For many eCommerce sellers on Amazon, the “Fulfilled by Amazon” business model is not only very profitable, but provides a valuable benefit. Amazon stores your products in their warehouses so they can get shipped to your customers quickly using their Amazon Prime subscriptions.
However, things can become costly if your items are sitting in storage for too long. According to Amazon’s official website, long-term storage fees must be paid on February 15th and August 15th of each year if some of your items have been in storage and not sold for more than 6 months.
It is important that you understand how these fees work because they can really eat into your profits if you aren’t careful. According to FullTime FBA, Amazon charges you for storage on the previous two dates based on two factors:
- The size of your products (by cubic feet)
- How long each product has been stored away
If a product has been stored for more than six months, you will be charged $11.25 per cubic foot for each stored item when the payment date arrives. That price doubles to $22.50 per cubic foot if the items in question have been in storage for more than a year.
As you can imagine, these long-term fees can skyrocket if your products aren’t selling! What makes things more difficult is that these fees are always liable to change. You always need to be aware of what is happening with your stock so you don’t pay more money than you should.
Fortunately, you can easily figure out what items in your inventory will be charged with long-term storage fees. Full-Time FBA provides helpful instructions for what to do.
You just have to go to your “Inventory Dashboard,” where you can find the “FBA Inventory Age” section. Click on “View Details,” and you will be shown which items in your inventory are subject to be charged. Items that will be charged the largest fees will be listed on the top of the page.
If you can’t figure out how to get here yourself, this video from FullTime FBA will show you the way:
Now comes the most important part – figuring out what you should do to avoid having to pay extraordinarily large fees for storing your inventory. Liz Adamson of Egility explains ways you can avoid paying these long-term fees.
First, you need to be checking your “Inventory Health Report” throughout the year to find slow-moving items. Do not wait until the payment dates start coming up because you might not be able to get them out of storage in time.
Once you’ve determined which items aren’t really selling you can try one of these tactics to get them out before you are charged for keeping them in storage for too long:
- Change your pricing on items that are stalling. Try to be competitive with other sellers in this regard.
- Use promotions via the Advertising tab in Amazon Seller Central to get the word out on these items.
- If everything else fails, have the items shipped back to you before the payment date arrives. You will be charged a removal fee for this, but nowhere near as much as you would have been for keeping the items around in storage.
The article contains a few options you can use once you get the items sent back to you.
Using Amazon's fulfillment services (FBA) is a great way to get your products in front of their massive customer base. However, stay on top of the the long-term fees which, if ignored, can drastically lower your profits.
Always keep an eye out for slow-moving inventory. Once you’ve identified them, take some action to get them moving. Those long-term fees can add up and there's no reason to pay them if you can avoid it.
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