|EcommerceBytes-NewsFlash, Number 2543 - May 16, 2011 - ISSN 1539-5065 1 of 5|
If your inventory is sitting unsold in Amazon.com's warehouse for a year or more, expect to pay a new annual fee as of August 15th; the company is also making it less expensive to remove inventory from its warehouses. Amazon.com is known for its operational efficiencies, and it is now educating and motivating sellers to be more efficient about inventory management as it continues to build new distribution centers around the world.
Amazon.com's FBA fulfillment program is instituting a new annual Long-Term Storage Fee of $45 per cubic foot for any Units that have been stored in an Amazon fulfillment center for one year or longer. Amazon.com also announced a reduction in the per-Unit price of removal items, from 60 cents plus shipping to 50 cents including shipping. Sellers can also choose to dispose of inventory for 15 cents per unit. Amazon.com is also reducing the price of removal of Oversize Units from $3 plus shipping to $0.60 including shipping, or 30 cents for disposal.
The new Long-Term Storage Fee is in addition to the regular Storage Fee and will not be charged if a request has been made to remove or dispose of the Units prior to the fee being charged. Each seller may maintain a single unit of each ASIN they carry without being charged the Long-Term Storage fee.
Amazon charges storage fees for all Units stored in an Amazon fulfillment center based on calendar month and the seller's daily average volume, measured in cubic feet. The new annual fee works out to $3.75 per cubic foot per month in addition to the normal monthly charge of 45 cents from January - September (the normal cost rises to 60 cents/month during the holiday shopping period of October through December).
During last year's holiday shopping season, Amazon.com FBA stopped accepting oversize items from merchants in some of its warehouses due to higher than expected demand for FBA warehouse space. The company is expanding and building new distribution centers this year.
Seller reaction is mixed on the discussion boards. One seller said the new Long-Term Storage fee was good:
"This is likely designed to keep sellers from loading up Amazon FBA warehouses with too much oversize inventory due to the cheap FBA storage costs (I've done this myself. I sent in 90 oversize items because it was cheaper to store them at Amazon.) This use of FBA storage caused the storage space shortage last year. I see this as a move to manage inventory better and make sure there is available storage space year round."
Another seller was unhappy with the short notice, writing they had no way to see what inventory is over a year old, while another said it was good "unless of course you have an item that they lost then find again 5 months later. Now you have 2 items in FBA and they charge you $45 for your $20 you thought you only had one of."
Amazon.com's most recent newsletter to merchants suggested FBA merchants monitor their non-selling inventory to remove it or repackage it to help minimize storage fees. The company also introduced a new report called the Inventory Health Report designed to help sellers identify which FBA items they want to replenish, re-price, or remove:
"Your inventory is one of your most significant business investments and we believe that keeping your inventory "healthy" is critical to your success on Amazon," according to the announcement.
To see seller reaction or leave a comment, visit the AuctionBytes Letters to the Editor blog.
Update 5/16/11: Amazon did not provide answers to questions about the changes but a spokesperson said he would provide a copy of the next communication to sellers, expected this week.
Update 5/18/11: Amazon sent an email to FBA merchants with some clarification.
About the author:
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to firstname.lastname@example.org.
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