Detailed explanation of Amazon FBA warehousing fees and optimization strategies
Amazon FBA (Fulfillment by Amazon) provides sellers with convenient warehousing and logistics solutions, but it also requires sellers to understand and plan the relevant warehousing fees to ensure the sustainable development of the business and maximize profits.
Storage fee structure
Monthly storage fee
Amazon FBA’s monthly warehousing fees are charged from the previous month between the 7th and 15th of the following month based on the size and weight of the product. The specific charging standards vary with the seasons. For example, the fourth quarter of each year is the peak sales season, and the warehousing fees at this time will be much higher than the off-season from January to third quarter. In addition, the charging standards for dangerous goods and non-dangerous goods are also different.
Long-term storage fees
Long-term storage fees (LTSF) apply to items stored in Amazon warehouses for more than 271 days. Inventory counts are conducted on the 15th of every month. For items stored between 271 and 365 days, the charge is $1.50 per cubic foot; for items older than 365 days, the charge is $6.90 per cubic foot or $0.15 per item. Charge (take the larger value).
Effective September 15, 2018, the assessment frequency of long-term storage fees will be changed from semi-annual to monthly. This means sellers need to monitor inventory more frequently to avoid high long-term storage fees.
Factors affecting warehousing costs
Item size and weight
Amazon determines storage fees based on the size and weight of the product. Larger or heavier items will incur higher charges. Therefore, optimizing the packaging and size of goods is one of the effective ways to reduce warehousing costs.
Storage time
Items older than 180 days will incur additional long-term storage fees. Sellers should reasonably plan inventory based on sales forecasts and market demand to avoid increased costs caused by long-term storage.
Peak season and off-season
Amazon may adjust storage fees during peak seasons (such as the Christmas season). Sellers should adjust inventory plans based on sales data and market trends to reduce expenses.
Storage type
Different types of storage will incur different charges. Sellers can choose the appropriate storage type based on product characteristics and sales forecasts.
Strategies for optimizing warehousing costs
Regular inventory cleaning
Regularly check inventory and clear out slow-moving or expired merchandise to avoid long-term storage fees. Adjust inventory levels in a timely manner and reasonably arrange replenishment and inventory replenishment based on sales trends and demand.
Sales Forecasting and Inventory Management
Make accurate sales forecasts based on market demand and sales trends and adjust inventory management accordingly. Avoid overstocking and long-term storage to reduce additional warehousing costs.
Choose the appropriate storage type
Choose the appropriate storage type based on product characteristics and sales needs. Standard storage is for regular merchandise, while long-term warehousing is for seasonal or low-selling merchandise.
Optimize supply chain and logistics
Build efficient supply chain and logistics systems to reduce inventory detention time and transportation costs. Establish good cooperative relationships with suppliers and logistics partners to ensure timely supply and on-time delivery.
Conclusion
Understanding the calculation methods and influencing factors of Amazon FBA warehousing fees, and adopting corresponding optimization strategies, can help sellers reduce costs, increase profits, and provide a better customer experience. Sellers should develop reasonable inventory management plans based on their own business conditions and market needs to ensure timely replenishment and adjustment of inventory, minimize warehousing costs, and enhance business competitiveness.