Do you now how much you are paying for Amazon storage?
A few weeks ago Amazon announced increased storage fees year round. Moreover, they have always had different prices for storage during Q4, which is now. And this year they did something cool – they allowed sellers to remove inventory from Amazon for free! Normally they charge a nominal fee typically around $0.50 per item. And these fees usually add up. But as I have mentioned above, right now it’s free through October 6th. So time is ticking.
Amazon also announced those increased storage rates, and for Q4 it’s roughly 4 times the normal storage rate. You know, I have to give Amazon credit for what they had accomplished – one of the reasons Amazon FBA caught on like wildfire and became so popular with sellers – they kept fees nominal and confusion to minimum, they tend to make things pretty cut and dry. If you go out and take quotes from other third party fulfillment providers, you will find that often there are lots of confusing things there, confusing language and charges that are several tiers deep. Amazon has avoided that for the most part. They don’t nickle and dime us as sellers.
One thing they do however, that a lot of sellers might not be aware of, is they charge a lot more for things in Q4. Your referral rate may stay the same, but average bids for sponsored products, as well as storage – they go way up!
If you spend a dollar in storage for the rest of the year – January through September – then you will spend 4 dollars per months for storing those same items October through December. The reason is pretty simple: Amazon is running out of space. That’s why they penalize us for things like long term storage, and they forbid new sellers from sending in inventory during the latter part of the year. They really want you to store only the items that you are planning to sell in the next six to twelve weeks.
And those added storage fees can really add up. That is why I encourage everyone to really know their numbers: know what you are getting into, know what you are spending, and all different aspects of your business. This can be difficult, but there are reports within Seller Central that will tell you how much you are spending on storage. Amazon calculates storage by cubic feet, which can be confusing, but there are easy online calculators that will give you the ability to translate cubic feet into pallets.
But the bottom line is this: know how much inventory you have with Amazon, and know how much it is costing you to store it there. In many cases Amazon FBA is the cheapest and most economical way to store your items. But especially in Q4 it may be worth looking into other options.
Time is ticking, the fourth quarter is upon us, removals from Amazon are free till October 6, and regardless of what you decide to do with your inventory, I hope that you will first run your numbers, grab your calculator and figure out, what you are actually paying for storage.