Are your goods overstaying at an Amazon fulfilment centre? Clear them out before the first scheduled inventory cleanup on the 15th of February, or else you risk paying high storage fees.
Now now, that wouldn’t be a wise way to use the money which you earned during the holidays, would it?
If your goods have been in Amazon’s fulfilment centre between six and 12 months, you will be subjected to a long-term storage (LTS) fee of $11.25 per cubic foot. However, if the items have already exceeded a year, you’ll be charged $22.50 per cubic foot.
The calculation of your fees depends on the space that your inventory occupies, plus the length of time it has been in Amazon’s fulfilment centre.
For example, a toy which measures 11” x 8” x 2” was stored for more than six months but less than a year, so it would incur an LTS fee of $1.15. Now, if 10 units of the item were stored for over a year in Amazon’s fulfilment centre, then that would be equivalent to $22.92 in fees.
If you are able to sell your stock before the inventory cleanup date, Amazon will not subject you to their LTS fees.
Why long-term storage fees are imposed
LTS fees are different from monthly storage fees; the former only applies to inventory that has been in an Amazon warehouse for more than six months.
Amazon wants to provide space for fast-selling products as this will make them money. However, they can’t do that if a large volume of products which don’t sell are eating so much space in their fulfilment centres.
Despite the expansion of their distribution centres, Amazon is still short of storage space, considering the large number of products that are sent to them by the minute.
Charging LTS fees helps them discourage third-party sellers from storing their inventory for an indefinite period of time, hence they are able to make room for products that guarantee them a higher revenue.
How to steer clear of LTS fees
Since long-term storage fees are only charged during Amazon’s inventory cleanup dates, which are on the 15th of February and the 15th of August, you have more than enough time to plan the goods which you send to their fulfilment centre.
Only send in items which you are confident will sell within six months’ time, and better do it a month or two after Amazon’s inventory cleanup date.
That way, even if the next cleanup date rolls in, your unsold merchandise won’t be subjected to LTS fees because they haven’t reached the six-month period yet.
As a third-party seller on Amazon, you need to not only follow the rules that they’ve set forth but also work a strategy around them so that you don’t pay more than you have to.
Has your inventory ever been charged a long-term storage fee for overstaying at an Amazon fulfilment centre? Tell us your story.
As always, to your continued success,
Dave & Matt