How to Minimize Your Amazon Long term Storage Fees

Amazon sellers are used to Amazon nickel and diming them all over the place, but storage fees are different. These are costs that sellers have direct control over, and there are ways to minimize the impact to your bottom line.

Background

StorageAmazon has optimized their FBA warehouses to provide the near real-time inventory deliveries we have come to expect as consumers. They are not setup to hold and store inventory for long periods of time. Amazon wants products to turn over, and their space is at a premium.  As such, they have built their fees to drive the behavior of fast turnover for products that have velocity.

Amazon is notorious for adding new fees and consistently increasing their fees. It’s no accident that storage fees in the months leading up to and including the Christmas holiday season are nearly three and a half times higher than in the first nine months of the year. However, that’s nothing compared to the massive leap in fees when your inventory sits a bit too long and you find yourself shelling out ten times what you paid in January of the previous year.

 

1 - 365 Days

(Introduced Fees for Hazmat)

365+ Days

(Decreased Minimums)

Jan - Sept 2019

$.69 per cubic foot

($.99 per cubic foot for hazardous goods)

$6.90 per cubic foot

($.15 per unit min

(down from $.50 min in 2018))

Oct - Dec 2019

$2.40 per cubic foot

($3.63 per cubic foot for hazardous goods)

$6.90 per cubic foot

($.15 per unit min

(down from $.50 min in 2018))


Storage Fee Changes in 2019

There are a few bits of good news in 2019. The best news is that Amazon got rid of the increase in storage fees that came after six months. Now, instead of charging higher storage fees after six months, your fees don’t jump up until your products have been in storage for a full year.

Amazon has also reduced the minimum long storage fees from $.50 per unit down to $.15 per unit. So that’s good news for some.

They did, however, add additional fees for any hazardous materials they may be storing.

Here is a list of all the 2019 US FBA inventory storage fee changes from Amazon as well as some summaries of the changes from others that you may find interesting:

And here’s some Amazon community feedback.

In short, it’s good to keep an eye on these changes every year and do what you can to keep your storage fees down.

How to Keep Fees Down

Now, let’s get to the all-important question - how do you minimize the amount you’re spending on storage fees.

Increase Your Margins

If you increase your margins ((revenue - cost of goods)/revenue x 100), you’ll be better able to afford the storage fees if they come your way. Aim for a margin of at least 30% but go for margins that are as high as you can find.

But honestly, this is my least favorite approach. I’d rather see that profit in your pocket instead of Amazon’s. So keep reading.

Sell Your Products Faster

If your products are growing stale on the shelf, you aren’t selling them fast enough. Take actions that will speed up the sales velocity, and you can worry less about long term fees. Doing something as simple as optimizing your sales listing can pay huge dividends.

You can also increase your Sponsored Ads, create lightning deals, or have other special sales around liquidating your inventory before you get to the one-year mark.

Monitor and Manage Your Inventory

Another reason why you might have extra stock sitting at Amazon is because you don’t have a good handle on the inventory your have or the amount of inventory you need. Don’t order stock by gut feel. Use tools like www.forecastly.com or www.inventory-planner.com to get insight and control over your inventory. Or even look to your current Amazon management tools.

You’ll also want to manage your Inventory Performance Index and know the rules around FBA Storage Limits.

Use a Warehouse for Staging

Warehouses and third-party logistics (3PL) are popping up all around Amazon warehouses for good reason. Many sellers are using the warehouses to stage their products before shipping them to Amazon at the last moment for Amazon to fulfill the orders.

Plan on making weekly or monthly transfers to Amazon FBA for the amount you know you need for just-in-time fulfillment.

These warehouses are particularly good for fulfilling larger business-to-business (B2B) sales, Walmart.com sales, and provide return management as well as FBA prep services.

Use a 3PL for Seller Fulfilled Prime

Maybe you could just skip Amazon’s fulfillment completely by contracting with a 3PL warehouse that provides Seller Fulfilled Prime.

You can have more control over the customer experience by being able to combine shipments, tweak branding, etc, and you could likely end up with lower fees in the process.

Remove Inventory

If you find you have products that just aren’t selling, pull them back. Request that Amazon either actively dispose of the products or remove them from FBA and ship them back to you (if the shipping isn’t outrageous) so you can resell them on other channels or liquidate them on a site like www.liquidation.com.

Conclusion



Any of these actions can help you not only get better control over your inventory but also improve your bottom line.

To learn more about managing your sellable and unsellable inventory at Amazon, check out our video, Amazon FBA Sellable vs Unsellable Inventory.

 

 

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