Sellers using FBAs such as Amazon Prime eligibility do not need to bother about inventory storage, managing picking, bundling, or dealing with customer returns. The sale of Amazon FBAs is subject to Amazon Prime eligibility fees. Instead, Amazon maintains its stock in its compliance centers, performs all shipping activities, and returns them on behalf of vendors. While Amazon FBA's (essentially) hands-off attitude attracts many Amazon salespeople, it is worth it.
Amazon Prime is increasingly popular, and the number of users on its website year after year is constantly disintegrating. As a result, customers are unable to purchase additional things to optimize their Prime membership's perks.
Sellers realize it and adapt fast to the sale of their products through the FBA program of Amazon. With FBA, considerable advantages such as outsources, fast shipping, and dedicated off-the-shelf storage are achieved.
These vast advantages are as expensive as they are. The Amazon FBA program is one of the various charges connected with storage. Storage charges are one of the main costs that Amazon FBA vendors have to pay. This is what you need to know and how they are determined on Amazon FBA storage fee.
Inventory Volume Calculation
The storage costs for Amazon inventories are paid in the Amazon fulfillment storage fee center based on an annual average volume occupied by the seller's stock. The unit size is measured when things are packaged and ready for the ship according to Amazon FBA guidelines and standards. Find out more about listing, prepping, shipments, and special packaging and preparation requirements for your FBA merchandise to the Amazon fulfillment storage fee centers.
It is easy to convert to cubic feet to estimate your storage rates if you know the dimensions of your packaged units in inches:
Length x width x height of item multiply
Divide the volume into cubic feet by 12
You can use an FBA calculator from Amazon to compute your Amazon FBA storage fees, including storage charges.
Amazon's Storage Fee Calculations
The Amazon storage fee calculator uses FIFO (First in, First out). FIFO mainly indicates that products sold or removed from the stock stored in Amazon for the most extended period are subtracted. Whichever unit is shipped or removed, this stays the case.
Amazon Monthly Storage Fees
In return for saving your product in Amazon's Fulfillment Centers, the Amazon monthly storage fee is the baseline fee sellers pay Amazon. These fees are collected between the 7th and 15th of the following month based on two product sizes – both in regular and excess sizes. So, for example, sometimes, between April 7 and April 15, you would be charged for inventory storage throughout March.
The monthly storage cost of the inventory, which is charged by the cubic foot, depends on product size and year time. Storage prices are generally more significant between October and December, when you can reach fulfillment centers everywhere throughout the hectic holiday shopping season.
Here is a Brief Chart from Amazon:
Dangerous Goods Monthly Storage Fees
If you use FBA for the Amazon inventory, you're going to spend a little more on monthly warehousing fees. Hazardous products are, in principle, items that require specific handling and storage of dangerous materials. Sellers must be part of the FBA Dangerous Goods program to sell these items.
Here we have a brief chart from Amazon:
Amazon Long Term Storage Fee
When you have more than 365 days in a storage center, an amazon long-term storage fee is levied each month. A $6, 90 per cubic foot or $0, 15 per unit, whatever is more significant, is chargeable to your seller's account.
Amazon will record that when you elect to delete a product (especially ASIN), subject to long-term storage charges at the next cleanup date. Amazon will subsequently not permit you to submit different ASIN units three months after the removal date.
Identify A Long-Term Storage Charge Inventory At Risk
You may either utilize the inventory health report or the inventory age report to get an ASIN breakdown. The information will determine the length of your inventory.
Search for the Inventory Age:
- Go to your seller account in the Inventory tab
- Click Planning Inventory
- Go to Reports, then Complete
- Finally, click on inventory health reports and recommendations for removal.
The recommended removal report will also allow you to identify stock for which storage charges apply. Here is a link to the recommended removal information. (Sign-in Required by Amazon Seller)
Tips For Avoiding Storage Fee
One of the biggest reasons Amazon's FBA storage fees are overcharged is that their products are delayed and not sold fast enough. Unfortunately, this means that many times the extra product is on the shelf.
Methods exist to avoid this, however. Here are just a few.
Send Back Your Stock
Simply returning your stuff to you is the simplest way. In addition, this will stop your stock for extra months of long-term storage fees continually. I will not be able to pay long-term storage fees until I am sure that the goods are sold next month. It's much too costly.
To do this, you might submit a removal order.
You will not be paid long-term storage fees until you have set up a removal order before the cleanup date. For example, on the 14th of the month, this date for cleanup shall be 11:59 PT.
Use Discount Pricing
Selling Amazon FBA products at a discount is the cheapest and less stressful option to lower the number of Storage Charges. It is beneficial if the demand for inventories lags and the products are only stored.
It is sometimes even meant to lose your merchandise to save storage costs. The lack of cash flow and over-storage costs affect your company in two ways:
First, it very rapidly stops bleeding. Second, long-term storage charges might sneak and bleed your bottom line quickly.
Secondly, norms for accounts receivable turnover in retail companies are measured. Lower turnover reduces your money's return to the number of times. I prefer to lose a product and receive cashback faster. This will allow me to reinvest the funds in a faster-selling inventory.
Use Promotions For Amazon
Amazon often offers its vendors promotions. These promotions sometimes contain an offer to sellers to remove items free of charge from FBA. During the promotional period, they pay the cancelation order.
This option isn't often provided, but you must keep it in mind if the situation permits it. Also, keep an eye on promotions since they occasionally arrive in fantastic moments.
The addition of your advertising to your goods is another fantastic technique of avoiding long-term storage charges. Run your product advertisements. If the advertisements cost less than storage costs and your products are sold, it is a win.
Time And Handle Your Inventory
If you buy products in exceptionally high volumes, only transmit a fraction of your overall inventory if you can. But, again, the aim is to establish proof of sales, provided that there is only one SKU.
With the documentation of your transaction, your inventory will take you time to establish a timeline. This data lets you know how much stock you can ship to mitigate storage costs. Ideally, you want to have inventory in store for 30-45 days.
Next article: Amazon Referral And FBA Fees: 2021 Guide