If 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 have been 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.
Amazon 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?
1. 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. My friend, Cynthia Stine, has a great post about advertising on Amazon you should check out.
4. 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 February 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.
Remember, 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).
UPDATE: Starting in August, Amazon is going to be charging a new long-term storage fee for items that are in your inventory for over 6 months. This fee will be half of the 12-month fee. The current 12-month fee is $22.50, and the 6-month fee will be $11.25 per cubic foot. You don’t need to worry about paying this fee now, but it might impact your sourcing decisions. You might decide not to go as deep on an item if you think you might be charged this fee after it’s been stored at an Amazon FBA warehouse for 6 months. I’ll be blogging more about how to make the most of the 6-month aged inventory notification, so be watching for that. Scroll up and subscribe to be sure you don’t miss that blog post when it’s ready.
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.