Selling through Amazon FBA sure have its perks, but you also need to consider the fees involved to make sure you don’t lose money. One of the fees you need to consider is the Amazon FBA storage fee because if don’t really understand how it works, then you might be losing more money than you should be.
In this blog post, I will give you an overview of what Amazon FBA storage fees are and how to calculate your monthly storage fees to help ensure your money is not spent by paying unnecessary storage fees.
Don’t skip the last part because I will give you tips on how you can avoid long-term storage fees.
What are Amazon FBA Storage Fees
Amazon FBA storage fees are fees that Amazon charges sellers in exchange for storing their products in its fulfillment centers. There are two types of storage fees: Long-term Storage Fees and Monthly Storage Fees.
Monthly Storage Fees
You typically pay the monthly storage fee between the 7th and 15th of the following month. The calculation of the storage fee is done when the month officially ends. The cost of Amazon storage fees is different for every seller. Typically, sellers will be billed whichever is greater: the fee for the applicable cubic foot or the applicable per unit fee.
Long-term Storage Fees
Once your inventory has been in a fulfillment center for more than 365 days, you will be charged a long-term storage fee every month. Your seller account will be charged $6.90 per cubic foot or $0.15 per unit, whichever amount is greater.
If you decide to remove a product (particular ASIN) that is subject to long-term storage fees at the next inventory cleanup date, Amazon will record that. Amazon then will not allow you to send in any more units of that ASIN for three months following the date of removal.
The basic factors that affect the cost of storage fees are:
- Daily average volume – This is the total volume of your inventory stored in Amazon FCs. This change every day because some of them are sold and taken from your storage. The more that you sell every day, the lesser storage fee you need to pay.
- Product type – The products you store at Amazon can be the standard type or the dangerous goods kind. The latter will normally be more expensive.
- Product size – If your products are bigger or fall under Amazon’s oversize dimensions, you will pay more for storage fees. Amazon provides product size tiers and dimensional weight pages you can use as references.
- Time of year – A big percentage of your Amazon storage fees is a result of the time of the year. Amazon provides a monthly storage fees page for reference. The most expensive months for storage are from October to December, for both standard and dangerous.
Amazon storage fees can change depending on the time of year. During the holiday season, for example, the storage fee can increase by up to 150%. The fee can also change depending on the size of your product. The storage fees of standard-sized items are typically higher than oversized products.
Amazon wants inventory in their fulfillment centers to move quickly as it is not a holding warehouse for sellers. The storage fees are a way to encourage FBA sellers to improve the management of their inventory and increase sales so that their fulfillment centers are efficient and profitable.
Related Reading: Amazon FBA Storage Limits: What You Should Know in 2021
How to Calculate Monthly Amazon Storage Fees
The specific Amazon storage fee is based on volume, so it is important that you determine the size of your product. This way, you can calculate your monthly storage fees and get an accurate cost.
To find out your Amazon monthly storage fees, on your Amazon Seller Central account, go to Reports, then choose Payments. Go to the Transaction View, then click the dropdown under Transaction Type and click on Service Fees. You’ll be able to see the charge for storage fees.
Alternatively, you can calculate it by:
- Determine the inventory volume by multiplying the length, width, and height of your product in inches.
- Divide it by 12 to convert the number into cubic feet.
- Multiply it by the current cost structure at Amazon.
- Multiply it by the quantity of the products that you will be storing.
For those who are selling dangerous goods expect to pay more compared to standard items. The fulfillment of each product is 30-40% more expensive since Amazon has to store them in fulfillment centers that manage dangerous products which require special handling and storage.
Other reasons why dangerous goods will cost you more:
- Fulfillment centers for these items are limited.
- The cost to ship them will be higher.
- They take a longer time to check-in.
- There are limits on the quantity you can send in.
Related Reading: Amazon FBA Cost Calculator – All You Need to Know
How to Avoid Long-term Storage Fees
The best method to avoid long-term storage fees is by keeping your inventory moving. If your products can quickly leave Amazon fulfillment centers, you will not need to pay for storage every month.
Besides that, here are other things you can do to avoid paying hefty storage fees.
Keep track of items that are not selling or are unfulfillable
One reason why you are charged excessive storage fees is that your inventory is lagging and are not selling fast enough. If your products are not selling fast, investigate the reasons for the lag.
To identify stocks that are at risk of being subjected to storage fees:
- Go to Seller Central and select “Manage Inventory.”
- Click “Inventory Dashboard” and find “FBA Inventory Age” to view how long your inventory has been sitting in FCs.
- Click “View Details.”
You will find here if there are items for which you will be paying storage fees. If you have stocks that will soon be subjected to long-term storage fees, you can choose to remove inventory.
You can also consider selling them at discounted rates by running deals such as Amazon Lightning Deals to entice customers to buy your product and get them out of the fulfillment center and avoid the storage fees.
Time when to restock your items
If you buy stocks in very large quantities, avoid sending everything in. Only send in a portion. You can then create a timeline that will help you determine how long it takes for your inventory to cycle through. An ideal inventory in storage is 30-45 days.
Always check the Recommended Removals Report
The Recommended Removals Report provides you with information on what inventory is up for storage fees. Be sure to check this regularly so you can identify what products are at risk for storage fees.
Use an inventory management tool
An inventory management tool will save you time and money by avoiding FBA long-term storage fees. The tool will notify you when your inventory levels need restocking, which helps you avoid having too many products in storage.
If you are on the lookout for an inventory management tool, you can check out my Inventory Lab review to see if it’s the right one for you. Aside from inventory management tools, there are a lot of other E-commerce tools available to help you manage your online business better.
Related Reading: What is Amazon FBA: Complete Amazon FBA Guide in 2023
Conclusion
Amazon actively works to encourage sellers to manage their inventory to keep it moving efficiently. When it comes to managing your Amazon FBA inventory, it is important that you are efficient. Be strategic as well so that you can avoid the excessive monthly and long-term storage fees.
Running out of stocks is something that you want to avoid, but having too many of them is just as damaging to your Amazon FBA business. Your goal should be to avoid paying storage fees and keep an efficient inventory.
How do you manage your inventory? Do you also use tools to keep track of them and avoid paying unnecessary FBA storage fees? Share your best practices in the comments section to help other sellers who are struggling with their inventory.
You can also visit my Amazon FBA course page and see how I can help you with your Amazon FBA business.