WARNING: Here Is What Every eCommerce Business Should Know About Amazon Storage Fees
Sellers using FBAs such as Amazon Prime eligibility do not need to bother about inventory storage, managing picking, bundling, or dealing with customer returns. The sale of Amazon FBAs is subject to Amazon Prime eligibility fees. Instead, Amazon maintains its stock in its compliance centers, performs all shipping activities, and returns them on behalf of vendors. While Amazon FBA's (essentially) hands-off attitude attracts many Amazon salespeople, it is worth it.
Amazon Prime is increasingly popular, and the number of users on its website year after year is constantly disintegrating. As a result, customers are unable to purchase additional things to optimize their Prime membership's perks.
Sellers realize it and adapt fast to the sale of their products through the FBA program of Amazon. With FBA, considerable advantages such as outsources, fast shipping, and dedicated off-the-shelf storage are achieved.
These vast advantages are as expensive as they are. The Amazon FBA program is one of the various charges connected with storage. Storage charges are one of the main costs that Amazon FBA vendors have to pay. This is what you need to know and how they are determined on Amazon FBA storage fee.
Amazon FBA Storage Fees
Sellers using Amazon's Fulfillment by Amazon (FBA) service pay monthly storage fees to keep their products in Amazon's warehouses. These baseline fees depend on product size and time of year.
Monthly Storage Fees
Amazon charges FBA storage fees by the cubic foot between the 7th-15th day of each month, based on inventory levels from the previous month. Rates typically increase during Q4 (October-December) to account for holiday inventory needs.
Here are the standard monthly FBA storage fees:
Dangerous Goods Monthly Storage Fees
If you use FBA for the Amazon inventory, you're going to spend a little more on monthly warehousing fees. Hazardous products are, in principle, items that require specific handling and storage of dangerous materials. Sellers must be part of the FBA Dangerous Goods program to sell these items.
Here we have a brief chart from Amazon:
Long-Term Storage Fees
Products stored for over 365 days incur a long-term storage fee of $6.90 per cubic foot or $0.15 per unit, whichever is greater. This applies when removing an ASIN from sale or letting inventory age too long.
Avoiding Storage Fees
High fees often result from slow-selling inventory lingering too long. Here are tips to help avoid storage fees:
Retrieve Your Inventory
Returning stock to yourself stops accrual of fees. Submit a removal order before the monthly cleanup date to avoid charges.
Discount Slow-Moving Inventory
Consider marking down prices to move aging products, even at low margins or a loss. This converts inventory to cash faster, allowing you to reinvest.
Leverage Amazon Promotions
Occasionally Amazon offers free removal promotions. Watch for these around key dates as an opportunity to pull inventory at no cost.
Carefully Manage Inventory Levels
Ship a small portion first to establish sales velocity. Use this data to calibrate optimal inventory pipelines that turnover within 30-45 days.
Next article: Amazon Referral And FBA Fees: 2021 Guide
FAQs
What are Amazon's FBA storage fees?
Amazon charges sellers monthly storage fees to keep products at their fulfillment centers, based on size and peak season surcharges. Long-term storage over 365 days also incurs fees.
How are FBA storage fees calculated?
Fees are charged per cubic foot of inventory stored, between the 7th-15th day each month based on the prior month's inventory levels. Rates increase in Q4 during holiday peaks.
What causes high FBA storage fees?
Slow inventory turnover and long-term storage of over 365 days are the main reasons sellers incur substantial fees. Low demand products lingering too long drive up charges.
How can I avoid monthly FBA storage fees?
Retrieve and return aging inventory to yourself, discount slow sellers, leverage Amazon removal promotions when offered, and carefully manage restock levels based on sales velocity.
What is the long-term storage fee threshold?
Products stored over 365 days in FBA centers incur additional long-term storage fees of $6.90 per cubic foot or $0.15 per unit monthly, whichever is higher.
When are FBA storage fees charged?
Amazon deducts monthly storage fees between the 7th-15th of each month, based on cubic footage of inventory stored in their facilities throughout the previous month.
How can I optimize inventory to minimize storage fees?
Analyze sales reports to calibrate optimal inventory levels that turnover within 30-45 days. Ship partial quantities first to gauge velocity before stocking up.
