Amazon hit me with a 1k bill for what they call their FBA long storage fees.
I was not impressed.
It cost me money and stress (dealing with Amazon support can sometimes drive you to the edge...).
In this post, I'll tell you why I got caught by these long term storage fees and what I did about it, so you can avoid this happening to you.
Let's start by clarifying what these storage fees actually are:
Amazon FBA long term storage fees apply to sellers who use the fullfilment by Amazon program (FBA) and are the cost of stocking your products in Amazon warehouses. Storage fees are charged per cubic foot, which is a normal pricing model for warehousing. Amazon charge a fee for products that have been in a fulfillment centre longer than 365 days.
That's pretty much how storage fees work: you're paying for space.
Now, before I explain what happened to me and what I did about it, there's a few other things you'll want to know about these FBA fees.
Costs may depend on the location of the fulfillment centre. Amazon's seller central forum states that:
inventory that has been in US fulfillment centers for more than 365 days incurs a long-term storage fee (LTSF) of $6.90 per cubic foot or a $0.15 per-unit long-term storage fee, whichever is greater.
Reference: seller central
And how about this one:
Here's what seller central states:
On the 15th of each month, Fulfillment by Amazon (FBA) conducts an inventory cleanup.
Reference: seller central
Ok, now let's tackle the question that everybody wants know:
Here are 3 things you can do to avoid getting hit with a storage bill:
Unfortunately, those are the only 3 things you can do to avoid this in future.
[clickToTweet tweet="Storage fees. FBA sellers have to limit how much stock we send in & watch closely so we don't run out of units." quote="Storage fees mean FBA sellers now have to limit how much stock we send in and then keep an eye on it around the clock to make sure you don't run out of units." theme="style3"]
So, you may be wondering, how did I get myself into such a bad position (1k in fees really stings, especially when you're not expecting it).
Let me tell you...
It was my fault, of course. The products affected had been in storage for a long time. And the reason for that is that I missed the email notifications (or warnings).
And that means that you can too.
You know how it is. You get busy. As a solopreneur, there just doesn't seem to be a day with a spare 20 minutes in it. Emails come in all day long, and I try not to spend much time in my inbox. When I see an important email, I action it.
But when I get a ton of email announcements from a company like Amazon, then I can miss the one email that I should have actually read.
That's not an excuse of course. It's just a fact. I don't know what the answer is, nor am I debating that here. My only point is that, you may not be reading every email Amazon sends you, and you should at least keep an eye out for any email with the words long term storage fees in the subject.
So that's the reason for the fees.
But you'll want to know what strategy I was playing to get myself into that situation, in order not to make the same mistake.
So let me tell you about that...
Quarter 4 (aka Q4) was coming up. I got as much stock into Amazon on the run up to Christmas in order to make the most out of Q4. If you've ever tried to get inventory into Amazon during Q4, you'll know that it's almost impossible. There are delays and problems arising from the fact that a gazillion sellers are also trying to desperately get their inventory into FBA.
In my case, I sent a lot of my stock way too late (i sent my last shipments around late November, early December) and some boxes went missing. Or rather, they made it to the fulfillment centre, but ended up who knows where.
They did turn up, eventually, after much back and forth with support, but by the time they popped up, Q4 was almost over.
This left me with far more inventory than I would normally stock in FBA, because I effectively missed the chance (due to me leaving things until the last minute) to sell a lot of product.
There's another lesson there: if you're going to top up your inventory before Q4, don't send your products into FBA too late in the year or too close to Q4, because everybody is doing the same!
But anyway, having high levels of inventory in January wasn't such a problem at that time, because it saved me from having to store the products in my own home.
Then, two things happened:
I probably got a few emails warning me of the long term storage fees deadline, but who has time to read those?
So there you have it: it was a perfect storm. The deadline came and went, as did the whooping bill that appeared in my seller app. That's because Amazon are smart enough to deduct the fees straight from your seller account, so you can't get out of paying them.
I did lower the prices on the overdue items and sold a good few, but not enough. Q4 was gone and I just couldn't get a decent sale off the ground mid January.
So I bought my inventory back. I say 'bought' because you have to pay for the delivery, of course. All that did was balloon up the cost of the final bill.
My inventory was delivered back to me in pallets (that's how much of it there was), and I dragged it all into a spare room in my home, vowing never to get caught by the LTF monster.
Once Amazon took the payment, I think I may have even shed a tear when I saw the amount deducted from my bank. What a lesson that was.
[clickToTweet tweet="Marketplaces evolve and we sellers need to evolve with them to stay on top of the game." quote="Marketplaces evolve and we sellers need to evolve with them to stay on top of the game." theme="style3"]
I have an old video where I talk about my long term storage fees mishap, which I will place below. At the time, I was so angry at having dropped the ball that I wanted to warn as many sellers as possible.