Posted by Alex Jackson on June 03, 2016
Yea we know it’s not even summer yet and we are talking about the holiday season (don’t worry we will remind you when we get closer) but that’s also why Amazon is announcing now that they will be more than doubling their storage fees in November and December for FBA sellers. The small silver lining here is that they are giving plenty of notice for retailers to prepare for the rate hikes. Let’s dig a bit deeper to see the actual changes.
|January- October||$0.54 Per cubic foot||$0.43 Per cubic foot|
|November-December||$2.25 Per cubic foot||$1.15 Per cubic foot|
As you can see that’s a pretty steep increase up 212.5% for standard size and 101.8% for oversize. Amazon in addition to the monthly fees will now be charging a very steep fee for what they are calling a semi-annual long term storage fee.
|per cubic foot|
|12 Months or longer||$22.50|
Of course you do have the option to either remove or dispose of these long term storage items and are allowed 1 unit of each item without being charged this long term storage fee.
What this all boils down to is Amazon only wants FBA sellers storing items that have significant sales volume and to clear out the clutter of under-performing items. This means it is time to start evaluating your merchandise and to have a plan of action ready for when these new rates kick in.
1.Stay ahead of the market- With storage fees going up you can expect a lot of merchants will be pushing to reduce inventory in October this means price slashing galore. Get an early jump on it start in August or September before the price cutting hits its peak.
2.Move it out if its old- Can you afford to take a nearly $12 hit on those 6 month old dresses? Or a $22+ hit on those pairs of year old shoes? If not then get them out and move on. Mark them down a reduced profit is better than a loss.
3.Be smart about what you are storing- Maybe think twice about keeping that off season merchandise at an FBA fulfillment center. Yes you can sell sandals year round but if you have 100 pairs in storage and there’s a foot of snow on the ground how many people are going to be shopping for these?
4.Be selective about what you are storing- have some low dollar items or slow movers maybe think twice about sending it to FBA for fulfillment if your margins are thin or if you know that the item will take time to sell it may not make sense to send it to FBA.
Remember Amazon is interested in selling merchandise not storing it but if they are storing then they want to make a profit. Be a smart retailer and stock what you need to stock to keep the business growing.