Updated September 2022
Ah…Amazon storage fees: who doesn’t love to calculate what they owe? Naturally, you hope to pay as little as possible, having all your products fly out of the warehouse, so there’s not much to pay, right? Unfortunately, that usually isn’t how today’s eCommerce works (unless there’s something we’re not aware of).
So, for you, the Amazon seller, here’s the question: how much are Amazon storage fees? How much will Amazon FBA storage cost you?
How Much Are Amazon Storage Fees:
There are two types of storage fees: Monthly inventory storage fees, and long-term storage fees.
Monthly Inventory Storage Fees
Fulfillment center space for shipments is at a premium, so their cost keeps going up. The more space your inventory needs to take, the more your storage fees will cost, which of course has an effect on your Amazon seller fees. Storing a good portion of your inventory somewhere else can cut your FBA storage fees, though of course, it’s a bit less convenient.
These fees vary throughout the year due to storage demand and are based on the size of the product. There are also additional fees for housing inventory classified as dangerous goods.
Aged Inventory Surcharge
For every inventory sitting in the warehouses for six months or longer, Amazon charges an additional fee. Because space is so valuable at Amazon warehouses, the company encourages sellers to manage their inventories as efficiently as possible, and reduce long-term inventories as much as possible.
In a nutshell, the fee for Aged Inventory looks somewhat like this:
- Items stored for more than 270 days (9 months), will be charged a monthly fee.
- Items aged 271-365 days will be charged $1.50 per cubic foot.
- Items aged 365 days or more will be charged $6.90 per cubic foot or $0.15 per unit, whichever is greater.
Calculating Monthly Inventory Storage Fees
Amazon charges all items stored at Amazon fulfillment centers, per cubic foot and based on the month and the volume of your merchandise. These are further divided into two categories each with two subcategories:
Standard-size items:
- January – September – $ 0.64 per cubic foot
- October – December – $2.35 per cubic foot
Oversized items:
- January – September – $ 0.43 per cubic foot
- October – December – $1.15 per cubic foot
A more detailed explanation of long-term storage fees can be found here. And while sellers can and should do their own measurement, Amazon has the final say in the matter, as stated in the Seller Central: “Amazon reserves the right to make its own measurement of the cubic feet or weight of packaged units or representative samples. In the event of any conflict between an Amazon measurement and information provided by the seller, Amazon’s measurement will govern.”
The monthly storage fee is applied to your Seller Central account usually between the 7th and 15th day of the month, to cover the storage fees for the previous month’s business. Rates vary depending on what time of the year it is. As you might expect, rates go up significantly during the holiday season, when fulfillment center storage space is particularly exorbitant.
You’re are probably asking yourself, how can you determine to which category do your inventories fit into? Luckily, you can find out with just a few clicks from your Amazon Seller Central account. From the main dashboard, go to Inventory > Manage Inventory, and click on the Inventory Dashboard. Scroll down until you see FBA Inventory Age and click on view details. You will see an assessment of your long-term storage fees, in addition to the “age” of your inventories.
Another way to measure your storage fees is by using something called Inventory Health Report: From your Amazon Seller Central menu, go to Reports > Fulfillment. On the left side of the screen, select Show More followed by Inventory Health.
How to Avoid Hefty Storage Fees
You can avoid hefty storage fees already from the beginning, by planning ahead: when you start out as a seller, begin with a small quantity, until you get a sense of how fast your products are selling. According to Amazon, you can avoid long-term storage fees, by removing inventories before the “clean-up” dates (February 15th or August 15). It, therefore, makes sense to send out inventories shortly after these dates, so that by the next “clean up” date, you will have as little inventory as possible. And for what inventory does remain, you can set up “automated removals.” Inventories you don’t remove will continue to be available, but of course, you will continue to pay for them.
But wait a minute…what if you don’t want to pay the extra fees to Amazon but still didn’t get rid of all my stock? You can store your inventory at locations other than Amazon warehouses – such as your house, storage unit, storehouse or any other low-maintenance location. Keeping the minimum amount of inventory at Amazon while with the bulk at another, lower-cost location allows you to both keep your FBA storage costs low, and restock it when you see it is running low.
Store Additional Inventory Outside of Amazon FBA
Another option for avoiding storage fees with Amazon is to keep a stock of inventory on hand in a location other than Amazon’s warehouses, such as your home, a storage unit, or another free or low-cost location. By keeping inventory stored in an easy-to-access location, you can keep lower volumes of inventory at Amazon and minimize storage fees, knowing that you can quickly ship off inventory to Amazon’s warehouses to avoid running out of stock when your inventory gets low. This approach gives you more flexibility when it comes to managing your inventory, versus always sending your full merchandise order directly from your manufacturer to Amazon. Particularly if your minimum order quantities are high, or your manufacturer is overseas, this approach can save you a lot of money.
Just-In-Time Inventory Levels
A third way to avoid Amazon storage fees is to implement a “just-in-time” inventory strategy, whereby you only send in enough inventory to Amazon to cover projected sales for a certain period of time.
This approach requires more vigilance and attention on your part, as you will need to closely monitor your sales data to ensure that you are not at risk of running out of stock.
However, if executed correctly, maintaining just-in-time inventory levels can save you a significant amount of money in storage fees, while still ensuring that you have enough inventory on hand to meet customer demand.
For example, let’s say that you sell an average of 10 units per day and your product is in Amazon’s warehouses for an average of 30 days. This means that you would need to have a minimum of 300 units in stock at Amazon at all times to avoid running out of inventory (10 units x 30 days = 300 units).
If you were to implement a just-in-time inventory strategy, you could send in smaller batches of inventory as needed, rather than keeping 300 units on hand at all times. So, if you sold 10 units today, you would send in another 10 units tomorrow to keep your stock levels consistent and avoid that dreaded Amazon storage fee calculator.
This approach can save you a significant amount of money in FBA storage fees, as you would only be paying for the inventory that is actually stored in Amazon’s warehouses.
It’s important to be smart in your inventory management – whether it’s brick-and-mortar shop or selling on Amazon. Using Algopix allows you additional ways to manage your inventories carefully, noting which are the best Amazon marketplaces to sell your products and decrease your inventories quickly, and liquidate any overstock by providing a platform to offer other Amazon sellers, your inventory (which can be crucial if you near the “clean-up” dates and still have inventories) thus, saving yourself extra storage payments. Algopix also provides a very useful FBA free calculator for Amazon.
