If you’re planning on selling on Amazon, it’s important to know about Amazon storage fees. If you aren’t careful, these fees can add up and eat at your profit margins, which can cause you to lose money on a product. You will have to manage your storage fee risk and adjust accordingly regularly.
Selling on Amazon is becoming more popular every day, and the demand for space is also growing. These warehouses are quickly filling up with products from sellers, and because space is in such high demand, it can become expensive if sellers aren’t careful.
Types of Storage Fees
There are two types of storage fees that all sellers should understand.
- Monthly Inventory Storage Fee
Amazon charges a monthly storage fee that covers their costs. Storage in a fulfillment center is valuable to Amazon, and this cost will continue to go up as there is more demand. When planning your inventory, keep your storage fee in mind and remember that the more storage you have in an Amazon warehouse, the more expensive it will be.
This type of storage fee is calculated based on the daily average volume of space your items occupy in a fulfillment center.
There are two different product rates for storage in the Amazon warehouses: Standard size items and oversized items.
Standard size items take up less space, but the configuration of space can be complex. Amazon typically stores items in bins or drawers to store these products. The rate for standard size items is higher than oversize items.
However, oversized items are typically still more expensive to store because the fee is calculated based on the volume in cubic feet.
Rates for the storage fees will vary depending on the time of year and can go up significantly around the holidays.
2. Long-Term Storage Fee
A long term storage fee is applied twice a year on top of the monthly storage fee for all of the inventory that has been sitting in the fulfillment center for six or more months. Amazon wants its sellers to appreciate the fact that space is limited, and inventory sitting on the shelves can be used by products that actually sell well.
If your inventory isn’t selling, it’s taking up space that could be used to make Amazon more money. Amazon works to encourage its sellers to manage their inventory to keep their space efficient and profitable.
Determining Items Subject to Long-Term Storage Fees
While determining which of your units may be subject to this type of storage fee takes some work, you can use tools within the Seller Central to help you determine what your risk is. This can help you plan a strategy to avoid the fee.
Using the FBA Inventory Age box within the Inventory Dashboard can help you find the estimated long-term fee as well as the inventory age for each of your products being stored in the warehouse.
If you’re not sure how long certain inventory will take to sell, it may be necessary to store it outside of Amazon FBA. You can keep stock on hand in a different location, like your home or a storage unit. This can help you avoid these fees.