Last updated on November 13th, 2023
Written by Mohamed Aden
Navigating Amazon selling can be complex, especially when understanding the various seller fees involved. One crucial aspect you must be aware of as a seller is the aged inventory surcharge, more popularly known as Amazon long-term storage fees. These fees are charged for items stored in Amazon’s fulfillment centers for an extended period.
Knowing how long-term storage fees work on Amazon is essential for maintaining a healthy inventory level, optimizing your overall selling strategy, and increasing your profit margins. In this guide, you will learn about calculating the fees and the strategies you can employ to minimize costs and maximize your business's profitability. Let's begin!
The Amazon long-term storage fee is a charge imposed on FBA sellers who have products stored in an Amazon warehouse for over 181 days. It encourages sellers to assess and manage their inventory to prevent excess storage costs.
From the term “long-term storage fees,” Amazon now calls this cost the “aged inventory surcharge.” On April 15, 2023, Amazon implemented new fees and tiers for products on long-term storage. Below are some of the changes you’ll experience.
Don't be confused when you research long-term storage fees and also see "aged inventory surcharge" as the two are the same thing. The latter is what Amazon calls “long-term storage fee” now.
Before the revamp, Amazon only charged long-term monthly storage fees for items stored in an Amazon fulfillment center from 271 days and older. Now, Amazon charges fees for items stored in their warehouses from 181 days onwards. Nevertheless, note that if you sell products like clothes, bags, shoes, pieces of jewelry, and watches, these changes do not apply to you.
|Item Age||Before April 15, 2023||April 15, 2023 Onwards|
|181-210 days||$0||$0.50 per cubic foot|
|211-240 days||$0||$1.00 per cubic foot|
|241-270 days||$0||$1.50 per cubic foot|
There is a significant increase on the long-term monthly inventory storage fee charged for items 271-365 days old as cited in the table below.
|Item Age||Before April 15, 2023||April 15, 2023 Onwards|
|271-300 days||$1.50 per cubic foot||$3.80 per cubic foot|
|301-330 days||$1.50 per cubic foot||$4.00 per cubic foot|
|331-365 days||$1.50 per cubic foot||$4.20 per cubic foot|
Nevertheless, Amazon retains the storage utilization surcharge for units stored for more than 365 days at $6.90 per cubic foot or $0.15 per unit. You will be charged a higher amount.
To make the most out of the FBA program on your Amazon Seller Central account and avoid incurring excessive costs, it's essential to understand how to calculate long-term storage fees accurately.
Long-term storage fees are assessed on a per-item basis. Factors affecting the costs are the following:
The billing for long-term storage fees is February 15th and August 15th every year. However, the charge will reflect on your account between the 7th or 15th day of the next month. For instance, if you have long-term storage fees in October, it will show on your seller account on November 7-15.
To guide you further on how to calculate long-term storage fees, you can follow the steps below.
Start by measuring the dimensions of your products in inches. Multiply these values to find the product volume in cubic inches. To convert cubic inches to cubic feet, divide the volume by 1,728 (1,728 cubic inches equals 1 cubic foot).
Click the “Inventory” tab and select the “Inventory Age” option on your Seller Central inventory dashboard. This will show you the age of stored items in the Amazon fulfillment centers.
To avoid aged inventory surcharges, consider liquidating, discounting, or creating promotions for inventory that have been stored in Amazon's warehouses for more than 181 days.
Amazon charges long-term storage fees from $0.50 per cubic foot to $6.90 per cubic foot or $0.15 per unit per month. The longer your items stay in Amazon warehouses, the higher the charge.
Long-term storage fees differ for standard and oversized items, and the months they are stored in fulfillment centers. Expect the rates to be higher for larger items. Storage fees from October to December are higher, and the rates return to normal from January to September.
Stay organized by keeping track of your products' storage time in Amazon fulfillment centers and maintaining an efficient inventory management system. Check your stocks religiously to help you avoid aged inventory surcharges and storing items in excess.
Amazon charges monthly inventory storage fees already, and you surely do not want long-term monthly storage fees to add up to that cost. Let us help you! Here are eight strategies to keep your Amazon FBA storage fees to a minimum.
Amazon turnover rates refer to the frequency at which inventory is sold and replaced within a specified period. By analyzing turnover rates, you can identify slow-moving products and make informed decisions to reduce long-term storage fees. This helps optimize inventory management and ensures that high-turnover items are prioritized for better sales and profitability.
Proactive inventory management is an essential aspect of running a successful FBA business. Implementing strategic inventory management involves the following:
By managing your inventory effectively, you can stay within Amazon's storage limits and minimize the risk of long-term storage fees.
Forecasting demand is a proven and effective strategy to avoid or reduce long-term storage fees. By accurately predicting the demand for a product or service, you can optimize inventory levels and avoid unnecessary storage costs.
By analyzing historical data, market trends, and seasonal patterns, you can anticipate how much stock you will need and when. This proactive approach allows you to order and store in FBA fulfillment centers the right quantity of items for your inventory, preventing excessive stockpiling and minimizing the need for long-term storage.
Monitor your inventory age and health by using the reports provided by Amazon. These reports will help you decide which items to remove or adjust in your inventory, preventing potential long-term Amazon storage fees and optimizing storage usage.
Ensure your product listings have search engine-optimized descriptions and high-quality images to help improve their visibility and sales velocity. Additionally, use Amazon paid advertising to further enhance your products’ exposure and help your FBA inventory move faster, reducing the risk of long-term storage fees.
To know more about optimizing your listing, you can watch this video:
Maximize promotional activities like special offers, discounts, and bundling to drive sales of slow-moving products in your inventory. Review and update these promotional activities to maintain optimal inventory turnover rates and reduce long-term storage costs.
Amazon provides a Recommended Removals report, which can help you evaluate the cost-benefit ratio of removing or returning items from the fulfillment centers. By exploring various options for removals and returns, you can make informed decisions and minimize the impact of long-term storage fees.
Liquidating removed items through an Amazon Outlet can be an effective strategy to avoid or reduce long-term storage fees. By listing items on the Outlet, you can quickly sell your inventory at discounted prices, minimizing the chances of incurring more charges.
Moreover, customers who visit the Amazon Outlet often look for discounted products, which increases the likelihood of a successful sale. Liquidating removed items through this channel not only reduces storage fees but also allows you to recoup some of your investment, minimizing losses and optimizing inventory management.
Staying ahead of Amazon's long-term storage fees is beneficial for your bottom line and helps maintain a healthy inventory turnover rate. Regularly monitoring your inventory levels and basing your decisions on data will allow you to manage your storage and prevent fees from pulling your profits down.
To keep your focus on growing your business and achieving success, why not consider partnering with a professional service provider like us here at Seller Interactive? We have experts in Amazon full account management who will help monitor your inventory, provide insights to avoid long-term storage fees, and ensure optimal performance for your Amazon account.
Hand over the reins to the experts, and be confident in your investment for a better, more profitable future on Amazon. Call us now!
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Last updated on November 13th, 2023 Written by Mohamed Aden Navigating Amazon selling can be complex, especially when understanding the various seller fees involved. One crucial aspect you must be aware of as a seller is the aged inventory surcharge, more popularly known as Amazon long-term storage fees. These fees are charged for items stored […]