Long term storage fees can eat into your profits fast. But don’t worry! Here’s how to avoid them and keep your savings.
If you use Amazon FBA, you know warehouse storage is handy, but it can also get pricey. If your inventory sits too long, Amazon starts charging you extra.
Let’s break down what Amazon’s long-term storage fees are, how they work, and what you can do to reduce or avoid them.
What is Long Term Storage on Amazon?
Storage fees are extra charges Amazon applies to inventory that has been sitting in their warehouse for too long.
Amazon wants to keep its space open for fast-selling items, so it charges more for items that aren’t moving. If your products aren’t selling quickly, you’ll get hit with long term storage fees.
The Long Term Storage Fee (LTSF) is an extra charge Amazon applies to inventory stored for more than 181 days. Amazon uses it to encourage sellers to keep their stock fresh and moving.
Say you’re selling phone cases. You have 500 units sitting in Amazon’s warehouse for 6 months. If they don’t sell soon, you’ll get hit with long-term storage fees on each unit, which could eat up your profits.
How Does Amazon Long Term Storage Fees Work?
Every 15th of the month, Amazon checks how long your items have been sitting in their warehouse:
- 181-270 days. You start getting charged an aged inventory surcharge (a.k.a. long term storage fee).
- 271+ days. The surcharge goes up significantly.
The fees depend on how long your items have been stored and how much space they take up.
For example, if you’re selling Christmas decorations and they don’t sell before the holidays, you could be stuck paying high storage fees until next year.
And these are on top of your regular Amazon storage fees, so slow-moving products can cost you a lot.
How are Storage Fees Calculated?
Amazon calculates storage fees based on:
- Volume (cubic feet). Bigger items cost more to store.
- Storage duration. The longer it sits, the more you pay.
- Peak vs. non-peak seasons. Fees go up from October to December due to holiday season peaks.
To avoid surprises, use Amazon’s FBA Revenue Calculator to estimate fees before you send inventory.
Related content: Inventory Planning Tips
Identify At-Risk Stock
Your first step for determining how to handle your slow-moving stock is to identify which products in your inventory will be subject to long-term storage fees on the next inventory clean-up date (the 15th of each month).
Amazon offers inventory reports to help identify products that are getting close to incurring the long-term storage fee. The way to check for long term storage is:
- Go to inventory tab and click either “Manage Inventory” or “Inventory Planning”. If you go to the “Manage Inventory” tab you will then need to click the link that says “Inventory Dashboard” underneath the menu bar.
- Once on the Inventory Dashboard, look for the “FBA Inventory Age” report, located at the bottom of the page. Then, click “View Details.”
- You can then see your inventory, how many days it’s been at an FBA center, and what your estimated long term storage fees will be.
Make a Plan
Once you’ve sorted and identified your at-risk products, make a plan for what you’re going to do with them. Essentially, you have three options:
- Pay the fee. This is the simplest solution; however it’s also going to hurt your bottom line..
- Remove the products. You can ask for Amazon to remove the affected inventory, for a fee.
- Sell the products. You can attempt to sell the at-risk stock to get it off FBA’s shelves.
It’s a good rule of thumb to start looking at products that are three to six months away from hitting the 181-day mark.
Place a Removal Order
Amazon will let you submit a request to remove inventory from their warehouses. You’ll find the removal order on your inventory management page within your Amazon seller account.
You can have the stock sent off-site or disposed of by Amazon. Of course, there are some considerations before taking this route. First, there is a fee for Amazon to take care of this for you. Second, there is a waiting period for when you can send removed items back to FBA to attempt to sell again. Amazon can also dispose of the inventory and you will no longer incur any Long Term Storage Fees.
Amazon also gives you the ability to set up automated long term storage removals allowing you to just have the inventory sent back to you whenever it begins to age. Once you receive the inventory you can sell it on other platforms or even resend it back to Amazon after a waiting period.
How to Reduce Long-Term Storage Fees
You can’t avoid regular storage fees, but you can avoid ridiculously high long-term storage fees.
Keep Your Inventory Moving
The best way to keep long-term storage fees low is to sell your products quickly. The faster your inventory moves, the less time it spends in the warehouse. This translates to fewer fees for you!
Start by analyzing your sales trends. Look at which products sell quickly and which ones tend to sit for a while. If you notice certain items moving slowly, adjust your restocking strategy.
Only order what you need based on demand, and avoid overstocking products that aren’t selling fast enough.
Use Amazon’s Inventory Tools
Amazon offers several inventory management tools that can help you stay ahead of storage fees.
The Inventory Performance Index (IPI) gives you an overall score for how well you’re managing your inventory. A high score means you’re keeping a good balance, while a low score could lead to storage limits and higher fees.
You can also use the Restock Inventory Tool to get Amazon’s recommendations on when to restock your products.
Another useful feature is the Aged Inventory Report, which shows you which products have been sitting in Amazon’s warehouse for too long so you can take action before storage fees kick in.
Run Discounts and Promotions
If you have products that aren’t selling as quickly as you’d like, running promotions can help.
Discounts like Lightning Deals and Prime-exclusive offers can give your listings more visibility and boost sales.
Offering Buy One, Get One (BOGO) deals or bundling slow-moving items with popular products can also help you clear out inventory.
Seasonal sales, especially around holidays and big shopping events, are great opportunities to move extra stock before it becomes a problem.
Liquidate Extra Inventory
Sometimes, even with promotions, certain products just won’t sell fast enough. In that case, liquidating your inventory can be a smart way to recover some costs.
Amazon’s FBA Liquidations program allows you to sell slow-moving inventory at a discounted price instead of paying storage fees.
If you prefer, you can also use third-party liquidation services to reduce excess stock. While you won’t get full price for these products, it’s better than losing money to storage fees.
Store Smarter with Warehouse Management
Another way to reduce storage costs is by diversifying where you keep your inventory. Instead of storing everything in Amazon’s warehouses, consider using a third-party logistics (3PL) provider.
You can also use your own warehouse or storage facility and send inventory to Amazon only as needed. This strategy―plus a good warehouse management software―can save you money and give you more control over your stock.
Watch Amazon Storage Limits
Amazon sets storage limits based on your IPI score: this means that, if your score drops too low, your storage space gets restricted. This can make it harder to manage your inventory and could lead to even higher fees.
To keep your IPI score high, avoid overstocking slow-moving products and make sure your listings are active and optimized.
If any of your inventory becomes stranded, meaning it’s listed incorrectly and isn’t available for purchase, fix those issues quickly to keep your score in good standing.
Avoid Dead Inventory
Dead inventory is one of the biggest factors behind high storage fees. If you have stock sitting in Amazon’s warehouse for months with little to no sales, take action before it costs you more.
You can choose to run some aggressive discounts or even bundle slow sellers with bestsellers. If this doesn’t work and the products are still, remove the inventory from Amazon’s fulfillment centers and take it somewhere else to avoid the fees.
Related content: The Benefits of Amazon Outlet
Automate Price Adjustments
Pricing plays a huge role in how quickly your inventory sells. If your prices are too high compared to competitors, your products may sit in storage for too long. Using an automated repricing tool can help you stay competitive without constantly adjusting prices manually.
These tools monitor the market and adjust your pricing to keep your listings attractive to buyers. This way, you can move inventory faster and avoid paying for extra storage.
Improve Your Inventory Planning
Checking your inventory management strategy regularly helps prevent overstocking and helps you cut storage fees. Keep a close eye on past sales trends, seasonal fluctuations, and customer demand to make smarter purchasing decisions.
Demand-planning software can help you predict how much stock to order and when, so you don’t end up with too much sitting in Amazon’s warehouse.
It’s also a good idea to do regular inventory audits. Check your stock levels frequently and identify products that aren’t selling as expected. By reviewing your inventory every month or quarter, you can make adjustments before fees pile up.
Final Thoughts
Amazon’s long term storage fees can add up fast, but you don’t have to let them cut into your profits. By tracking inventory, forecasting demand, running promotions, and using Amazon’s tools, you can keep fees low and your business running smoothly.
The trick is to act before your inventory becomes a problem. Start making small changes today, and you’ll save money in the long run.
Author
Antonella Fleitas is highly adept at creating fact-based, evergreen content about science, language learning, and culture. Her main goal is to build a strong content foundation for her clients, based on meaningful stories that people can learn from.
