Amazon Long Term Storage Fee 2024: 8 Tips For Sellers
Are you storing items on Amazon for a while? If so, it’s important to be aware of Amazon’s long-term storage fees. These fees are charged monthly for items that have been sitting in Amazon’s fulfillment centers for over six months.
In this blog post, we’ll dive into the details of Amazon’s long-term storage fees.
What are Amazon Storage Fees?
When selling products through Amazon FBA (Fulfillment by Amazon), sellers can store their inventory in Amazon’s warehouses. Amazon then handles all aspects of fulfillment, including storage, picking, packing, and shipping. To cover the costs of these services, Amazon charges storage fees.
Factors Affecting Storage Fees
Storage fees are influenced by several factors:
- Product dimensions: Larger products occupy more space and incur higher fees.
- Product type: Certain product categories may have specific storage requirements or fees.
- Seasonality: Fees can vary depending on the time of year, with higher rates during peak seasons (e.g., holidays) and lower rates during off-peak seasons.
- Oversizing: Products that exceed Amazon’s size limits may incur additional fees.
- Inventory age: The duration that products spend in Amazon’s fulfillment centers can affect storage fees, with older inventory incurring higher costs.
Amazon Storage Fees Rates
Amazon frequently updates its fees, and monthly storage fees depend on several factors, including dimensions, type, and oversizing. Notably, Amazon has different storage fees for different seasons.
The Amazon FBA storage fees increase during peak seasons, such as the holiday season, when there is a significant load on Amazon’s warehouses. Conversely, pricing typically decreases during off-peak seasons. As of April 1, 2024, the basic storage fees for standard items range from $0.78 to $2.40 per cubic foot. Below is a detailed table of Amazon storage fees.
Sellers can utilize the storage utilization ratio and storage utilization surcharge to manage their monthly inventory storage fees. Certain Amazon warehouses may have high removal fees in addition to storage costs. In such cases, sellers should consider removing inventory and increasing sales velocity to minimize costs.
What are Long-Term Storage Fees?
Previously known as “long-term storage fees,” the aged inventory surcharge is an additional fee imposed on inventory that remains unsold in Amazon’s warehouses for an extended period, contributing to long term storage costs.
This surcharge is intended to incentivize sellers to manage their inventory effectively and avoid excess storage costs.
Amazon Long-Term Storage Fee Rates
Similar to standard storage fees, Amazon’s long-term storage fees depend on various factors, including item type, dimensions, oversizing, and the season. The aged inventory surcharge has gained attention due to recent changes in Amazon’s policies, leading to increased aged inventory surcharges.
One significant change is the modification of the time frame. Previously, inventory was classified as aged if it had not sold within 271 days. Now, that timeframe has been reduced to 181 days. This means sellers will incur an aged inventory surcharge if their inventory is stored for more than 181 days. The fees range from $0.50 to $6.90 per cubic foot.
How To Calculate Amazon Long-Term Storage Fees
Follow these steps for calculating storage fees:
- Measure dimensions: Determine the length, width, and height of the product in inches.
- Calculate volume: Multiply the length, width, and height to get the volume in cubic inches.
- Convert to cubic feet: Divide the volume by 1728 to convert it to cubic feet.
- Determine fee: Use the appropriate fee rate based on the product type, storage duration, and Amazon’s current pricing.
- Multiply: Multiply the volume in cubic feet by the fee rate to determine the total surcharge.
8 Strategies to Avoid Long-Term Storage Fees
Long-term storage fees can be a significant financial burden for Amazon sellers, especially when FBA inventory doesn’t sell as expected. These fees are charged for products that remain in Amazon’s fulfillment centers for an extended period. To avoid these costs, sellers need to implement effective strategies to manage their inventory.
1. Implement Strategic Inventory Planning:
Effective planning is crucial for success on Amazon. By conducting thorough market analysis, understanding customer behavior, and forecasting demand, you can optimize your inventory levels and reduce the risk of excess stock.
2. Opt for a Smaller Inventory
If you are a new seller or introducing a new product to the market, consider starting with a smaller inventory. For new products, create a limited stock inventory to gauge customer feedback and demand. Adjust your inventory based on this feedback. Many sellers mistakenly build large inventories based on initial good sales, only to experience poor performance later, leading to substantial long-term storage fees.
3. Optimize Listings and Product Information
High-quality listings are essential for attracting buyers and increasing sales. Ensure your product descriptions are detailed, images are clear, and keywords are optimized. Additionally, consider offering competitive pricing and fast shipping to improve your product’s visibility and appeal.
4. Utilize Promotions and Discounts:
Sales and discounts can be effective tools for moving slow-moving inventory. Consider offering seasonal promotions, limited-time deals, or bundle discounts to stimulate demand and reduce storage costs.
5. Leverage Amazon's Advertising Tools
Amazon’s advertising platform provides powerful tools to promote your products and reach a wider audience. By strategically targeting potential customers, you can increase sales and minimize the risk of long-term storage fees.
6. Utilize the Recommended Removal Report
Amazon’s Recommended Removal Report identifies products that you should consider removing from its fulfillment centers to prevent incurring aged inventory surcharges. Make it a habit to review this report regularly and act on the recommended items.
7. Liquidate Removed Items Through Amazon Outlet
Liquidating removed items through Amazon Outlet is a smart way to avoid or lower long-term storage fees. By listing these items on the Outlet, you can quickly move your inventory at discounted prices, reducing the risk of incurring additional charges. Shoppers at the Amazon Outlet are typically seeking bargains, which boosts your chances of making successful sales. This strategy not only helps decrease storage fees but also enables you to recover some of your investment, reducing losses and enhancing your inventory management.
8. Removing Inventory to Avoid Storage Fees
Removing inventory is an effective way to avoid storage fees. Here are some ways to remove inventory from Amazon’s fulfillment centers:
Creating a Manual Removal or Disposal Order
Creating a manual removal or disposal order is a straightforward way to remove inventory from Amazon’s fulfillment centers. Here’s how to do it:
- Log in to Your Amazon Seller Central Account: Go to the Inventory tab and select the products you want to remove.
- Create a Removal Order: Click on the “Create Removal Order” button and select the products you want to remove.
- Choose the Removal Method: You can choose to have the products returned to you or disposed of. Returning products allows you to sell them through other channels, while disposal is suitable for unsellable items.
- Confirm the Removal Order: Review the removal order details and confirm it. Amazon will process the removal, and you will avoid incurring further storage fees for those items.
By following these steps, you can efficiently remove inventory from Amazon’s fulfillment centers and avoid unnecessary storage fees. This proactive approach helps you manage your inventory more effectively and maintain profitability.
Wrapping Up
Avoiding long-term storage fees on Amazon is crucial for maintaining profitability and optimizing inventory management. By implementing strategic planning, adjusting inventory sizes, focusing on effective listings, leveraging sales, and utilizing resources like the Amazon Outlet and Recommended Removal Report, sellers can successfully manage their inventory and minimize costs.
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