How to save storage fees on Amazon FBA program?
No Amazon seller likes to lose money. After all, you ventured in the Amazon marketplace in hopes to make money. If you are an FBA seller and are looking to improve your profit margins while taking advantage of the program’s benefits, you have come to the right place. But before we deal with FBA storage fees, let’s first talk about the costs of using FBA program.
What are the costs of using FBA program?
The FBA program comes with a bunch of perks but it is important that you get a good grasp of its cost to determine whether it suits your business.
Amazon breaks down their FBA storage fees by size (standard and oversize), weight and time of the year. Expect higher fulfillment and storage fees from October to December.
Here are the services you need to pay under the FBA program:
- Picking and packing your items
- Shipping and handling your items
- Customer Service
- Product Returns
Amazon may charge you additional fees if:
- Your items are oversized and require special handling per shipment
- Your items have been sitting around in the fulfillment center for more than 365 days
- Your items fall under certain categories where there are additional prep service fees or fees for processing customer returns
- You are selling clothing items. You need to pay additional $0.40 per item
For more information about FBA fees, head over to this page.
Understanding FBA Storage Fees
Currently, there are two types of storage fees:
Monthly inventory storage fees – Inventory storage for the current month is usually charged between the 7th and 15th day of the following month.
|January – September||$0.69 per cubic foot||$0.48 per cubic foot|
|October – December||$2.40 per cubic foot||$1.20 per cubic foot|
Long-term storage fees – Every 15th of each month, Amazon conducts an inventory cleanup and charges every item stored in their warehouse for more than 365 days an additional fee of $6.90 per cubic foot.
|Inventory cleanup date||Items in a fulfillment center more than 365 days|
|15th of every month||$6.90 per cubic foot|
To calculate cubic feet from inches:
- Multiply length x width x height in inches to get the volume.
- Divide the volume by 12 cubic inches (12 x 12 x 12 inches = 1,728).
Example: A unit measuring 45 x 10 x 8 inches divided by 1,728 = 2.1 cubic feet.
Tips to Lower Your FBA Storage Fees
If you don’t plan carefully enough in advance, hidden costs like shipping and storage can eat away at your profits. Here are some actions to take to reduce your FBA storage fees.
Ship only particular items to Amazon
You may or may not have heard about this but Amazon has an FBA program dedicated to small, light and inexpensive products. It is called FBA Small and Light and offers a great solution for sellers who want to reap the benefits of FBA program without losing a significant amount of their profits.
The main difference between Small and Light and standard FBA is the reduced fulfillment cost. Small and Light saves you $0.64 per order for items priced at $5 or less and $0.22 for items priced more than $5. This doesn’t sound big, but the savings build up quite fast when you are selling a lot.
Know more about the Small and Light program here.
Keep a close eye on your inventory performance
In your Seller Central account, you will find a tool named Inventory Performance Dashboard that allows you to track your inventory activities. It also gives recommendations and suggestions so you can improve your in-stock rate, lower your storage fees and carrying costs, and ensure your items are available for purchase.
Alternatively, you may use SellerMobile’s Inventory Management and Analysis tool to help you forecast inventory and restock at the right levels, at the right time.
Remove some products
If you have lots of inventory, find out which items you can pull out. These can be items that have been sitting on the shelves for so long. When trying to remove items – first, calculate how much it will cost you to send these items back to your place. Next, calculate how much you have to pay for storage. Based on the results, identify which option is more profitable for you.
Sell your products in bundles
If you sell five products, Amazon will charge you fulfillment fees on five products individually. But if you bundle those five products together, you will only be charged for one single unit. Product bundling also comes as an easy fix to get slow-moving items out, preventing you to pay for long-term storage fees.
Of course, you cannot just bundle items according to your choice. If you wish to try this strategy, be sure to comply with Amazon’s product bundling policy.
The FBA program surely does offer a ton of features and services to help you manage your business with ease; however, it does come with a price. To be able to cut down on cost, you need to be smart about your selling strategies, product choices and inventory management.
To help you breeze through the Amazon marketplace and stay ahead of your competitors, try using SellerMobile analytic tools.