Understanding Long-Term Storage Fees on Amazon

If you’re an Amazon seller, then you should know about long-term storage fees. These fees can be painful for your business if you’re not prepared for them. In this article, we’ll explain how Amazon’s long-term storage fees work, how to avoid them, and the impact they can have on your business.

How Amazon’s Long-Term Storage Fees Work

Amazon’s FBA (Fulfillment by Amazon) service allows sellers to store their products in Amazon’s warehouse. However, if your product sits in their warehouse for too long, they will charge you a long-term storage fee.

Amazon’s long-term storage fees apply to any inventory that has been in their warehouse for more than 365 days (annually) and 180 days on 15 February (semiannually). Amazon charges $6.90 per cubic foot or $0.15 per item, whichever is higher. These fees are assessed on a monthly basis, so if your inventory remains in storage for multiple months, then you will be charged the fee multiple times.

It’s important to note that Amazon’s long-term storage fees can significantly impact a seller’s profits. To avoid these fees, sellers should regularly monitor their inventory levels and consider removing slow-moving products from Amazon’s warehouse before they incur the long-term storage fee.

Additionally, Amazon offers a program called “Inventory Age” that allows sellers to see the age of their inventory and take action to prevent long-term storage fees. This program can be accessed through the seller central dashboard and provides valuable insights into inventory management.

The Difference Between Monthly and Long-Term Storage Fees

Monthly storage fees apply to all inventory stored in Amazon’s warehouses, while long-term storage fees only apply to inventory that hasn’t sold for over one year.

Monthly storage fees are based on the volume of your inventory in cubic feet and the time it spends in their warehouse. The fee varies depending on the time of year and the size of your inventory, with peak season fees being higher than non-peak season fees.

It’s important to note that Amazon charges additional fees for items that are considered dangerous goods or require special handling. These fees can vary depending on the type of product and the level of handling required.

Additionally, if you choose to remove your inventory from Amazon’s warehouse before the minimum storage period, you may be subject to additional fees. It’s important to carefully consider your storage needs and plan accordingly to avoid any unexpected charges.

The Impact of Long-Term Storage Fees on Your Amazon Business

If you don’t manage your inventory properly, long-term storage fees can hurt your Amazon business. They can quickly eat away at your profits and make your products less competitive in the marketplace. The longer your products sit in Amazon’s warehouse, the more expensive they become, and the less profitable they are.

Moreover, Amazon will not hesitate to dispose of your inventory if they determine it’s been in their warehouse for too long. The last thing you want is for your inventory to be disposed of, considering the significant financial loss that comes with it.

One way to avoid long-term storage fees is to regularly review your inventory and remove any products that are not selling well. This will not only save you money on storage fees but also free up space for new products that may be more profitable. Additionally, you can consider using Amazon’s FBA (Fulfillment by Amazon) program, which offers free removals for inventory that has been in their warehouse for more than 365 days.

It’s also important to note that long-term storage fees vary depending on the time of year. Amazon charges higher fees during the peak holiday season, so it’s crucial to plan your inventory accordingly. By forecasting demand and adjusting your inventory levels, you can avoid excessive storage fees and ensure that your products remain competitive in the marketplace.

Tips to Avoid Long-Term Storage Fees on Amazon

There are several ways to avoid long-term storage fees on Amazon. One of the most important is to monitor your inventory levels carefully. Keep tabs on which products are selling well and which ones aren’t. As the time of the year approaches to reassess your inventory levels and pull out the items that you don’t anticipate selling in the near future.

Another strategy is to offer discounts or promotions that move your slow-moving inventory more quickly. Amazon advertisers have the option to run Sponsored Product ads with discounts at a product or bundle level, helping to cover your costs while preventing a surcharge.

Additionally, it’s important to consider the size and weight of your products. Amazon charges higher long-term storage fees for larger and heavier items, so it may be beneficial to focus on smaller, lighter products that are easier to store and ship. You can also consider using Amazon’s FBA (Fulfillment by Amazon) service, which allows you to store your products in Amazon’s warehouses and have them shipped directly to customers. This can help you avoid long-term storage fees altogether, as Amazon takes care of the storage and shipping for you.

How to Calculate Long-Term Storage Fees on Amazon

Calculating your long-term storage fees is easy. You can do this by logging into your FBA account and using the inventory health report. This report will show you which items have been in storage for over 365 days. Multiply the number of units by the charge per item and the price per cubic foot to get an estimate of your long-term storage fees.

It’s important to note that long-term storage fees are charged twice a year, on February 15th and August 15th. If you have items that have been in storage for over 365 days during these periods, you will be charged the long-term storage fee. However, if you remove these items before the fee is charged, you can avoid the fee altogether.

Another way to avoid long-term storage fees is to regularly review your inventory and remove any items that are not selling well. By doing this, you can keep your inventory fresh and avoid accumulating items that may end up in long-term storage.

Strategies for Managing and Reducing Long-Term Storage Fees on Amazon

One of the best strategies for managing and reducing long-term storage fees is to use Amazon’s inventory placement service. With this service, you can have Amazon store your inventory at any of their warehouses across the country, which can not only guard against fees but also reduce your shipping costs.

You can also convert your slow-moving products into multi-pack bundles. Bundling slower-selling items into cost-effective combos also can help move your inventory around and decrease your total long-term storage fees.

The Pros and Cons of Using Amazon’s Long-Term Storage Services

While Amazon’s long-term storage services may seem like a convenient option to store your inventory, they come with their fair share of pros and cons. The advantage is that you don’t have to worry about managing your inventory, which saves you time and energy. Additionally, your products are eligible for Amazon’s Prime shipping program, increasing the likelihood that your items will sell.

On the other hand, the major disadvantage is the long-term storage fees. If your products sit in Amazon’s warehouse for too long, then you’ll be charged a hefty fee, which can significantly eat up your profits. You also run the risk of having your inventory disposed of by Amazon if it sits in their warehouse for too long.

Another factor to consider is the potential impact on your brand’s reputation. Amazon’s long-term storage services may not provide the same level of care and attention to your products as you would if you were managing your own inventory. This could result in damaged or expired products being shipped to customers, which could lead to negative reviews and a decrease in sales. It’s important to weigh the convenience of using Amazon’s services against the potential risks to your brand’s reputation.

Alternatives to Using Amazon’s Long-Term Storage Services

If the long-term storage fees or the possibility of disposal are concerning, you may consider storing your inventory off-site with a third-party logistics provider (3PL). A 3PL will store your products in their warehouse, allowing you to avoid Amazon’s storage fees.

However, there are also several disadvantages to using a 3PL. One drawback is that you will have to manage your inventory yourself, which can be time-consuming and labor-intensive. Additionally, your products won’t be eligible for Amazon’s Prime shipping program, which can make them less attractive to Amazon shoppers.

Another alternative to using Amazon’s long-term storage services is to sell your products on other e-commerce platforms, such as eBay or Etsy. These platforms have their own storage and shipping options, which may be more cost-effective for your business. Additionally, selling on multiple platforms can help you reach a wider audience and diversify your sales channels.

However, it’s important to note that each platform has its own set of rules and fees, so you’ll need to do your research and compare the costs and benefits of each option. You’ll also need to manage your inventory and orders separately on each platform, which can be challenging if you’re not using a centralized inventory management system.

How to Monitor Your Inventory to Prevent Long-Term Storage Fees on Amazon

The best way to monitor your inventory and prevent long-term storage fees on Amazon is to use software applications that help you keep track of your inventory levels. These apps provide you with real-time information about your inventory, allowing you to make informed decisions about your business.

You can also use Amazon’s inventory management tools, which include inventory performance reports, restock alerts, and automated pricing and promotions. These tools provide valuable insights into your inventory levels, allowing you to optimize your business and avoid long-term storage fees.

In addition to using software applications and Amazon’s inventory management tools, there are other strategies you can implement to prevent long-term storage fees. One effective strategy is to regularly review your inventory and identify slow-moving or stagnant products. By identifying these products, you can take action to either sell them quickly or remove them from your inventory to avoid long-term storage fees.

Another strategy is to set up a system for rotating your inventory. This means prioritizing the sale of products that have been in your inventory the longest, to avoid them becoming subject to long-term storage fees. By regularly rotating your inventory, you can ensure that you are always selling your oldest products first, and avoiding unnecessary fees.

The Impact of Seasonality on Your Long-Term Storage Fees

Finally, you need to consider the impact of seasonality on your long-term storage fees. Certain products may sell well during certain times of the year, while others may not. By tracking the seasonality of your products, you can determine the best time to sell them and avoid long-term storage fees.

In conclusion, long-term storage fees are a necessary evil for Amazon sellers. However, by managing your inventory carefully and using the strategies outlined above, you can minimize their impact on your business. Keep in mind that Amazon isn’t the only option for storing your inventory, so weigh the pros and cons of using their services against those of third-party logistics providers. By taking proactive measures to manage your inventory, you can avoid the pain of long-term storage fees and keep your business profitable.