Long Term Storage Fees
Long Term Storage Fees are on the horizon! On Feb 15 and Aug 15 every year, Amazon runs their math over your inventory. They are a sales machine, so don’t want to see any products older than 6-month in their warehouses.
Products that have been sitting from 6 – 12 months are currently charged at $11.25 per cubic foot. That rate doubles for any products they find that are over 12 months, to $22.50 per cubic foot.
As with most things within Amazon, they are open and transparent about their charges. However, they do creep up on you and their impact can wipe away any profit you made in the last 6-months and then some.
Their Inventory Health Report is a mine of great information and sellers should be checking this report every month to assess how they are tracking. Better to bite the bullet and run some promotions to move your inventory into cash that have it cost you cold hard cash!
Here’s where to go: Reports > Fulfillment > Inventory > Inventory Health
It will show your their estimation of the number of units and the fees they will charge at their next spring-clean. They work on a first-in/first-out principle, so be very mindful of any large shipments that you put in over the last 6 months. The timing is critical!
Their report is actually very helpful, as you get a count down to the day they will charge their fees. They provide an estimation, so you can’t say you didn’t know!
Here are the key questions you need to be able to answer:
What were your average sales per day over the last 3-months?
What were your average sales per day over the last 30-days?
Did you run any promotions during either period that you need to allow for?
Are your sales up, down or neutral
This will give you your run rate so to speak. Then look at Amazon’s calculation and with a very clear and open mind, decide if their number is correct – or close enough!
Work out the actual cost per unit. You need to understand this number so you can understand the financial impact of the following steps.
Here are our Top-6 Tips to get you back on track:
Keywords: Are you on top of these? How long since you looked at these? If more than 60-days, do a total refresh. People search by words so if you have not got these nailed, then you will remain hidden forever.
Title & bullets: Packed with your most important keywords, user-friendly, informative, encouraging copy…but not salesy!
Images: Are they as good as they can be? Have you used all 7 slots? Have you got at least two, if not thee lifestyle images showcasing your product in use? Does your product lend itself to an infographic?
Amazon Buyers are very visual – many check products on mobile. So make sure you look exceptional!
Pricing: Are you competitive with similar products. Check your Buy Box stats – do they suggest you need to look more closely at this.
Coupon down! Don’t just go in and slash your price. Amazon likes price stability so any large movements up or down and you will likely lose your own buy-box, even if there is no other seller. This means one more click for a buyer and we all know they are click-averse!
Promotions: This is where to go: Advertising > Promotions
There are a variety of options eg money off or buy-one/get-one. Select which one you feel will work best for your product. Don’t do buy-one/get-one if people are unlikely to want two! You want sales!
Check to see if you are eligible for Lightning Deals. They come at a cost, so be sure the fit is right for your product and run your math.
Sponsored Products are another option, driven via a pay-per-click model. Often a good way to help get you ranked.
If you’re within 60 days of Feb 15 or Aug 15, go hard! Sure, your margin may be close to zero but you must look at your overall costs. Better to turnover cash than face a hard cost and be no further ahead.
Assess your run rate every week. Daily is irrelevant. See how you are tracking – at the same time be mindful of the impact of actually running out of stock!
Non-Amazon Sales Channels: You probably already know people have bought your product on a promo or give-away and have resold it on eBay. Open an account, offer any price you like (no Amazon bog brother here) and simply fulfill from Amazon. You won’t be charged their referral fee but still pay for the fulfillment of course.
This can be a great strategy for a good selling product that simply has got overstocked and allows you to maintain your pricing on Amazon.
Are you out of time?
As a last resort, you can either ship them back to you if you have a US address but be sure you have worked out how to turn them into cash….not just stack them in your garage! The big downside is they will take around 60 days to arrive, come in dribs and drabs and often look the worse for wear. Amazon will usually lock you out from restocking so be mindful of this.
Navigate to the ASIN in question and click dispose. It will cost you 50c each (or 60c for oversize). However, be very aware that Amazon’s system of destroying is to put them in huge bins with many other products and then auction these off to the highest bidder!
There is a huge market of resellers who will take a bet on finding some great products that they then resell on their own Amazon account or eBay or elsewhere.
Make sure you act on this today and put into place a rolling bi-monthly check to assess the age of your inventory so you can manage down your risk of “unexpected” Long Term Storage Fees!
As always, ask us anything. If we don’t know the answer, we’ll know someone who does! Back to Blog