FBA Aged Inventory Notification (or How to Avoid Long Term Storage Fees)

amazon-warehouse-5If you’ve been selling on Amazon at least 11 months, then it’s possible you recently received a FBA Aged Inventory Notification email from Amazon. Twice a year, (February 15th and August 15th), Amazon charges a long term storage fee for all items that are being stored in a FBA warehouse for 365 days or longer. To allow flexibility, Amazon is kind enough to exempt one unit of each MSKU from being applied to the long term storage fee. This means that if you have 5 items that have been stored in a FBA warehouse for over a year, only 4 will actually be charged the fee.

This fee is something to take seriously, as it’s currently $22.50 per cubic foot. As an example, I currently have 83 aged units of inventory which (if none of them sell or are removed) will cost me $291.82 in long term storage fees. That’s a charge of over $3.51 per item. These are just my numbers and yours will vary. You may be paying less per item, but you could also be paying more.

ifOUVAvNfA60Amazon charges this fee to make sure of two things: 1) to encourage sellers to keep our inventory priced competitively, and 2) that their FBA warehouses aren’t used as a dumping ground for products that might never sell. Before long term storage fees, you could send in 100 of a $50 book ranked at 5 million, and only pay pennies a month for storage per book. Maybe you sell one book a year, but what do you care? You’re making a profit and FBA stores all the books for you. Meanwhile, Amazon is seeing thousands of other sellers doing the same thing. FBA warehouses don’t want to be a long term storage solution for you. They want to be a short term storage facility that holds your item for a short time until it sells. To make sure that Amazon sellers are motivated to get all of these multiples sold, they have instituted the long term storage fee.

How do we find out what items are going to possibly be charged this fee? In the email that Amazon sent you, there was a link to their recommended removal page. This page will tell you what Amazon says you should remove in order to avoid this fee.

So what are our options to avoid this fee?

LC_OFF_Body_NLP1. Reprice the items that are affected by this fee. Depending on the rank, you’ll want to either match the current low price or beat it. If the rank tells you that this item sells often, just price-match the lowest price, but if it looks like this item only sells once a month, then you’ll probably want to be the lowest price of all your competition.

2. Use Amazon Promotions to offer your potential buyers an incentive to buy your item.

3. Use Amazon Sponsored Products to advertise your item. This will cost you, but may cost less than the long term storage fee if done correctly.

EBay_logo.svg4. Use multi-channel fulfillment and see if you can sell these items on eBay (or other sites) and then use Amazon to ship the item to your buyer.

5. Don’t just reprice your item once. Go back often and make sure that the item is still priced competitively. Remember, you might not be the only seller of that item who may be hit with long term storage fees. Other seller are going to be lowering their prices too.

6. When all else fails and your item is still not sold by August 15th, then you could set up a removal order to have your inventory returned to you. Then you could try to sell it on eBay, or perhaps sell it in a future garage sale. If that doesn’t work, donate it to a worthy cause. You can even arrange with Amazon to automatically remove all items that are affected by this fee.

7. If you don’t think that returning the items to you is worth the hassle of selling it on another platform, at a garage sale, or even donating it, then you could set up a removal order and have Amazon dispose it.

Screen Shot 2014-07-14 at 11.53.12 AMRemember, almost everything I tell you has exceptions. If the item you are selling is a rare, high-priced item, perhaps you are fine with being charged a long term storage fee. Perhaps you have a rare toy that is ranked 1 million, but you are certain that you’ll get $250 for it… then maybe paying around $3 for long term storage fees don’t matter to you. Also, you might have a situation where you’d prefer to pay a $3 long term storage fee rather than lowering your price by $10. Each product will require you to decide what is best and what will maximize your profits.

But for 95% to 98% of items in our inventory, you’ll probably want to choose some of the options above in order to avoid these fees.

If you did not get this FBA Aged Inventory Notification from Amazon, then congratulations! You don’t have any items that are subject to this upcoming fee. But just to be sure, you can go to Amazon and see your recommended removal report (sign-in required).

So what are your plans to avoid long term storage fees? I’d love to hear how you handle Amazon’s FBA Aged Inventory Notification and make the most of this situation.

2 Responses to FBA Aged Inventory Notification (or How to Avoid Long Term Storage Fees)

  1. Stephen,

    Very timely post! I got my first Long Term Storage email the other day also. One option that you did not cover was figuring out the cost of creating a removal order (generally $.50 per item for non-oversized items) and having the item(s) sent back to you, and then shipping them back in to FBA after August 15th. That would buy you another 18 months to sell the inventory. My fee is going to be $185.57 if I don’t do anything. The bulk of that is 1 item that I have 45 in FBA and I could get them sent back to me for about $22.50 and then send them back in later. Shipping back in to AZ would be maybe $30. So less than 1/3 of the Long Term Fee. I have sold about 70 of them in the year since I sent them in so I would be confident I would move the rest within a year.

    Just another thought!

    Dave
    http://www.RockSolidDeelz.com

  2. Hi Stephen. Im 3 weeks in on FBA and I have sold 21 items so far. I have close to 200 items in inventory. The costs are really eating into my profit at this point. How many items would I need in inventory to start seeing multiple items sell per day and proper cash flow?

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