On February 15 and August 15 of every year FBA conducts an inventory cleanup, at which time inventory Units that have been in our fulfillment centers for 365 days or longer will be assessed an upfront, semi-annual Long-Term Storage Fee of $22.50 per cubic foot.
To provide additional flexibility to maintain your unique selection, one Unit of each applicable product ASIN will be exempted from the semi-annual Long-Term Storage Fee if none of your Units of that ASIN have been in our fulfillment centers for less than 365 days. Please note, FBA accounts for inventory on a first-in-first-out (FIFO) basis.
|Inventory cleanup dates||Affected inventory||Long-Term Storage Fee
(per cubic foot)
|Units in fulfillment centers
365 days or longer
Units in our fulfillment centers for 365 days or longer are charged the Long-Term Storage Fee semi-annually on August 15 and February 15.
One Unit of each applicable product ASIN will be exempted from the annual Long-Term Storage Fee if none of your Units of that ASIN have been in our fulfillment centers for less than 365 days.
In advance of each Inventory Cleanup, we will notify you of any Units in your FBA inventory that will have been in our fulfillment centers for 365 days or longer as of that date.
Use the Recommended Removal report and the Inventory Health report to identify your inventory that is likely to be included in the Long-Term Storage program during the next inventory cleanup event. Products will appear in the Recommended Removals Report six weeks prior to the cleanup date.
Below is the blog post that I did about the August 15th, 2011 cleanup date. I hope it helps you evaluate your inventory and make the necessary adjustments.
REPOST from August 10, 2011:
Have you received an email like this?
The FBA Long-Term Storage Fee will take effect on August 15, 2011, less than one week away. Be sure to submit your removal request before midnight PDT on this date to avoid incurring Long-Term Storage Fees.
I received it TWICE; once on my books & media account, and again for my ‘everything else’ account where I sell toys, tools, and, well, everything else.
What is the Long Term Storage Fee?
The Long Term Storage Fee is $45/cubic foot that is charged on items stored in FBA warehouses for more than one year. This does not mean that every item that you send to FBA has to sell within 12 months. There is an exemption for single units of an ASIN. This means that Amazon still wants your Long Tail items (items that sell, they simply don’t sell very often), they just don’t want three copies of a book that sells once every three years. This would be nine years supply of inventory and it is not how Amazon envisioned the FBA program.
|Item||Dimensions||1 unit||2nd unit||10 units|
|Book||8? X 6? X 1?||$0.00||$1.10||$9.90|
|Toy||11? X 8? X 2?||$0.00||$4.58||$41.22|
Believe me, Amazon does NOT want to charge you the Long Term Storage Fee. This is not a profit center for them. They want FBA warehouses humming with inventory coming in and orders going out. This is what they are good at. They do not want to be in the storage business.
Want to know my numbers? I’ll show you:
Books & Media:
As of August 8, 2011, you have 2,060 Units of inventory that will have been in our fulfillment centers for 365 days or more on August 15th for which you will be charged $2,384,unless you submit a request to remove them (or they sell) before that date.
As of August 8, 2011, you have 181 Units of inventory that will have been in our fulfillment centers for 365 days or more on August 15th for which you will be charged $4,071,unless you submit a request to remove them (or they sell) before that date.
I’m pretty sure that most sellers are not looking at such high numbers. When I started with books, I’ll admit I was a dummy. I thought I was a genius and happily bought ex-library books on tape sets that were listed for $70+ on Amazon. Too bad I didn’t know the difference between ‘listed for’ and ‘selling for’ (I’m better now, thanks). Learned a few things about Sales Rank is the past three years as well
Through August 15, 2011 the per-unit fee to have inventory over 270 days old returned to you is $0.20 per-Unit including shipping ($0.40 including shipping for Oversize Units), or you can have Amazon dispose of the inventory Units for no charge.
After August 15, 2011, the per-unit fee to have inventory returned to you is $0.50 per-Unit including shipping ($0.60 including shipping for Oversize Units), or you can have Amazon dispose of the inventory for $0.15 per-Unit ($0.30 for Oversize Units).
I have some oversize items on my Everything Else account that is pushing the Long Term Storage Fees way up. I sent Amazon all of my oversize items because the monthly fees were so low. Amazon admits that they did not expect this behavior when they implemented the FBA program and defined the fee structure. This behavior (myself included) is in part what prompted the Long Term Storage Fees. This post has two parts; first, how to analyze and remove/dispose of your older inventory to avoid the Long Term Storage Fees, and second, what these rules are for and how to optimally send inventory to Amazon’s FBA warehouses.
Analyzing Your Aging Inventory
Log into your Amazon Seller Account: https://sellercentral.amazon.com/gp/homepage.html (seller account required)
Look under Reports, then click on Fulfillment.
Under Inventory, you’ll see two reports. One called Inventory Health, and the other called Recommended Removal.
Request both of these reports to be downloaded. Save, and open in Excel. Familiarize yourself with these reports; they are very helpful. Right now you want to look at the columns that relate to Inventory Age (270-365 days & 365+ days) as this will show you the items on which Amazon will charge you the Long Term Storage Fee.
Creating a Removal Order
Amazon has actually made this process fairly easy. Here’s how I did it on my accounts:
Go to your Seller Account, Reports, Fulfillment, choose Recommended Removal, View Online, click on Generate Report.
You’ll now see the first 150 items from your Recommended Removal Report. These are all items that will be charged the Long Term Removal Fee or that have single quantities of inventory that have been in stock for 365+ days. Click on Begin Removal Process.
Most of these items you will want to remove or destroy. The ones to double check are the ones that have a Fulfillable Quantity of one and Available Quantity of one (even if at FBA for 365+ days). These may be Long Tail items that you want to keep in inventory. Remember, single inventory units per ASIN are exempt from the Long Term Storage Fee. I copied and pasted the ASIN into Amazon to check the prices and Sales Rank for these items to decide if I wanted to keep them at FBA or remove/destroy. If you want to keep them, check the box in the Delete column to remove the item from the removal order. Once you have reviewed the items, click the Continue button at the bottom of the screen and complete the process. If you have more than 150 items to review, repeat the process for the additional items.
You have to have your removal order PLACED by AUGUST 15, 2011 to avoid the Long Term Storage Fees. Don’t wait until the last minute.
Note: you may be able to get a tax deduction by shipping a Removal Order to a thrift store or non-profit for an amount great than $0.20/unit. Correction: Business inventory cannot be donated for a tax write off like this. You can go through the steps to convert business inventory to personal use and then make a donation, but I doubt that it is worth the trouble in this case. (Thanks Karin!)
Creating a Disposal Order
Follow the same steps as above for creating a Removal Order, but instead of clicking Ship To Address and entering an address, you’ll click on Destroy. Trust me, when Amazon says they will destroy the items, they will be destroyed.
What’s Really Going On?
As mentioned above, Amazon does NOT want to charge you the Long Term Storage Fee. If they did, they would not make so many reports available to you and make it easy to identify and dispose of this type of inventory. They even reduced the removal and disposal fees to help sellers adjust to this new rule. It’s only $0.20 to get Amazon to pick, pack, and SHIP an item back to you. I don’t know about you, but i can’t even buy a box for twenty cents, let alone pack and and ship it somewhere. And if your inventory is scrap or junk, Amazon will toss it for you FOR FREE.
This fee is designed to encourage FBA sellers to manage their FBA inventory better and to not simply use FBA warehouses as a cheap storage unit for all of their inventory. The FBA storage fees were so low that many sellers (myself included) simply sent Amazon everything because it was so cheap to store it at FBA that it made sense.
Who remembers fourth quarter last year (2010) when Amazon halted inbound FBA shipments because FBA warehouses were full? I sure do. This fee will prevent this from happening again. Amazon wanted nothing but to receive inbound shipments and get stuff listed and sold, but too many sellers filled up the warehouses with slow moving inventory. The new Long Term Storage Fee will discourage this practice and keep FBA warehouses able to receive products without any delays.
Think of it this way: only send Amazon a maximum of ONE YEAR SUPPLY of any product and you will never be charged the Long Term Storage Fee. Single quantity items are excluded to you can still send in Long Tail items without worry. Periodically check the Inventory Health Report and the Recommended Removal Report. Most FBA sellers who sell books and media items with quantity of one will be largely unaffected by this new fee. If you need any help having your inventory returned to you or disposed of, please contact Amazon’s Seller Support team using the Contact Us link in your Seller Account.