Managing a fulfillment by Amazon (FBA) business is excellent, but it also comes with a price tag. This fee was paid yearly, but the routine is now changed to the monthly payment.
Amazon charges FBA sellers a fee for inventory items that were in stock for the last than six months. If you are not prepared, you might lose hundreds of dollars in fees and other charges.
We have some surefire methods to steer clear of the FBA storage fee and make a profit in your store.
Look for free removal promotions
Amazon cares about its amazon sellers, so they put up promotions on the removal fee every other while. The promotion will remove FBA storage items for no cost. It waives off removal order fee as well, for items removed during the said period.
We cannot predict when the offer lands, so keep a close eye on it. Whenever it happens, use it to your advantage. Another thing about removing items from warehouses is that there is a time of putting the pieces back on.
The period to return the removed products is usually three to six months, but you can be the best judge of these timelines. So, you must check your selling schedules to not miss out on important events like holiday sales.
Keep an eye on unsold items
Now that you are aware of Amazon’s long-term storage fee, you need to keep an eye on unsold items. The key is to avoid storing items for more than six months. This way, you will be proactive about ignoring the fee and staying on track.
It is very simple to track unsold items. Log into your Seller Central account, click ‘fulfillment’ from ‘Reports,’ and create a report. Amazon FBA Coaching experts suggest that you copy-paste this report to your excel sheet, which makes it easier to read.
The most critical information bits in the report include the SKU, Product Names, ASIN, projected long-term fee, and quantity of items that will be charged. This little exercise gives you an idea about the things lying in inventory and their projected prices. For some people, it is above $500, which would be a shock if it not anticipated beforehand!
Dispose of or remove old inventory
In the next stage, you get rid of items that are no longer relevant and can idle around somewhere free of cost. The three options you have when getting rid of your inventory are to dispose of, liquidate, or remove altogether.
However, each of these methods has its own set of fees set by Amazon.
You will notice that each of these numbers come close to the minimum long-term prices; it is not a coincidence.
Disposing
You can dispose of inventory by paying Amazon and just getting rid of it. It sounds like the easiest thing to do at first, but it should be your last resort. It would be best if you tried selling or returning it to you before destroying this inventory. Moreover, this tip is useful for wholesale sellers of books or other items with individual SKUs.
Removing
Removing inventory is your next option, which is charged at $0.50 per unit. It is the priciest option, so you better think this through. But, it will save your inventory from destruction and much regret.
Many sellers recommend that you try selling this inventory to someone or yourself on eBay or other platforms. It is easy to send inventory this way, rather than removing it by paying the hefty price.
Liquidating
If you are up to liquidate inventory, Amazon puts it up on auction. Other wholesalers take part in the auction and buy your list. It sounds lovely, but FBA sellers don’t want to do it. Why?
Because the amount is minimal compared to what you would get by removing or disposing of, and then boom, Amazon also cuts a 10% off it. The one who buys your stock can happily put it back as their listing and may make more money on it too!
Based on your identification of stock, you can choose either of these methods and save up some bucks on the dreaded long-term fee.
Manage it from the first day
The smoothest tip to avoid long-term storage fees is to keep an eye on your stock from day one. Keep track of the stock you send to the FBA warehouse, and how much you are sending. If you post in a quantity that will be sold within six months, you will have a minimal fee to pay.
This is a strategy that you will perfect with experience. Over time, you and your team will anticipate needs, demands, and send over inventory based on a data-driven mindset. Top-rated FBA sellers will always tell you that if an item ends up costing you a long term fee, evaluate why this happened.
Did you need the item in the first place?
Why couldn’t you sell it to the biggest marketplace in the country?
Is your marketing strategy missing out on something?
Was there an issue with your listing?
Use this information to perfect your selling strategy and improve it in the future. Everyone makes mistakes, but savvy sellers don’t repeat such mistakes more than once.
Follow the 3-month sales rule
The biggest rule is to not store more than 3-month sales worth of inventory in Amazon warehouse. If your calculations show that you are selling 200 items every month, then you need no more than 600 items in stock.
If you have items above this number, keep them anywhere else but not at Amazon’s warehouse. Please keep it in your basement or a distribution center. It requires only 15 minutes every day, taking a look at your current inventory status and update as needed.
As you send the last bit of inventory from your distribution center to Amazon, you can place another order at your supplier for a refill. Things will work in perfect harmony with this three-month rule and 15-minute overview.
Last word
There is nothing worse than a hefty fee arriving in your inbox, especially when you did not anticipate it. It can eat away your profit and disrupt your estimates. We provided you some easy but proven tricks to stay away from that expenditure and use that money on doubling your earnings.
If you have more questions or queries about FBA prices, we would love to answer them!
