The original intention of FBA was to serve local merchants as a local warehouse, but when used for cross-border e-commerce, the use fee of FBA may erode profits due to the low price of goods. The overall logistics cost of FBA is higher than that of third-party overseas warehouses. FBA attracts Prime users, but for non-members, they may bear higher shipping costs, which may cause the loss of such buyers. For example, according to FBA’s current charging standards, the storage fee of a 40-foot cabinet in the UK FBA is more than 2,000 pounds/month, while the rent plus tax of a local 1,000m2 warehouse is 3,500~4,000 pounds/month, and this area can hold about 16 cabinets.
Products vary throughout the year due to specifications and grades, and the peak season fees from September to December will be listed separately. Small-sized products require more complex and costly shelves, storage locations and operations. The unit price of small products is more expensive than large products by volume, but the total storage fee may be lower than that of large-sized products.
Although warehouse rents are expensive, FBA warehouse space has always been in short supply, so sellers are given inventory limits or total product caps. However, storage restrictions are not conducive to centralized purchasing and bulk first-leg transportation. Merchants can provide inventory health reports through the “Seller Center” Storage Monitor to find out which products are unsalable or circulating too slowly. If the “Inventory Performance Index” does not meet the standard (IPI<400), the storage usage will be restricted. If the inventory exceeds the FBA limit, the seller will no longer be able to create a new warehousing plan, and an excess fee will be charged for the average daily inventory that exceeds the upper limit. Sellers with good performance can obtain unlimited storage usage rights. Through the “Inventory Age” inventory age report can be used to view the storage time of goods in the warehouse.
There is inventory that has been stranded in FBA for a long time. For example, goods that have been in FBA for more than 1 year will be subject to long-term storage fees. FBA will conduct a clearance activity every month, and the long-term storage fee is charged based on the volume or number of pieces of goods. This is a good reference for overseas warehouse management. In order to avoid long-term storage fees for goods, large items must be given priority, and removal requests must be made before the inventory clearance date, or automatic removal from the shelves can be set if the expiration date is exceeded. Sellers should make cost analysis in a timely manner and decide whether to pay storage fees or pay to remove items from the warehouse. For clearance, Amazon’s repricing tool can be used to match the platform’s lowest price and sell them out as soon as possible. If the price reduction of the product is ineffective, the seller can request the product to be returned to the designated overseas warehouse, or pay FBA Dispose.
The FBA return process is simple and tends to favor consumers. The return rate is generally higher than that of FBM for the same product. For general categories, FBA will return the product for free and refund 80% of the platform usage fee previously charged to the seller for the order, but FBA will also charge return shipping fees for categories such as shoes and clothing. Often, FBA warehouses will not re-test and identify returned products. Even if there is no quality problem with the return, the unpacked goods will be displayed as “Unfulfllable” after being returned to FBA. This type of unsaleable goods will also incur storage fees, and sellers are required to create an order to remove the inventory “Removal Order” to exit as soon as possible. FBA also provides some value-added services such as re-labeling or unpacking and repackaging, but they are usually handled with the help of third-party overseas warehouses. FBA also supports sales and distribution on non-Amazon platforms, that is, multi-channel warehousing and distribution, such as Shopify/Magento/3Dcart and other tools, which require different fees.