Amazon May Have Just Saved You Big Time...
If you have been selling on Amazon for a decent length of time, then you probably are aware that Amazon charges long-term storage fees for Fulfillment By Amazon (FBA) inventory twice a year. If you didn’t know, here are the official terms per the Amazon website:
“On February 15 and August 15 of every year, FBA conducts an Inventory Cleanup, at which time inventory units that have been in Amazon fulfillment centers between six and 12 months are assessed a Long-Term Storage Fee of $11.25 per cubic foot. Units that have been in fulfillment centers for 12 months or more on the Inventory Cleanup date are assessed a Long-Term Storage Fee of $22.50 per cubic foot.
To provide additional flexibility to maintain your unique selection, one unit of each applicable product ASIN will be exempt from the semi-annual Long-Term Storage Fee. Please note, FBA accounts for inventory on a first-in, first-out (FIFO) basis when calculating the Long-Term Storage Fee. In practice, physical units are shipped to fill customer orders to optimize for cost and speed of delivery, not on a FIFO basis.”
You can read the entire FBA Long-term storage guidelines here: Amazon Long-Term Storage Guidelines
While FBA has numerous advantages, long-term storage fees are obviously not one of them and can impact your business if you are not careful. Sellers who like to hold slower moving inventory or private label sellers are especially vulnerable to long-term storage fees.
Well, on March 31, 2016, Amazon sent out an email to Amazon Sellers saying the following:
What's BYOB? Think. Lots. Of. BOLOs....
Register HERE to find out more about BYOB and the amazing community of product-sharing Amazon sellers
What does this mean for you?
If you do not have any inventory that will incur long-term storage fees on August 15, then likely nothing! However, if you have a private label line that has not been moving quickly.. Amazon may have just saved you a lot of money.
Most items cost $.50 to be returned to you by Amazon. If you have a couple hundred units that you need to return to you before long-term storage fees hit.. you may save yourself quite a bit of money getting them returned in April!
Who wins big with this promotion?
If you paid long-term storage fees on February 15, 2016 for items that you still have in the warehouse, you can now have those units removed and receive a 66% reimbursement. This may not seem like much to you..but some sellers literally paid $1,000's of dollars in long-term storage fees back in February. This may save them a pretty penny.
Don't like to read? Catch a quick video on long-term storage fees:
What to do going forward
Going forward, make sure that you are always keeping a close eye on your inventory turnover. Amazon has made it pretty easy to see which items are going to incur long-term storage fees in Seller Central by going to:
> Reports > Fulfillment > Inventory Health Report
Inventory management is an important part of running an Amazon FBA business and we recommend that you watch the show we did on this topic when you have a few minutes: Managing Amazon Inventory