Amazon storage fees suck, but they exist for a reason.
If you’ve noticed a huge increase in storage fees in the past few months, there are a few things you can do.
First though, a bit of an overview.
There are 2 different ways to sell through Amazon:
- Fulfillment-by-Merchant (FBM)
- Fulfillment-by-Amazon (FBA)
FBM is a process where the merchant is engaged in packing and delivering the goods to customers directly. While in FBA, the merchant delivers the goods to the Amazon warehouse and everything is handled by Amazon–from storing to delivering the goods.
Amazon has a different fee structure for FBM and FBA based on the services received.
Your objective as a seller is to understand the fees and costs incurred and ensure to earn a profit by selling products on Amazon. Storage fees are charged by Amazon on a monthly basis for storing your goods, packing and delivering. This fee varies based on the size and nature of the products.
What Are Amazon Storage Fees?
Amazon storage fees are determined by calculating the daily average volume occupied by the goods in cubic feet. The volume is determined after the products are properly packed as per FBA policies and requirements.
Amazon charges a monthly storage fee for its FBA sellers between the 7th and 15th of every month. For instance, storage fees for January will incur in February, between the 7th and 15th.
The fees are determined based on the product-size tier and the time of the year. During peak seasons, Amazon charges a high storage fee as compared to the off-season.
Goods are also categorized as dangerous and non-dangerous.
Here’s a handy table that recaps storage fees for Amazon sellers:
|January–September||$0.75 per cubic foot||$0.48 per cubic foot|
|October–December||$2.40 per cubic foot||$1.20 per cubic foot|
|January–September||$0.99 per cubic foot||$0.78 per cubic foot|
|October–December||$3.63 per cubic foot||$2.43 per cubic foot|
Long-Term Storage Fees on Amazon
Long-term storage fees are also known as overage fees and are charged for products that remain in inventory for 365 days or more. This fee is charged in addition to the monthly storage fee. The fee charged is $6.90 per cubic foot or $0.15 per unit, whichever is higher every month.
Amazon storage fees calculator
To calculate your storage fees, Amazon uses the following formula:
Storage fees = Average daily units x volume per unit x applicable rate
Here is a quick explanation of all 3 metrics:
- Average daily units referred to the average number of units stored in the warehouse
- Volume per unit is determined when the product is fully packed
- The applicable rate refers to the rate based on the nature and size of the products
3 Ways To “Avoid” Amazon Storage Fees
FBA sellers can avoid long-term storage fees through effective inventory management.
Here are 4 strategies to help you lower fees down to a minimum:
(You cannot truly avoid all of them)
Method #1 of Lowering Storage Fees: Old Inventory Management
The Amazon storage system works on the concept of First-in-First-Out.
If there’s any inventory, which is expected to be in the warehouse for 365 days, it should be removed.
For this, you can send out a request to Amazon to remove the inventory, which will be processed and a long-term storage fee will not incur. It may take 14 to 30 business days to remove the inventory, but the fee will not be charged after the request. Any inventory doesn’t sell should also be removed and replaced with items that are more likely to sell.
It may take 14 to 30 business days to remove inventory when requested but you will not incur the fee anyway after the request.
To avoid such a situation, it is recommended that less quantity should be ordered in the beginning and a track should be made of sales for 30 to 40 days.
If the product is high in demand, then the stock should be ordered for at least 6 months.
Method #2 of Lowering Storage Fees: Alter the Pricing Strategy
To avoid long-term storage fees, it is recommended that the pricing strategy is altered.
Even if you have to sell the products at a lower profit margin, you should consider it.
The reason is that requesting the products back may result in bearing the cost, which can be higher than the loss expected to incur after selling at lower prices.
Thus, it is appropriate to sell at a lower profit margin and in large quantities to avoid additional fees.
Method #3 of Lowering Storage Fees: Amazon Free Inventory Removal Offer
Amazon sometimes offers free inventory removal to sellers.
This opportunity should not be wasted.
If there’s any product that is expected to last longer than 365 days in the warehouse or is not selling out, such products should be removed from the warehouse by using Amazon’s free removal offer.
Without this offer, Amazon is directed to charge a certain fee per product just to remove it from its shelves.
There are ways to keep storage fees at a minimum on Amazon. However, it’s not as simple as “avoiding” them; rather, you need a sound inventory management strategy to ensure that things that stay with Amazon go out of their warehouses in time, and that you sell enough items to make the fees worth it in the first place.
With so many moving parts, managing your inventory isn’t easy. Sunken Stone helps with ensuring that your inventory management strategy isn’t an afterthought leading you to lose 1000s of $ in overage fees down the line.
Learn about some of our best tips for selling on Amazon in the guide below >
Frequently asked questions
Amazon fees are charged when an actual sale occurs while FBA fees are charged for placing your goods in the warehouse along with charging for packing and delivering the goods.
Amazon storage fee is calculated by using the following formula: Storage fees = Average daily units x volume per unit x applicable rate as per size and nature of the product.