Could long-term storage fees be killing your Amazon FBA profits?
In the middle of every month, Amazon does a cleanup in their fulfillment centers. Any inventory that has been there for more than 365 days is charged additional fees.
If you’re an Amazon FBA seller, it’s vital that you understand long-term storage fees, including which of your products are due to be charged and when. Otherwise, it can come as a very unwelcome surprise, and cut in to your profit margins big-time.
This post is about finding out how much you will pay in long-term storage fees, and how to take proactive steps towards reducing your Amazon FBA long-term storage fees.
[Note that Amazon long-term storage fees were changed in late 2018. Previously, fees were assessed only in February and August each year, and included products that had been in storage for more than 6 months.]
Amazon Long-Term Storage FAQs
What items are
charged long-term storage fees?
If you have a product with multiple units in stock (Amazon won’t charge for 1 single unit) that has been in FBA inventory for 1 year or longer, you will be charged a long-term storage fee.
Amazon emails sellers about a month before each charge date alerting you if they expect you’ll owe long-term storage fees.
You can also find out by checking your Amazon reports. The inventory age report and inventory health report both give you information on how long your inventory has been in Amazon fulfillment centers.
Additionally, the recommended removals report calculates for you ASINs that are expected to be charged with long-term storage fees, and how many will need to be removed in order to avoid extra fees.
How much is each item charged?
Any items assessed with long-term storage fees will be charged $6.90 per cubic foot, or $0.15 per unit – whichever is larger.
This means $0.15 is the minimum charge per unit. These charges aren’t multiplicative – you only get charged the space they take up, or a flat price per unit.
How much will I be charged?
You can use the same reports mentioned above to check how much your long-term storage fees will be.
Here’s how to access that.
- Log in to Seller Central
- Go to the Inventory tab and click on Manage Inventory
- Click Inventory Dashboard
- Scroll down below to the FBA Inventory Age Box
- Click View Details (which will bring up the report you want to see)
And this will show you
- The Inventory Age for each product
- How many units have been in storage for 12+ months (365+)
- The estimate long-term storage fee (Est LTSF) for each product.
To calculate your total estimated fees
- Download the report as a CSV
- Open the CSV in Excel or Google Sheets
- Create a SUM formula to add up the estimated fees for each product.
Amazon recommends some ways to avoid paying these fees. This includes lowering your price, advertising the product on Amazon and by making a cancellation order.
Below are some other ways you can reduce your fees for next week and in the future.
How to Avoid Paying FBA Long Term Storage Fees
You can avoid paying additional storage fees by strategically timing your next restock and by offloading items.
Keep in mind that these dates are calculated from the 15th of each month. So if you can offload any lagging inventory before the 15th, you’ll avoid incurring these costs.
Here are a few ways to avoid extra charges.
Create a removal order
If you have lagging inventory you don’t think you will be able to sell before the deadline, you can request Amazon to remove them and return them to you.
After receiving your stock back, you can think about what you want to do with it (keep it and fulfill orders yourself, sell it on another marketplace, or try to return them to your supplier) without worrying about incurring fees from Amazon.
If your stock is lagging in fulfillment centers, there’s a reason for this. Chances are, you’ve ordered too much stock, or you’re trying to sell at too high a price.
Dropping your prices may be what you need to kick start your products’ sales, particularly if you’re getting a lot of impressions but not selling a lot.
Just be careful with dropping your prices very low with the intention of raising them back up later. This can hurt some of your metrics, including the chances of winning the buy box. So in the long-term, one-off promotions make more sense.
Run Amazon Sponsored Ads (PPC) Campaigns
PPC ads are an extremely valuable advertising channel for Amazon sellers, capable of a big boost in sales if you put the money in.
Some well-managed Sponsored Ads or Display Ads campaigns could be what you need to clear out excess inventory before the deadline.
A flash sale is your best option to turn a potential negative (extra fees from Amazon) into a positive.
You can use on-Amazon promotions, such as coupons or lightning deals, to do this. Or, you can run external traffic campaigns and generate a bit of excitement, while building an audience.
Everyone loves a sale. Take advantage of this by creating a promotion for your ASINs with excess inventory, and promoting it in channels such as email, social media ads or Facebook groups.
Create a LandingCube campaign for your promotion, and you can offer high-discount single-use promo codes to clear out your stock while collecting a really valuable asset in the form of customer email signups.
As for the discount amount, consider your specific situation before deciding on this. If you’re about to be charged a lot in long-term storage fees (for example, if your products are quite big, or you have a lot of excess product), it will make sense to run a large discount (over 70%). Just consider that you won’t be able to ask for reviews from these purcahses.
Amazon Long-Term Storage Fees – In Summary
Hidden costs like shipping and storage can eat away at your profits, if you don’t think ahead.
Ideally, you’ll order enough stock so that you don’t run out, but not so much that you’ll have products sitting in fulfillment centers for more than a year.
However, the best-laid plans of mice and men often go awry. Unforeseen circumstances can crop up, and you can be looking at unplanned fees.
If this should happen, the important thing is knowing what to expect, and how to deal with the situation.
Now you know the basics of Amazon FBA long-term storage fees. Make sure to take the necessary action to minimize these costs.