Amazon sellers are fuming over a new provision in the Fulfillment by Amazon (FBA) policy around its fee structure, and many were scurrying on Monday to avoid costly fees as a result.
While sellers are familiar with Long-Term Storage (LTS) fees, they say they were not aware of a provision that closed a loophole in the policy – and they said they had only hours to react.
With LTS fees, Amazon charges sellers a surcharge for inventory that hasn’t moved – a way to improve inventory turns and ensure its warehouses are used most efficiently. Each February and August, merchants must pay $11.25 per cubic foot for inventory that has been in Amazon fulfillment centers for 6 – 12 months; and they pay $22.50 per cubic foot for inventory longer than 12 months.
Right now, sellers have until August 15th to do something about slow-moving inventory before Amazon assesses the LTS fee – they can request a return or a disposal to avoid the LTS fee.
But when they received a reminder email from Amazon on Monday, sellers noticed something new:
“Inventory returns: If you file a Removal Order between August 5, 2015, and August 14, 2015, to have units of this inventory returned to you, you will be unable to send in additional units of these ASINs until December 1, 2015. You can continue to sell through your remaining inventory of these ASINs. You are responsible for paying the FBA Removal Fee for return of these units.”
That meant sellers who didn’t want to pay the LTS fees but wanted the flexibility to send in more of the same items to have a shot selling them during the busy holiday shopping season would be unable to – unless they got their requests in by the end of the very day they received the notice.
That gave sellers only hours to place requests for removal orders – those that missed the midnight deadline would either have to pay up LTS fees, or remove the items and not be able to send them back to Amazon until December 1st.
One reader who reported the incident to EcommerceBytes wrote, “The inability to send in additional units (or resend the removed units) until 12/1 was new to me. They gave me (and other 3P sellers) three hours notice of a change in policy that will cost us thousands of dollars. Who does that?”
Other sellers were flabbergasted. “This is just so absolutely mind numbingly crazy I cannot believe it. They announce this with only HOURS to go! Imagine all the people who shut down for the day and went home and are going to come to work to find this tomorrow! Some of them are going to be completely screwed!”
The seller continued, “Imagine companies who sent in a years worth of stock last year on a good selling item. Then Amazon decides that they need to charge a six month LTS. So the guys with several hundred items sigh and realize that about Aug 10 or so they need to recall a few hundred units and BAM! now with hours to go this comes out. They don’t even know and find out tomorrow here’s your choice: pay a massive Long term storage fee, or go out out of stock until December! And why Decemeber 1st? Creating a stock influx at the absolute busiest time of the year? ARGGHGHHGHHGHGHGH!”
But not everyone was sympathetic to their colleagues’ plight. “I do not hold it against them. I have over 2,000 units at FBA, at any given time. For me to recall, then resend, is just gaming the system.”
We asked Amazon to confirm that this was a new provision and asked what it would tell sellers who were caught off guard. Here’s the response from spokesperson Tom Cook: “This was recent update and there is currently a notification in Seller Central. From time to time we make changes to our policies. We notify sellers as quickly as possible when this occurs.”