How to Avoid Amazon’s Long-Term Storage FeesCaitlin Donnelly
On March 1, 2018, Amazon released a new policy on storage limits for FBA products and new storage pricing.
For Amazon sellers, selling with Fulfillment by Amazon, that meant a few things:
- Inventory Performance Index
- IPI is based on your excess inventory percentage, FBA sell-through rate, and FBA in-stock rate
- Scores below 350 will have limits set on their storage
- Scores above 350 will have unlimited storage limits
- Storage Limits
- Starting July 1, 2018, storage limits will be assessed every 3 months on a quarterly cycle. Your Inventory Performance Index will be implemented for the following quarter
- Short and Long-Term Storage Fees Changed
- Starting April 1, 2018: Monthly storage fees increase by $0.05 per cubic foot
- Starting September 15, 2018: Long-term storage fees will be assessed monthly (at a rate of $3.45 per cubic foot per month, 181-365 days), instead of semi-annually (at a rate of $11.25 per cubic foot per 6 months, 181-365 days)
- Starting August 15, 2018: Minimum storage charge of $0.50 per unit per month for items at fulfillment centers longer than 365 days (previously, no minimum charge)
To assist sellers with the transition, Amazon is offering free removal orders starting on April 18, 2018.
Avoid Long-Term Storage Fees
If you have inventory that has been sitting around at Amazon, chances are their long-term storage fees are zapping your business of any potential profit. Amazon does not want excess inventory stored in their warehouses; therefore they have decided to implement these new restrictions and fees. Turn over is the name of the game at Amazon fulfillment centers.
To avoid these fees, third-party warehouses can come in handy. As the most seasoned sellers will tell you, feeding your inventory into Amazon on an as-needed basis will save you big bucks. This doesn’t mean waiting until the last minute to reorder stock from your supplier – That will create all kinds of problems that can end up costing more than Amazon’s FBA storage fees alone. Plan your inventory carefully and store excess inventory with companies who are well-versed in affordable long-term storage and quick FBA replenishment as needed.
Example of fees you will incur:
Assume you have 1 pallet worth of standard-sized goods sitting in Amazon’s warehouse for 12 months. We’ll estimate what your storage fees would have been for the last 6 months, on a per month basis and on a bi-annual basis.
|Amazon Long-Term (Now)||$ 200.46||$ 1,200.42|
|Amazon Long-Term (Sept 15)||$ 322.92||$ 1,937.52|
|FBAforward||$ 15.00||$ 90.00|
|Cost Savings per Pallet||$184 – $308||$1,109 – $1,848|
This is, of course, with no inventory selling. But it is easy to tell the cost savings between Amazon’s rates and a third-party company like FBAforward.