Amazon Long-Term Storage Fees In 2023 (How To Avoid + FAQs)
If you sell products on Amazon using Fulfillment by Amazon (FBA), you‘ve probably gotten hit with those pesky long-term storage fees. I know firsthand how frustrating it can be to wake up one morning and see hundreds or even thousands of dollars in charges for keeping your products too long in Amazon‘s warehouses.
In this comprehensive guide, I‘ll explain everything you need to know about Amazon‘s long-term storage fees so you can avoid them in 2024.
Here‘s what we‘ll cover:
- What are long-term storage fees and why does Amazon charge them?
- Exactly when you‘ll get hit with these fees
- How much Amazon charges for long-term storage
- Smart strategies to avoid incurring these fees
- Step-by-step instructions for tracking your inventory age
- Answers to frequently asked questions about long-term storage
Let‘s dive in!
What Are Amazon Long-Term Storage Fees?
Amazon long-term storage fees, sometimes shortened to LTSF, are extra fees charged by Amazon for keeping your products in their fulfillment centers for over one year.
They exist to encourage rapid inventory turnover. Amazon doesn‘t want their warehouses filled with slow-moving or dead stock. The long-term storage fees incentivize sellers to keep only active, selling inventory in FBA.
Here‘s a quick rundown of key facts about long-term storage fees:
- They are charged monthly on the 15th
- Apply to inventory stored over 365 days
- The fee is $6.90 per cubic foot or $0.15 per unit, whichever is greater
- There is a minimum fee of $0.15 per unit
- Charged in addition to regular monthly storage fees
- Show up as "service fees" on seller reports
So in a nutshell, Amazon will ding you every month for keeping products too long in their warehouses. This is their way of nudging you to turn over inventory faster.
I know it can be tempting to use FBA as a low-cost storage option, especially if you got a great deal on bulk inventory. But you‘ll end up paying for it eventually via long-term storage fees. It‘s just not a sustainable long-term storage solution.
Now let‘s look at exactly when these fees kick in…
When Does Amazon Charge Long-Term Storage Fees?
Long-term storage fees are assessed monthly on the 15th of each month. This is different than the regular FBA inventory storage fees that Amazon charges.
Those are only about $0.75 per cubic foot. The long-term storage fees apply specifically to inventory that has been sitting unsold in an Amazon fulfillment center for over 365 days – one full year.
The fees are calculated based on a "first-in, first-out" method. As inventory sells or is removed, the oldest items in the fulfillment center are deducted first.
This prevents sellers from incorrectly being charged for newly replenished stock. For example, let‘s say you originally sent 100 units of Product A to Amazon in January 2022. In December 2022, you send another 100 units.
When the January 2023 long-term storage fees are calculated, the 100 original units from January 2022 would be deducted first, since they entered the warehouse first. The December 2022 units would not be subject to the fees, since they haven‘t hit the 365 day mark yet.
Now due to processing delays, you may not see the charges reflected in your account until the 15th-22nd of the month.
Both the long-term storage fees and regular monthly storage fees just show up as generic "service fees" on your seller reports. So you need to dig deeper on the exact breakdown of what constitutes those fees.
The key takeaway is that long-term storage fees are completely separate from the regular monthly storage fees. Amazon is essentially "fining" you an extra amount for keeping products too long via the long-term fees.
Next, let‘s look at how much Amazon charges for these long-term storage fees…
How Much Are Amazon‘s Long-Term Storage Fees?
The amount Amazon charges for long-term storage depends on whether the cubic feet or per unit rate is higher:
- $6.90 per cubic foot
- $0.15 per unit
Whichever amount is greater gets charged.
There is also a minimum fee of $0.15 per unit for long-term storage items. However, sellers will only pay this minimum if it exceeds the $6.90/cubic feet rate.
The bottom line – you pay the higher of the two fees, either the $6.90/cubic foot rate or $0.15 per unit.
Here are some examples to illustrate:
Example 1
- 100 units
- Each unit is 2 cubic feet
- Total cubic feet = 100 x 2 = 200 cubic feet
- $6.90 per cubic foot rate = 200 x $6.90 = $1,380
- $0.15 per unit rate = 100 x $0.15 = $15
Since $1,380 is greater than $15, you would pay $1,380
Example 2
- 150 units
- Each unit is 0.5 cubic feet
- Total cubic feet = 150 x 0.5 = 75 cubic feet
- $6.90 per cubic foot rate = 75 x $6.90 = $517.50
- $0.15 per unit rate = 150 x $0.15 = $22.50
Here the $0.15 per unit rate is higher, so you would pay $22.50
As you can see, the per cubic foot rate adds up quickly for larger/bulkier items taking up more warehouse space. But for smaller products, the per unit rate ends up being higher.
Either way, Amazon has designed the fees to maximize their profits on slow-moving seller inventory.
Now that you know precisely how much Amazon charges for long-term storage, let‘s look at ways to avoid incurring those fees…
How To Avoid Amazon FBA Long-Term Storage Fees
Avoiding long-term storage fees requires proactively managing your inventory turnover. Here are some tips and strategies:
Monitor Inventory Age Reports
Keep a close eye on the "FBA Inventory Age" report in Seller Central each month. This shows you which items are approaching that dreaded 365 day mark where the long-term fees kick in.
I recommend checking this report weekly or even daily as you get closer to month-end. Spot any products that need a sales boost before hitting one year old.
Ask yourself:
- Why are these items selling slower than others?
- How can I better optimize them to drive more sales velocity?
Are prices misaligned with demand? Does the listing content need beefing up? Do the pictures clearly showcase the product?
Making strategic tweaks to pricing, promotion, and listing quality for slower-moving inventory can help boost sales velocity and avoid long-term fees.
Adjust Pricing
One of the best ways to kickstart sales on stagnant inventory is to run pricing analysis and make strategic adjustments.
Use tools like Amazon‘s own repricer or third-party software to analyze your prices relative to competitors. Don‘t be afraid to lower prices to remain competitive – a lower margin is better than incurring long-term storage fees!
Of course, watch out for MAP (Minimum Advertised Pricing) policies that may restrict your pricing flexibility for certain brands. You‘ll have to get more creative with promotions for MAP items.
Run Promotions
Speaking of promotions, these are a great way to incentivize buyers, especially for MAP products where you can‘t adjust pricing.
Amazon offers options like percentage discounts, dollar-off discounts, and "Buy X Get Y Free" promotions under the "Promotions" tab in Seller Central.
You can set customized promotion schedules to run special deals on slower-moving inventory approaching the one year mark. Sweeten the deal for customers and liquidate those units!
Leverage Sponsored Products
Sponsored Products advertising is Amazon‘s PPC program. You bid on keywords to get your listings higher visibility in search results.
Use Sponsored Products to specifically spotlight slower-moving listings approaching long-term storage territory. The higher visibility can help drive sales on those ASINs and avoid incurring fees.
Sell Via Other Channels
Amazon offers a Multi-Channel Fulfillment program where they‘ll pick, pack, and ship FBA inventory to customers on other channels like Shopify, eBay, or your own website.
The service fees are reasonable for occasional orders. This avoids long-term storage fees without having to fully remove inventory from FBA warehouses.
However, perishable or extremely high velocity products aren‘t ideal for this, since fulfilling from Amazon‘s distant warehouses may cause delays or logistical issues.
Use Alternative Storage
Some companies like StorageByAmazon and ShipMonk offer separate storage programs catered to Amazon sellers. This reserves storage space closer to Amazon‘s facilities.
While there are fees involved, they are often much lower than Amazon‘s long-term storage fees. This gives you overflow inventory storage options without incurring high costs.
Remove Inventory
As a last resort, you can proactively remove inventory nearing 365 days in FBA warehouses to avoid fees.
Just be aware there are per unit remove fees, so you don‘t want to over-remove and have to restock soon after. Carefully evaluate which units are best candidates for removal to avoid incurring more fees.
Okay, you‘re now equipped with some smart strategies to avoid those nasty long-term storage fees. But it‘s crucial to closely track your inventory age so you know which items are vulnerable to fees.
Let‘s talk about how to monitor that…
How To Track FBA Inventory Age and Long-Term Fees
Keeping tabs on your inventory age is the first step to avoiding unpleasant surprises from long-term storage fees.
Amazon provides two reports to help with this:
FBA Inventory Age Report
This report shows you the age breakdown of your FBA inventory by ASIN. It‘s your bird‘s eye view into exactly how long units have been sitting in Amazon‘s warehouses.
To access it:
- Go to Inventory > Manage Inventory
- Click the Inventory Dashboard link
- Select FBA Inventory Age and click View Details
Analyze this report weekly or daily as month-end approaches. Filter by age range or ASIN to see which products are coming up on one year old.
Get those close-to-365-day units selling to avoid incurring long-term fees!
Recommended Removals Report
This report lists products currently accruing long-term storage fees that may be good removal candidates. To access it:
- Go to Inventory > Manage Removals
- Select Recommended Removals
Review this each month to see which ASINs Amazon is advising you to remove to stop bleeding from long-term fee accumulation.
Combine analysis from both reports to stay one step ahead of inventory age and avoid costly long-term storage fees piling up unnoticed.
Frequently Asked Questions
Let‘s wrap up with answers to some frequently asked questions about Amazon FBA long-term storage fees:
How are cubic feet calculated for the long-term fees?
Amazon determines cubic feet measurements based on the product‘s dimensions in the warehouse.
- 1 cubic foot = 12 x 12 x 12 inches
- 1,728 cubic inches = 1 cubic foot
So for example, if your product is 12 x 6 x 4 inches:
- 12 x 6 x 4 = 288 cubic inches
- 288 cubic inches / 1,728 cubic inches per cubic foot = 0.33 cubic feet
Amazon always rounds up to the next whole cubic foot. So that 12 x 6 x 4 product would be charged as 1 full cubic foot.
Can I remove inventory to avoid the fees once it hits 365 days?
Yes, you can remove inventory that‘s already incurred long-term storage fees to prevent fees from accumulating further. However, Amazon will not refund fees already charged.
It‘s best to proactively remove items before they cross 365 days if possible. But better late than never! Removing stops even more fees from accruing.
Do long-term storage fees apply in non-U.S. Amazon warehouses?
No, the long-term storage fees currently only apply to inventory stored in Amazon‘s U.S. fulfillment centers.
However, other regions like Europe and Japan likely have similar long-term fee structures. So keep an eye on age reports for all of your FBA inventory globally.
Are any products exempt from long-term storage fees?
No exemptions unfortunately, except for hazardous materials.
Amazon prohibits long-term storage of hazmat inventory. Those products must be removed within 180 days.
Everything else is fair game for long-term fees once it hits 365 days, so stay on top of inventory age!
What‘s the maximum amount of long-term storage fees per month?
There is no cap on the total long-term storage fees Amazon can charge per month. The fees keep accumulating based on total cubic feet or units over 365 days old.
I‘ve heard horror stories from sellers with six-figure long-term fee assessments in a single month by letting age get out of control. Don‘t let that happen to you!
Final Thoughts
And there you have it – everything you need to know about Amazon FBA long-term storage fees and how to avoid them.
The key takeaways are:
- Monitor inventory age closely
- Strategically manage slower-moving items
- Adjust pricing and run promotions as needed
- Remove inventory proactively before 365 days
Staying on top of your inventory turnover will help minimize these pesky fees. Now you can keep only your best-selling items in FBA and avoid being stung by huge long-term storage bills!
I hope this guide gives you confidence and strategies to handle long-term storage fees effectively. Don‘t let them catch you off guard in 2024. You‘ve got this!