Amazon sellers can take advantage of Amazon FBA long-term storage, a service for sellers looking to store their products for over a year, although there are associated fees.
Here is everything sellers need to know about Amazon’s long-term storage fees, from when they are assessed to what sellers should do to avoid paying them!
What Are Amazon Long-Term Storage Fees In 2022?
Currently, Amazon’s long-term storage fees are assessed on the 15th of each month. These fees exist to encourage sellers to move items quickly. In addition to monthly storage fees, sellers are charged $6.90 per cubic foot or $0.15 per unit (whichever is greater). Adjustments to pricing and promotions are two ways to help avoid accumulating LTS fees.
To learn more about why Amazon charges fees for long-term storage, including more ways to avoid them, keep reading!
When Does Amazon Charge Long-term Storage Fees?
Though it is now assessed monthly, the Amazon long-term storage fee is not the same as the monthly inventory storage fee.
In fact, LTS fees apply to only some of your inventory and are charged at a higher rate. Amazon refers to this monthly assessment as an “inventory cleanup.”
With this fee, Amazon is trying to clean up items that have been in fulfillment centers for more than one year.
Since Amazon’s goal is to sell products rather than store them, LTS fees encourage sellers to have quickly cleared out their products.
As a result, more room is made available for new goods. In other words, LTS fees are like fines assessed for slow-moving products on shelves.
Amazon’s long-term storage fee (LTSF) for items is calculated according to a “first-in, first-out” basis.
This means that any time you sell or remove an item from the inventory at one of these fulfillment centers, it will be deducted from the oldest items inside that center first.
Also, this will help prevent incorrect fees associated with replenished goods.
However, due to delays, sellers might not see their account reflect these changes until around the 15th-22nd of each month.
Both monthly inventory storage fees and long-term storage service charges will appear on reports as “service fees.”
Another thing to keep in mind is that LTS fees are assessed in addition to monthly storage charges.
How Much Are Amazon’s Long-term Storage Fees?
For every month a seller has been storing their inventory in fulfillment centers for over a year, Amazon charges a fee of $6.90 per cubic foot or $0.15 per unit- whichever is greater.
As of 2019, this fee is assessed each month on the 15th.
In addition, Amazon charges a minimum monthly fee of $0.15 per unit for items that have been in the warehouse for more than one year.
However, sellers will only be charged the minimum fee if it is greater than the applicable volume-based long-term storage fee.
Moreover, sellers will always pay whichever one of these two fees is greater.
How Can Sellers Avoid Amazon FBA Long-term Storage Fees?
It is crucial to keep an eye on the Inventory Management page each month.
Furthermore, sellers will want to monitor it throughout the year for any products sitting around for too long and need a boost in sales.
It’s essential to find out what is causing these items to be slow-moving and how you can sell them more quickly:
- Find which ones are stuck because they don’t belong with your current inventory.
- Keep an eye on things like prices and total units. These can help guide consumers towards buying those fast-moving products instead of the slower ones.
There are several ways that sellers can avoid Amazon FBA long-term storage fees, such as the following:
If your inventory is not moving, look hard at your pricing. First, ask if your product is competitive with other similar items out there.
If needed, don’t be afraid to lower prices, and if it is not running under a “Minimum Advertised Price (MAP)” policy.
Remember that margins are essential but so too are the costs of keeping an item in stock that doesn’t sell.
Alternative Sales Channels
Amazon offers a fulfillment service that you can use to ship products from your other sales channels.
Moreover, Amazon doesn’t charge any referral fees on these orders.
Also, the handling costs are likely comparable to what you would have been paying if you were fulfilling those items yourself.
It’s important to note that this option doesn’t work well if it’s not an item with a short shelf life and high demand.
For example, if you were selling products like milk or eggs, having them stored on Amazon would be necessary to maintain product freshness and quality until they’re sold.
Another way sellers can avoid paying Amazon FBA long-term storage fees is by partnering with another company that will store their items for them.
This service is often called seller’s storage, and it takes little time or effort on your part.
By partnering with one of these companies, you’ll be able to reap the benefits of this service without the cost.
Although there may be some additional fees involved when using this option, it may still be worth it if you are looking for a more affordable solution than Amazon offers.
One option is often overlooked but can work exceptionally well for MAP products. Under the “ Promotions “ tab, current promotions can be located on Seller Central.
Here, sellers can set up a variety of promotions for their products, including offering discounts and Buy-One-Get-One-Free options.
Amazon sponsored products is an Amazon marketplace pay-per-click ad campaign tool.
With this tool, sellers can draw more traffic to their products with the potential to convert them into customers.
It is especially beneficial for newer products that are not ranking well in search results and other less popular items on the site.
How Can Sellers Track Amazon Long-term Storage Fees?
Both the sellers and Amazon benefit from avoiding or removing slow-moving inventory.
Therefore, Amazon’s “Inventory Age Report” is a tool available for sellers to track inventory age.
After logging into Seller Central, Sellers can locate this report by following these steps:
- First, go to the “Inventory” tab and select “Manage Inventory.”
- Next, click on your “inventory dashboard” at the top of the screen.
- Once open, scroll down to choose the “FBA Inventory Age” report and click the “view details” option.
This report will show how many units of each item are in your inventory and the current fees assessed when you next clean your account up.
In addition, sellers may review the “Recommended Removals Report” to highlight any products currently subject to LTS fees.
Amazon’s long-term storage fees incentivize sellers to liquidate their inventory quickly.
Having a plan to manage your slow-moving inventory throughout the year with monthly cleanups can help you reduce the stress and costs associated with Amazon’s long-term storage fees.