Amazon recently announced changes to their FBA storage fees as well as some of their storage policies. Several changes are happening throughout 2018 that Amazon sellers using FBA services need to be aware of, so keep reading to stay in-the-know
There are three main changes to Amazon’s FBA storage fees:
1. Monthly inventory storage fees are increasing by $0.05 per cubic foot. This is effective April 1, 2018 and will be as follows:
2. Long-term storage fees are actually decreasing, but will be assessed more frequently. Instead of fees being charged twice a year (February 15 and August 15), long-term storage fees will be charged monthly, beginning September 15, 2018, for any units that are older than 6 months. The new rates are as follows:
3. Minimum long-term storage fees will be introduced. Beginning August 15, any items that have been at the Amazon fulfilment centers for over one year will be charged either $0.50 per unit or $6.90 per cubic foot, whichever is greater.
Beginning July 1, 2018, Amazon will be implementing new storage limit policies and will be using the Inventory Performance Index to determine how much storage you will have at Amazon’s fulfillment centers.
If your index stays above 350, you will have unlimited storage. If it drops below 350, Amazon will limit how many cubic feet of inventory you can store, and you will be charged a $10 per cubic foot overage fee for anything over the limit. You will also not be able to create a new shipment to Amazon until your inventory drops below the limit. Amazon will assess your inventory storage six weeks before the start of a quarter, and limits will apply for the following quarter.
The Inventory Performance Index can be found in Seller Central under Inventory > Inventory Planning > Performance and it measures three things: 1) Excess inventory percentage - target is 0–10%, 2) In-stock inventory - target is 90%–100% and 3) Stranded Inventory - target is 0–1.5% (this inventory that does not have an active listing for one reason or another).
These changes reflect Amazon’s need to ensure that their fulfillment centers are not being used as storage centers. Even though Amazon is constantly building out their fulfillment center network, space is still limited, and Amazon’s priority is to make sure that valuable space is not being wasted on inventory that does not sell.
As an Amazon seller using FBA, you need to be monitoring your inventory levels at least weekly, watching not only for products needing to be restocked, but for products that are not selling as quickly as you expected. To monitor this, you can start by looking at your Inventory Planning Dashboard in Seller Central. It will show you your current Inventory Performance Index, SKUs needing to be restocked, and excess units. Clicking on any one of those metrics will take you to a list of products that are affected.
Another report is the Inventory Age report, which you can download under Reports > Fulfillment > Inventory > Inventory Age, or you can view an Inventory Age dashboard under Inventory > Inventory Planning > Inventory Age, that will show you inventory age and estimated long-term storage fees by ASIN. It will give you the following data:
You will want to really limit how many units are older than 90 days. If you see more and more units entering the 91–180 day range, start thinking now about what you can do to get product moving more quickly:don’t wait for it to get into the 181–270 day range. There are a number of ways to do this:
If you are in the 181 day or above range, you will want to take faster action and consider removing your inventory from the fulfillment center to avoid the long-term storage fees. If you use this option and create a removal order for inventory subject to long-term storage fees, Amazon will not allow you to ship in more inventory for those ASINs until a date that they specify. It can take as long as 6 months to have that restriction lifted, so it’s in your best interest to not let your inventory age past 6 months.
Review your inventory today and don’t let these new FBA storage updates catch you by surprise. Smart inventory management will save you money, time, and stress and will help you be a better Amazon seller (and run a more profitable business!). These policies are not going away; Amazon will likely continue to put limits on slow-moving inventory as they try to create more space for items that are in demand.
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