Amazon is a customer oriented selling platform, and the Fulfillment by Amazon (FBA) service makes it easy for sellers to fulfill orders.
However, these benefits are not without cost. From fulfillment to storage, Amazon sellers need to pay fees to utilize the convenience of FBA.
You simply cannot avoid many of these fees, but there are some you can avoid. A fee in specifically, the long-term storage fees that Amazon charges for storing inventory.
Let’s look at the overview about Amazon long term storage fees and how you can avoid paying those long-term storage fees.
AMAZON’S FBA LONG TERM STORAGE FEES
On February 15, 2019, Amazon FBA revised the way they charge long-term storage fees. Previously, sellers were charged long-term fees (in addition to monthly storage fees) for items left on the Amazon shelves for more than six months.
Amazon FBA has changed the structure of long-term storage fees:
Items that remain in Amazon warehouse for six months to one year are no longer subject to long-term charges. Items that are not sold for more than 365 days are subject to charges. Sellers are charged a long-term storage fee of $6.90 per cubic foot of storage space used for stock stored for more than 12 months.
LONG-TERM MINIMUM STORAGE
Amazon FBA lowered the minimum storage fee long-term from $ 0.50 per unit to $ 0.15 per unit for stocks held for more than 365 days.
Remember, depending on how many or how large your items, Amazon will determine how much you’re charged.
WAYS TO AVOID AMAZON LONG-TERM STORAGE FEES
Follow these ways to manage your Amazon FBA inventory to reduce or eliminate storage costs long-term:
1. IDENTIFY SLOW MOVING STOCKS
Your first step in managing your slow stock is to identify the products in your inventory that will be subject to long term storage charges on the next stock cleanup date.
Amazon offers reports to help identify products that are about to pay long-term storage charges. To know the reports you need to:
Access Inventory tab and click “Manage Inventory”. Then, you need to access “Inventory Dashboard” below the menu bar.
Once you are in the inventory dashboard, you need to check the report called FBA Inventory Age which is at the bottom of the page. Click View Details to view the report.
You can then look at your inventory, how many days the inventory has been in an FBA center and what your estimated long-term storage fees will be.
2. CREATE A PLAN
Once you have sorted and identified your slow moving stocks, you need to create a plan of what you are going to do with them. You have three options:
Pay the Fee – This is the simplest solution, however it’s going to affect your bottom line. Also keep in mind that the longer you wait, the higher the fee.
Remove the Products – You can ask Amazon to remove the affected inventory. Amazon will charge a fee for this, but it can cost less than the fee for keeping it there.
Sell the products – You can try selling the at- risk inventories to get it off the FBA shelves.
Sort the products that are subject to long term storage fees.
3. PLACE A REMOVAL ORDER
Amazon FBA will allow you to submit a request to remove inventory from their warehouses. You’ll find the removal order on your inventory management page within your Amazon seller account.
You can sent your stocks off-site or dispose it by Amazon. There are some considerations to consider before choosing this route.
To take care of the inventory, you need to pay certain fees for inventory. To make Amazon sell those removed items, there is a waiting period when you send those items back to FBA.
Amazon can dispose of your inventory and you will no longer incur any long-term storage fees.
Amazon also gives you the ability to set up automated long-term storage removals to sent back the inventories whenever it outdated.
4. SELL SLOW-MOVING STOCKS
The first step to avoid Amazon long-term storage fees is to monitor your inventory turns. This will help you to source inventory efficiently.
To clear your stocks, you need to consider lowering your prices to move more of your products or you can also run product promotions such as ‘buy one get one’ offers to encourage customers to buy more.
Another option is you can opt for Amazon sponsored products. Pay-per-click ads will improve the visibility of your products to the targeted customers and hence you can increase your sales.
Whether you choose to remove items or focus on selling them, the goal is to make the best decision for your business and remove those products from Amazon’s shelves before they cost you.
Remember you need to monitor your customer demand and market trends to manage your inventory. Also you need to ungate the restricted categories by The Funnel Guru, an ungating service expert who gets you ungated in any of the restricted categories.
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