4 Ways FBA Sellers Can Avoid Amazon's Long-Term Storage Fees
- August 5, 2015 | Marcus DeHart
Twice a year, Fulfillment by Amazon (FBA) does an Inventory Cleanup, taking stock of all subscribers' inventory to determine how long it’s been taking up space in their fulfillment centers.
If your inventory is found to have been sitting around for longer than six months, you’ll be assessed a long-term storage fee. The next Inventory Cleanup will take place on August 15, 2015. Now's the time to figure out your options for avoiding this fee for units you'd rather not pay for storing.
First read my post on Pro Tips for Managing Your Amazon FBA Inventory to learn about ways to decide what to remove and what to keep on your shelves. Next, check out your options:
1. Create a Removal Request
This is by far the easiest way to avoid the long-term storage fee. Amazon has even made it less painful by creating marginal return fees. Return fees for a standard-size product can cost as little as $0.50 per unit. Oversize units are only $0.60. And those prices include the shipping of inventory to your place of business.
So if your profit margin can take a hit like that, this might be the best solution for you. The great part is that the recommended removal report mentioned above comes with a convenient button to begin the removal process. Just click, and your ASINs that they have recommended for removal will pre-populate a removal request form with the quantities needed to avoid the long-term storage fee.
2. Create a Disposal Request
Disposing of your inventory might be a tough decision to make. This will be easier if your cost of acquisition is minimal. You took a risk, it didn’t pay off, so it’s time to count your losses and move on.
But disposal still comes with a price. Standard-size units are $0.15 and oversize units cost $0.30. But compared with the price of the long-term storage fee, you could be saving a bundle. Disposing of inventory is easy, if not painless. You can follow the same process from the Recommended Removals report, but designate that you want to dispose of the inventory instead of have it shipped to your address.
3. Create a Sales Promotion
If you still think that you can sell your aging inventory on Amazon, you might try reducing the price or offering a short-term promotion to try and move it before the next Inventory Cleanup. From Seller Central, go to the Advertising drop-down menu and select Promotions.
You can pick from offers like Free Shipping, Money Off, Buy One Get One, and External Benefits. The Promotions page will explain each offer and walk you through setting these up. The advantage here is you might be able to move enough inventory to lessen the cost of removing or disposing of inventory or paying the long-term storage fee. First, learn how to create a promotion.
4. Create a Sponsored Products Campaign
Sometimes inventory sits on the shelf for a long time because it’s difficult to find. If you have a Professional selling plan with Amazon, you have the option of bidding on ad placement on Amazon through Sponsored Products. Using a pay-per-click auction, Sponsored Products compares the relevancy of your product ads with other sellers’ ads and matches your keywords up with shopper search terms to find the best match.
The great part is that you only pay when your add is clicked. So you could get thousands of views by shoppers, but if only one hundred click your ad, you pay for the one hundred, not the thousands of views. With a little more visibility you might be able to move more of your aging inventory out of the fulfillment centers and into the hands of happy customers. Learn more about Amazon Sponsored Products.
Make a Plan
Of course, you don’t have to stick with just one of the options above. It might be worth the effort to run a promotion or an ad campaign during the weeks remaining before the Inventory Cleanup. You can use that time to evaluate what to do with any remaining inventory.
Run the numbers of removal versus disposal. It might not be worth it to remove some of your higher-margin products while it might be time to say goodbye to your low-margin units.
The important thing to remember is to make a decision before August 15. You don’t have to have the units out of the fulfillment center by then, but you do need to have submitted a removal or disposal request by then to avoid the fee.
Learn more about FBA Long-Term Storage.