of selling on the world’s largest retail platform is Flash Sales.
If you have an item stocked for more than 365 days in your inventory, sell it on Amazon Flash Sales for discounted prices before 15th of each month. Amazon ships your products in "First In, First Out" manner and each item you sell in the Flash Sale will first be from the “over-age” inventory.
Keep in mind, this is the best bet to minimize your chances of paying those hefty long-term storage fees for your products in fulfillment centers at Amazon.
If you hesitate to sell at discounted rates, you can always compare your profit compromise for your item at deducted prices with the charges you may have to pay at its initial cost.
Have you ever noticed why small businesses are so popular with Amazon FBA services?
Fulfillment By Amazon's answer that helping you operate with Third Party Logistics (3PL). This means you have a complete inventory record and that record can be used to increase efficiency.
Excessive stock can lead to too much storage fees. Inventory storage is variable cost — it depends on how much room your stock takes up at any specific time.
You end up paying more for storage if you have more goods on the side than you need.
Simply put, you should try to strategically restore your inventory to sell it out before 365 days.
In that way, your products will not be subjected to Amazon FBA long-term storage fee and you can avoid losing profits.
It's quite understandable that you might think what should you do if your stock is already a year old and you don't want to pay Amazon FBA long-term storage fees.
Because we have you covered here as well.
Amazon FBA has left some loopholes in its Long-term Storage Fee system and we will get you through them.
Surprise, Surprise… If you remove your item from inventory, Amazon will not charge you any long-term storage fees. Makes sense, right?
This is probably the best way to escape the long-term storage fee of Amazon FBA on your product if you can't sell it before the cleanup date, i.e. 15th of each month.
And the greatest benefit of a removal order is that until it is physically disposed of or returned to you, your item is still in sellable condition.
Follow these instructions to create a removal order:
I think we can both agree on the fact that it can be very tiring to track your products regularly on Amazon FBA.
Fulfillment By Amazon has developed an Automated Removal System that automatically generates a removal order for your product when it is subjected to Amazon FBA long-term storage fees.
Within the Automated Removal System, you have a variety of options where you can remove items according to their price range and escape the stress of tracking and creating a removal order for your product.
You can set it up by clicking on Fulfillment By Amazon inside the Settings tab in Amazon Seller Central.
Before you create a Removal Order for your products, there are some things you need to know.
Amazon has a strict policy against using this leniency as a strategy to avoid long-term storage fees.
To adhere to that policy, Amazon FBA will not allow you to restore your inventory with the same ASIN products you removed before a 90-day period.
OK, We know what you’re thinking:
What happens if during this time your product sells out and you run out of stock?
Don’t worry… As we mentioned, Amazon does not risk its sellers into a non-profitable business.
Amazon FBA allows you to store your inventory with a reserve stock for a minimum of 8 weeks and a maximum of 90 days. A ratio of the number of products sold in the preceding 90 days calculates the size of the reserve.
Let’s take an example to understand the mathematics behind this calculation.
If you sold about 270 units in the last 90 days of the ASIN product you removed from your inventory, that means you sold an average of 270 (items) / 90 (days) = 3 items per day.
So, Amazon will let you reserve at least 8 (weeks) × 7 (days) × 3 (items per day) = 168 items of that ASIN in your inventory.
Consequently, Amazon will allow you to restore 270 (maximum)-168 (minimum) = 102 items to your inventory whenever your stock falls below the 168 item mark.
More examples can be screen from the table:
We imagine how the Amazon FBA Long-Term Storage Fee can be intimidating to steer clear of.
So, what’s the bottom line?
The best way to get rid of this tedious activity is to plan ahead.
Like any other business, good management is the best way to excel as a seller at Amazon FBA. Particularly to stay away from the long-term storage fee.
Here we have some of the things you should keep in mind while stocking your inventory at Amazon.
A good strategy is the key to success while working on Amazon as a seller. And selling high-volume products on the world's largest online retail store is one of the best strategies.
While this might not be a problem for some, it is a reality that on Amazon it can be laborious to store rarely bought products. Therefore, we feel that storing high volume products is the golden path to take for a growing business.
It is always preferable that you never store products in bulk.
It’s pretty obvious if you think about it.
Overstocking your Amazon FBA inventory will always leave your products prone to long-term storage fee.
The good news is it doesn’t have to be you.
And here’s the thing: If you are unsure that your product is going to sell or not, 30 days of stock is most ideal to avoid all storage fees.
This will always save you from getting overage from your stock and a long-term storage fee subject to Amazon.
It is always good to be prepared for a rainy day, right?
In that case, if your items don't sell in time, we should think about how to minimize the long-term storage fees.
The most appropriate way for you to do this is to consider producing smaller products in size to ensure that the storage fee remains minimal.
It will be beneficial not only for the storage fee but also for shipping cost reduction. It's a win-win situation.
There you have it, a concise yet complete guide about the possible ways to avoid the Amazon FBA long-term storage fee on your product.
Here’s the deal:
As troublesome as it seems, the substantial Amazon long-term storage fee is still avoidable at multiple fronts. However, you should always prefer to plan ahead of time to increase productivity of your business.
So, if you want to use your hard-earned profit to reinvest in your business instead of paying Amazon's long-term storage fee, you need to define your strategies in advance.
And here’s the big idea:
If you hit long-term storage fees then you have a bigger problem like demand from the customer or over stock.
Ideally, users should not be hit with long-term storage fees in most situations.
Do you still have questions?
Feel free in the comments to let us know. We'd love to hear from you.
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