The complete guide to Amazon FBA storage fees

Why does Amazon charge storage fees for FBA sellers?

This may seem like a bit of a silly question, but it is one that is asked by many online arbitrageurs and FBA sellers. Amazon already charges enough to sell on their platform – why on earth are they charging us just to store our items?

Well, Amazon is a business, and the purpose of a business is to make money – and so while there is an element of Amazon trying to increase their profits in charging you fees to store your item, there are legitimate costs associated with storing and fulfilling your items which Amazon is within their rights to reclaim from you. For example – Amazon has to pay the workers that book your items in, pick, pack and ship them out. It’s not reasonable to expect Amazon to have to subsidise this part of your operation, nor is it reasonable for all of these people to work for free – and this is a large part of why Amazon charges storage fees.

Amazon has a finite amount of space in their warehouses and therefore storage fees incentivise sellers only to keep fast-moving inventory stored with them – if Amazon allowed their warehouses to be filled with slow-moving inventory and didn’t charge sellers for the privilege, there would undoubtedly be sellers who abused this system, overstocking and limiting access for other sellers. Amazon storage fees ensure that all sellers have access to FBA services, and also encourages sellers to streamline their supply chains which contributes to a smoother operation on Amazon’s part.

The different types of storage fees Amazon charges

Monthly storage fees

Amazon charges fees on a monthly basis just to store items in their fulfilment centers. Amazon calculates the monthly storage fee by multiplying the average volume (in cubic feet) for the space your items occupy in fulfilment centers by the applicable rate – and the rate is generally based on which size tier classification Amazon has put your product into. The rate can vary throughout the year based on seasonal demand. The fees you pay are also determined by the unit count, dimensions and how efficiently Amazon can store your inventory.

Long-term storage fees

Long term storage fees are additional charges imposed on inventory that has remained in Amazon’s fulfilment centers for more than one year (365 days). The idea behind these fees is to encourage sellers to maintain a healthy turnover rate for their inventory and not have valuable warehouse space tied up by slow-moving inventory. Long term storage fees are assessed twice yearly, in February and August.

Long term storage fees are calculated based on the space occupied by any inventory that has been in Amazon’s facility for over one year, measured in cubic feet. These fees are generally higher than monthly storage fees. Amazon does give an inventory health report which shows the inventory that is soon likely to incur long term storage fees, as well as an automated long-term storage removal policy to have items returned to you or disposed of before they begin to incur long-term fees.

Overage fees

Amazon applies storage limits to sellers based on their inventory performance index, sales volume and fulfilment center capacity, among other factors. If you ship too many items to an Amazon FC that would breach your storage limit, Amazon will still accept them, but will charge you an overage fee.

Overage fees are calculated monthly based on the average volume in cubic feet that exceeds your storage limit. Unfortunately these fees are much higher than the monthly storage fees as they are designed to discourage you from overstocking. This is why it’s so important to proactively manage your inventory and remove any unsold or slow-moving stock.

Amazon can also impose additional fees and restrictions on sellers that consistently exceed storage limits, such as limiting any incoming shipments until you have sold through your overstocked inventory below your storage limits.

Seasonal variations and peak periods

Amazon fees are subject to seasonal fluctuations, reflecting changes in inventory demand throughout the year. With the increase in consumer demand in October through December, Amazon increases its’ monthly storage fees to cope with the influx in inventory, the idea of which is to encourage sellers to manage their inventory strategically and avoid stockpiling inventory “just because it’s Black Friday/Christmas/etc.”

These storage fee hikes can be quite significant and they have the potential to impact your profitability if you aren’t careful. You should be sure only to keep fast-moving stock with Amazon in these periods as otherwise, you can expect to rack up significant fees if you aren’t acutely aware of how and when Amazon will charge you.

In addition to this Amazon may implement peak event fees for high-traffic events like Black Friday and Prime Day, which could further impact your profitability if you aren’t expecting them. You should also be aware that these fees don’t just apply to incoming inventory during these periods – the fact that your items are in an Amazon warehouse means if you don’t sell them through, you will be liable to pay these increased storage costs.

Other types of FBA fees Amazon might charge you

• Unplanned service fees – this is where inventory arrives at an Amazon FC without proper prep or labelling, which means Amazon has to prepare and label these items for you. While these fees might seem a bit unfair if you think you’ve packaged your items properly, it’s far more preferable to pay these fees than have to pay to have your items shipped back to you.
• Removal order fees – if you decide to have Amazon return or dispose of your inventory for whatever reason, they will charge you a fee per item to remove your goods.
• High-volume listing fees – if you have a large number of units of a single ASIN in an Amazon fulfilment center for an extended period of time and these units have not sold, Amazon could charge you a high volume listing fee.
• FBA liquidations fees – if you use Amazon’s liquidation service to recover value from either overstocked inventory or customer returns, you will be charged a fee; usually based on the gross recovery value of your liquidated inventory.

How to reduce the storage fees you pay to Amazon

Of course, while we recognise that Amazon can legitimately charge you for use of its own storage space, we’d all like to reduce the fees we pay to Amazon in order to increase the profit we make. Here are a few ways you as an online arbitrageur can reduce the storage fees you’re liable to pay Amazon and increase your profit margin.

Regular inventory audits

Regularly audit your inventory to identify slow-moving items. If you find you are being charged long-term fees, or your monthly fees are to the point where the product becomes unprofitable, consider a sale, promotion or a removal order to avoid racking up storage fees and losing money.

Increase your inventory turnover

This may seem obvious, but the less time your inventory spends in Amazon’s warehouse, the less you will pay in storage fees. Make sure your items are priced competitively (use a repricer if you need to), make sure your listings are optimized well. Remember – the quicker you can turn over your inventory, the cheaper it will be for you.

Seasonal inventory management

This goes hand in hand with speeding up inventory turnover. Make sure you don’t have slow moving stock stored with Amazon going into peak periods. Run a sale and clear out anything that isn’t moving fast enough before you become liable to pay higher fees. You should be doing this in around August/September each year so by the time October comes around, you only have your quicker-moving lines stored with Amazon.

Optimize your packaging

Monthly fees are based on size tiers. The smaller the size tier you can get your item into the less you will pay in fees. Obviously there’s only so much you can do for larger items, but if you find that your items are right on one of the size tier thresholds, do what you can to get it into a smaller box as you could save yourself a considerable amount of money.

Use any eligible FBA storage programmes

If any of your products meet the criteria, you should be participating in any eligible FBA storage programs such as Low Price FBA (formerly FBA Small and Light) which can offer lower fulfilment and storage fees for eligible items.

Use strategic restocking

Strategic restocking involves restocking popular items more frequently in smaller quantities to avoid having too much inventory at any given time. You should calculate this while also considering your shipping costs – it may be more cost effective to ship items in bulk, so make sure you calculate whether it’s cheaper to pay more in shipping but pay less fees or vice versa.

Stay within your stock limits

Overage fees are really expensive and you should avoid them where you can. Monitor your storage usage in the Seller Central dashboard to manage your inventory levels effectively and profitably.

Conclusion

While many sellers and online arbitrageurs might not realise that Amazon even charges storage fees, the reasons for them doing so are sound and ensure a fair and even playing field for all FBA sellers. You can, however, by following the tips and tricks in this article, limit the fees you’re paying to Amazon and increase your profitability – mainly by not overstocking on slower-moving lines and ensuring regular inventory audits so you don’t have any items incurring overage or long-term fees.

Frequently asked questions about Amazon storage fees

Can I get a refund for storage fees if my items are removed or sold?

Amazon charges fees after the fact – so even if you sell or issue a removal order for your items, storage fees are still valid because they are based on the time for which your items were still stored in a fulfilment center. However, you may be able to get a refund if Amazon made an error in measurement which meant your items were classified into a higher size tier than they should have been, or if Amazon loses or damages your inventory while it’s in their care.

How do I dispute a storage fee if I think it’s incorrect?

Generally you will need to contact Seller Support to dispute a storage fee. Make sure you have evidence and have thoroughly reviewed your inventory reports before you raise a case. You should also remember to act quickly, as there could be time limits for disputing storage charges.

Does Amazon ever waive long-term storage fees?

Amazon may decide to waive fees in special circumstances, or during certain promotions for specific items. If you’re eligible for a fee waiver, this will be shown to you as a notification in the Seller Central dashboard.

Does Amazon offer tools to help manage inventory and reduce fees?

Yes – Amazon provides a tool called the FBA inventory age tool which can show you how much inventory you have with Amazon, how long it’s been there and what you might be liable to pay if inventory doesn’t sell through within a certain time period.