Selling on Amazon can be a lucrative business, but it also comes with its fair share of costs. One of the most significant costs that sellers face is Amazon’s long-term storage fees. These fees are charged to sellers who have inventory that has been in Amazon’s warehouses for more than 365 days. In this article, we’ll discuss what Amazon’s long-term storage fees are, how they work, and most importantly, how you can manage them to reduce costs and maximize profits.
What are Amazon Long-Term Storage Fees?
Amazon’s long-term storage fees are charged to sellers who have inventory that has been in Amazon’s warehouses for more than 365 days. There are two types of fees: a semi-annual storage fee and a long-term storage fee. The semi-annual storage fee is charged twice a year, in February and August. The long-term storage fee is charged annually in August.
Understanding How Amazon Long-Term Storage Fees Work
The long-term storage fee is based on the volume of inventory that has been in Amazon’s warehouses for more than 365 days. The fee is calculated based on the number of units of inventory and the time it has been stored. The fee is $6.90 per cubic foot for inventory that has been stored for more than 365 days but less than 730 days. For inventory that has been stored for more than 730 days, the fee is $0.15 per unit. It’s important to note that these fees are in addition to the regular monthly storage fees that sellers already pay.
Top Tips for Managing Amazon Long-Term Storage Fees
Use Amazon’s Inventory Performance Index (IPI) to Monitor Your Inventory
Amazon’s Inventory Performance Index (IPI) is a score that measures how well you manage your inventory. The IPI score is based on factors such as excess inventory, stranded inventory, and stockouts. By monitoring your IPI score, you can identify areas where you can improve your inventory management and reduce the risk of incurring long-term storage fees.
Sell through Your Inventory Before Long-Term Storage Fees are Incurred
One of the easiest ways to avoid long-term storage fees is to sell through your inventory before the fees are charged. This can be done by monitoring your inventory levels and adjusting your pricing and promotions to encourage sales.
Use Amazon’s FBA Inventory Age and Inventory Health Reports to Identify Slow-Moving Inventory
Amazon provides reports that can help you identify slow-moving inventory. The FBA Inventory Age report shows how long your inventory has been in Amazon’s warehouses, and the Inventory Health report provides data on inventory that may be at risk of incurring long-term storage fees. By reviewing these reports regularly, you can identify inventory that needs to be sold or removed from Amazon’s warehouses before the fees are charged.
Consider Removing Inventory from Amazon’s Warehouses Before Long-Term Storage Fees are Charged
If you have inventory that is at risk of incurring long-term storage fees, you may want to consider removing it from Amazon’s warehouses before the fees are charged. You can do this by using Amazon’s Removal Order service, which allows you to have your inventory shipped back to you or disposed of.
Utilize Amazon’s Inventory Placement Service to Reduce Long-Term Storage Fees
Amazon’s Inventory Placement Service allows sellers to have their inventory distributed across multiple fulfillment centers. This can help reduce the risk of incurring long-term storage fees by spreading out inventory and ensuring that it’s closer to customers, which can lead to faster shipping times and increased sales.
Amazon’s long-term storage fees can be a significant cost for sellers, but they can be managed with the right strategies in place.
By using Amazon’s Inventory Performance Index to monitor your inventory, selling through your inventory before long-term storage fees are incurred, using Amazon’s FBA reports to identify slow-moving inventory, considering removing inventory from Amazon’s warehouses, and utilizing Amazon’s Inventory Placement Service, you can manage your inventory effectively and minimize the risk of incurring long-term storage fees.
It’s important to note that managing long-term storage fees requires a proactive approach to inventory management. By regularly monitoring your inventory and taking action to sell through slow-moving inventory, you can reduce the risk of incurring these fees and keep your business profitable.
Additionally, keeping a close eye on your inventory can help you identify opportunities for growth and expansion on the platform. By understanding what products are selling well and which ones are not, you can adjust your strategy and make informed decisions about your business’s future on Amazon.
In summary, managing Amazon’s long-term storage fees is essential for any seller looking to maximize profits on the platform. By implementing these tips, you can keep your inventory moving, reduce costs, and grow your business on Amazon. Remember to stay vigilant and proactive in your inventory management, and you’ll be well on your way to success on the world’s largest online marketplace.