Amazon storage fees, as long as you want to open a store on Amazon or already run a store in Amazon, you must understand this fee. Because if you don't pay attention, these costs may eventually reduce your profits quickly, and even cause your product to lose money.
Unlike Fulfillment fees, which will be charged by unit, Amazon storage fees are charged per cubic foot. Therefore, you need to understand and calculate your Amazon storage fees and adjust your strategy appropriately to ensure that its impact on profitability is minimized.
In today’s article, we will learn:
- What is Amazon storage fees?
- How to calculate Amazon storage fees?
- How to save Amazon FBA Storage Fees?
Without further Ado, let’s jump inside.
1, What is Amazon storage fees?
Amazon's business is developing very fast, and its distribution center's demand for storage space is often in short supply, so it is not free.
When you sell items through Amazon FBA and send inventory to Amazon's fulfillment center, Amazon charges a fee to keep your inventory there.
There are two types of Amazon storage fees that you should familiar with:
Monthly Amazon Inventory Storage Fee
The monthly inventory storage fees are charged by month, they are calculated based on the number of cubic feet of all your cargo inventory in the Amazon fulfillment center. So, keep in mind, the more inventory you have in the warehouses, the higher inventory fees you need to pay.
Long-term Amazon inventory storage fee
When your goods are stored in the Amazon fulfillment center for more than 365 days, long-term storage fees will be incurred. On the 15th of each month, FBA（Fulfillment by Amazon）performs inventory clearance.
With limited space in Amazon's warehouses, Amazon wants inventory on shelves to be used for well-selling products. Amazon encourages third-party sellers to carefully manage their inventory to keep their warehouse space-efficient and profitable.
2, How to calculate Amazon storage fees?
For the Amazon monthly storage fee, let’s have a look at the following form:
Amazon Storage fees are calculated by Cubic foot, which based on the daily average volume for the space your inventory occupies in fulfillment centers; These fees typically are charged between the 7th and 15th day of the month. You can see that the oversize storage fees are cheaper than standard size products, but based on volume, standard-size products may be less than those for oversize products.
For the Dangerous goods that require special handling, Amazon will charge the Monthly fee as following, you can use ASIN tool to check if your products need to be in the FBA dangerous goods program to sell it:
Long-term Amazon storage fees are part of the monthly inventory storage fee. If you submit a clearance order for the items before the next inventory clearance date, you will not be required to pay long-term storage fees for these items.
Products in stock for 365 days or more, the long- term storage fee (LTS fee) will be charged $6.90 per cubic foot or a $0.15 per-unit, whichever is greater.
For more information, please check FBA Long Term Storage Fees.
Let’s have a look at how to calculate the cubic feet from Inches
1, In China, factory always like to use “cm” for the measurement, so, you need to change the size from “cm” to inch, when calculating products cubic foot;(1 inch=2.54cm)
2, Multiply Length x width x height in inches
3, Divide the volume by 12 cubic inches (12 x 12 x 12inches=1728)
For example, the products packing size is: 38 x 20 x 16 inches
38 x 20 x 16/1728=7.04 cubic feet.
3, How to save Amazon Storage Fees and avoid long-time storage fees?
Although Amazon eliminates the long-term storage fees for units that have been in a fulfillment center for 181 to 365 days, it's very important to manage your inventory. This can reduce monthly storage costs and avoid long-term storage costs.
We always want to avoid stock-outs, too much inventory can harm your business or even worse. If you are not careful, these costs will not only eat your profit margins, but also create a situation where you lose money every time you sell a product.
In the following article, we will talk about how to save Amazon storage fee and avoid the long-time storage fees.
3.1 Take consideration of stock from the start
When we are ready to sell products on Amazon, we must consider the inventory factor.
First, we choose relatively popular products, such as the article in my blog: 13 Best products to import from China https://blingsourcing.com/best-products-to-import-from-china/, maybe it's very helpful for you.
Second, always plan to start with a small amount of inventory until you know how fast the product is selling.
At last, manage your first inventory delivered to the FBA warehouse. If you only send quantities that may be sold in 6 months or less, then you don't have to worry about long-term storage fees.
3.2 Store other inventory outside Amazon FBA
Some of my Amazon customers use this method to save Amazon storage fees. Their products are made in China, which means the manufacturer is in China, they usually purchase one container (about 28cbm) or several square meters of goods (note: 1 cubic meter equals 35.3 cubic feet). It is unreasonable to send all the goods directly to the Amazon fulfillment center at one time.
Some of them store their inventory in places other than Amazon warehouses, such as storage units or other free or low-cost locations, or even their homes.
Some of them will store their goods in China warehouse, as we provide 2 months of free warehouse storage for our customers.
In this way, on the one hand, you can keep your inventory low on Amazon warehouse and minimize your storage costs. On the other hand, when Amazon warehouse storage is low, you can quickly move your inventory out to Amazon's warehouse to avoid running out of inventory. Compared to sending directly to Amazon warehouse from China manufacturer (or from other countries), store other inventory outside Amazon FBA gives you more flexibility to manage your inventory.
3.3 Do everything possible to increase sales
You can optimize the details page to increase sales. In addition to important details such as image quality and product descriptions, product reviews are also an important way to increase sales.
After three months of sales, if the sales results are not good, determine if you have room to lower prices or take other actions to increase product sales.
You can use Amazon's promotional and sponsored product ads: Promote and advertise those products that will charge long- term Amazon storage fee if they are not sold. If the item is not sold in a timely manner, you will need to pay a long-term storage fee or removal fee. So it's worth spending some money on advertising or offering discounts to make it sell.
In addition, you can also take advantage of free relocation promotions: Amazon sometimes offers promotions for FBA sellers to remove items from FBA warehouses for free.
Note: Amazon cannot offer this promotion at specific times, but it is recommended that you take advantage of it during promotions.
3.4 Remove or Disposal older inventory
Most likely, the day before you charge for long-term storage, you will still have some items that cannot be sold. This means it's time to decide whether you should pay long-term storage fees or return your items. The deadline for submitting a removal order is 11:59 p.m. (PT) on the 14th of the month.
First, you need to evaluate each product individually to determine whether it makes more sense to remove or pay for LTS.
Second, check and confirm how much it will cost to return an item to your location. Besides, you need to check the cost of shipping and restocking (store it for 4 to 5 months, reprocess it and send back the item to Amazon warehouse), this will provide you an idea to see if it deserves to pay.
Also, calculate how long you can sell these stocks in the future, calculate the long-term Amazon storage fee and then decide you will pay the LTS fee or make other decisions.
You can remove inventory from a fulfillment center by submitting a removal order. Amazon charges $0.5 per item.
Disposing of Inventory
The last option is to dispose of the inventory. You pay Amazon and they get rid of it. This should be the last choice. Before destroying the inventory, try to sell or return it to yourself.
For any item that will eventually pay the long-term Amazon storage fee, we recommend that you evaluate it, first see if you should buy the product, whether there is a problem with the list, whether there is a problem with the price, etc. Then use this information to improve your future purchases.
Over time, you should be able to get better at this, then you can use your experience to guide you.
Because of Amazon's growing business, many people want to jump into this business, understand the rules first before you make a decision.
As professional China sourcing agent, most of our customers are brand customers and Amazon sellers, we will do our best to save your time and money, moreover, we provide two months free warehouse storage in China fo your products, please feel free to contact us if you have any requirement.
Do you have any other questions about this Amazon storage fee? Please leave your comments below, we would love to hear from you.