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Fulfillment By Amazon ( FBA ) sellers may not be aware of Amazon’s FBA long-term storage fees that they are charged for products that sit on Amazon’s shelves for over six months. According to Amazon, products that are overstocked or stored for too long in their warehouses limit their ability to offer space for fast-selling products that make money. So, on February 15 and August 15 of each year Amazon performs an inventory cleanup and assesses what’s called a “long-term storage fee” to their FBA customers whose inventory has been stored in their fulfillment centers for too long.
Three Tips to Avoid Paying Amazon FBA Long-Term Storage Fees
This is the easiest of the options. When you submit a removal request, Amazon ships your requested inventory back to your place of business for a small fee. Return fees can be a little as $0.50 per unit, with oversize products being only $0.60 per unit. This may be the best way to avoid the long-term storage fees as long as you can afford to take the hit on your margins.
Your second option is to submit a disposal request. For a cheaper price than removal, Amazon will dispose of the stock for you. The decision to use this option may be a hard one to make. But, if the amount you paid for your inventory is minimal, it may be the best one. Maybe you were testing a new product and it didn’t sell, so it’s time to cut bait.
Unfortunately, even if you choose to have Amazon dispose of your inventory, there is a cost to you. Disposal is $0.15 for standard size units and $0.30 for oversized units. The good thing about disposal is that Amazon makes it really easy. All you have to do is designate that you want the products disposed of and Amazon does the rest.
Your third option is to try to sell the at-risk inventory before Amazon assesses long-term storage fees. This is the best option for you if there is still a chance that you can sell your products – even at a small profit margin. There are a couple of methods to do this.
Create a Sales Promotion – Amazon makes it easy to add promotions to your products. From the Seller Central area on Amazon’s website, you go to the Advertising drop-down and choose Promotions. From there, you can choose to offer your customers free shipping, buy one get one, money off, or other deals. This may allow you to move at least a portion of your inventory, making the removal or disposal fees for the rest more palatable.
Create a Sponsored Products Campaign – If you think that your inventory has been sitting on the shelves because it’s difficult for customers to find, you might try bidding on ad placement through Amazon’s Sponsored Products. You place a bid on relevant keywords, and if your bid wins, your ad gets displayed to customers. It’s a form of pay-per-click, meaning you only pay when someone clicks your post. If it works, your products will receive much more visibility and some of your inventory may sell.