2024 Guide for Managing Amazon’s Long-Term Storage Fees & Utilization Surcharge with Ailumia

FBA Inventory, Long-Term Storage Fees, Utilization Surcharge

In the intricate ecosystem of Amazon’s marketplace, sellers face the ongoing challenge of managing FBA inventory efficiently. Critical to this challenge is navigating the waters of Amazon’s long-term storage fees and the storage utilization surcharge, which, if not managed adeptly, can significantly impact profitability. Ailumia emerges as a pivotal ally for sellers, providing an arsenal of advanced tools aimed at mitigating these surcharges and honing FBA inventory strategies.

Understanding Long-Term Storage Fees and Utilization Surcharge

Amazon’s storage model is straightforward: space occupied incurs costs, especially for long-term storage. Sellers are levied fees for FBA inventory stored in Amazon warehouses beyond a year. Specifically, items residing in fulfillment centers for more than 365 days attract a fee of $6.90 per cubic foot. Additionally, FBA’s Small and Light program stipulates a $0.25 per unit fee for storage spanning 181 to 365 days, escalating to $0.50 per unit for durations exceeding a year.

The Storage Utilization Surcharge, introduced to encourage efficient FBA inventory turnover, is calculated from the storage utilization ratio. This metric compares the average daily FBA inventory volume stored against the average daily shipped volume over the preceding 13 weeks, with this ratio being product size tier-specific. Sellers can access their latest storage utilization ratios directly from their FBA dashboard.

FBA inventory, Long-Term Storage Fees, Utilization Surcharge

Criteria for Storage Utilization Surcharge

The surcharge applies under specific conditions:

1.Ownership of a Professional selling account.

2.First shipment to Amazon’s fulfillment center occurred over 365 days ago.

3.The average daily FBA inventory volume for the product size tier exceeds 25 cubic feet.

4.A storage utilization ratio for the product size tier surpasses 26 weeks.

Strategies to Mitigate Fees and Surcharges

Evaluating Non-Selling Products

Understanding why products remain unsold is crucial. Strategies include competitive pricing adjustments, addressing negative reviews, optimizing product listings, accounting for seasonal demand, and diversifying product offerings to enhance sales velocity and evade long-term storage fees.

Reducing Prices

Price reductions serve as an effective tool to liquidate excess FBA inventory, thereby circumventing long-term storage fees. This involves maintaining optimal FBA inventory levels, initiating limited-time promotions, and leveraging Amazon’s pricing tools for strategic adjustments.

Utilizing Amazon Outlet for Aging FBA inventory

Amazon Outlet provides an avenue for selling aging FBA inventory at discounted rates. Sellers should utilize Amazon’s FBA inventory Age report to identify and list slow-moving stock, employing Amazon’s marketing tools for increased visibility and monitoring performance to ensure efficient clearance.

Leveraging Sponsored Product Ads and Promotions

Sponsored Product ads and promotions can significantly enhance the visibility of slow-moving products, fostering sales before they incur long-term storage fees. Sellers are encouraged to explore various ad formats to identify the most effective strategies.

Strategic FBA inventory Restocking

Timing restocks strategically, particularly post-February and August, can prevent FBA inventory from incurring long-term storage fees, thus optimizing both storage space and cost efficiency.

Manual Removal or Disposal Orders

Proactively requesting the removal or disposal of unsold FBA inventory before fee deadlines can avert long-term storage charges. Sellers must evaluate the cost-benefit of retaining FBA inventory versus the expenses of removal or disposal.

Automating FBA inventory Removals

Amazon’s automatic removal feature allows for the systematic elimination of FBA inventory at risk of long-term storage fees. Sellers can customize automatic removal settings to streamline FBA inventory management and mitigate fees.

FBA inventory Optimization

By harnessing real-time data, Ailumia ensures that sellers can maintain optimal restocking levels. This capability helps in reducing the risks associated with stockouts and excess FBA inventory, thereby streamlining operations and preventing unnecessary storage fees. 📉

FBA inventory, Long-Term Storage Fees, Utilization Surcharge

Automated Workflows

Ailumia minimizes the need for manual labor through the automation of key processes, leading to enhanced operational efficiency. This is further supported by tools such as the Replenishment Algorithm and FBA inventory Scheduling Tool. The Replenishment Algorithm uses lead time data, historical sales figures, and seasonal trends to determine precise restocking needs, ensuring sellers have the right amount of FBA inventory at the right time. Meanwhile, the FBA inventory Scheduling Tool aids in optimizing FBA inventory distribution by taking into account seasonal variations and the entire production and logistics cycle, allowing for a more strategic approach to FBA inventory management. 🤖📅

FBA inventory, Long-Term Storage Fees, Utilization Surcharge
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