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Long term storage fees with Amazon FBA
Amazon FBA Long Term Storage Fees and What To Do?
Amazon Motivates You to Move Inventory with Long Term Storage Fees
Long term storage fees are Amazon’s way of motivating you to clear your inventory from their warehouse if you have inventory that has not been moving in 6 months, 12 months etc.
August 15th and February 15th of each year. Amazon sends notices to sellers regarding the seller’s stagnant inventory. Amazon will have recommendations of what inventory to remove or lower the price to get the inventory sold and moved out of the warehouse.
$11.25 per month will be charged per cubic foot of space used for items that have been stored in Amazon warehouse for 6 months. If it hasn’t sold in 12 months then you will be charged $22 per month. Each year the fees can change and obviously the fees add up since it will be on a monthly basis these fees that are charged.
Perform an Amazon “Inventory Cleanse”
Put on your calendar to check your inventory report and do an “inventory cleanse” every 90 days. Look under the “Reports” tab in your Amazon Seller Central Dashboard. Look for the inventory health report. You will see what inventory Amazon recommends that you address. Think about marking down products that have been sitting for 90 days so it will give you plenty of time to move the product before the 6 month mark.
When finding inventory to sell, always take into consideration of the sales rank for the product so you have an idea of how fast an items sells.
Set up a goal for a minimum profit you want to make, it should be at least $10 profit per item. If it’s anything less than that then you will have small profit margins and less room to mark products down in price in order to still be profitable. Less than $10 profit = Less wiggle room for profit.
What are your Amazon FBA Selling Strategies?
Come up with selling strategies. You can promote your items on social media, put your items on sale to get the inventory selling. When entering a new product for sale on Amazon FBA, you can input a sale price to start on a specific date. You can have it set to start after 90 days of you listing the product to help get it moving out of the warehouse before the 6 month mark.
You have 3 options when you receive the letter from Amazon regarding inventory at risk of storage fees.
- Have Amazon remove/dispose of your inventory for you. The fee at the time of this video is .15 cents to .30 cents per item depending on the size of the product.
- Have Amazon send you your inventory back. The fee can range from .50 cents to .60 cents, plus shipping it back to you.
- Keep the inventory there until it sells, mark it down, put it on sale, or don’t change anything, just start paying the Amazon FBA storage fees.
What is considered a large item to Amazon FBA?
According to Amazon, large items are considered to be 20lbs and over and/or size of 18X14X4.
When you are logged into your Amazon seller account, you can set up your automated preference of what happens to your stagnant Amazon FBA inventory.
Directions for how to set up the Amazon automated long term storage settings.
Sign in> Go to settings > Fulfillment by Amazon > Auto long term storage > edit
Run your Amazon Seller reports, keep track of your fees paid
Be sure to run your reports of the fees that you end up paying to Amazon and give to your CPA for your taxes since the fees are a write off for your online business.
When weighing your options of what to do, I always analyze the product in question. Think to yourself the money you have in it, how much it will cost to ship back, cost to have Amazon dispose of it etc… If it’s a low priced items then consider marking it down to move it out or just have Amazon get rid of it for you, if it’s not worth much, then it may not be worth having it shipped back to you since it will cost you more. If you have it shipped back to you then how will you sell the product? Craigslist, eBay, Garage Sale? Think if it’s worth your time and how much you could possibly get by trying to sell it through the other selling avenues.
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