10 Pro Tips to Drastically Lower Your Amazon Monthly Storage Fees
Feb 12, 2024
Keeping storage costs under control is crucial to remain profitable selling on Amazon. And luckily for you, it all boils down to two things:
Proactively managing and optimizing your inventory to lower your monthly inventory fee
Avoiding aged inventory surcharges at all costs
In this article, we give you 10 tricks to reduce your base monthly inventory fee. If you are incurring aged inventory surcharges, make sure to check our article on how to avoid long-term storage costs.
The Amazon Monthly Storage Fee Equation
Monthly storage fee (per product)= Average daily volume per unit x applicable rate.
If you want to minimize your monthly storage fee, you have 2 solutions:
either you decrease your average daily volume per unit
or you decrease the applicable storage rate
While it might sound difficult to minimize your average daily volume or your applicable storage rate, 3fin is here to help you out. We have compiled our top 10 most effective tricks to decrease your monthly storage fee.
Top 10 Tricks to Decrease your Amazon Monthly Storage Fees
#1 Skip Low-Value Items
Storage fees are based on weight and size and not price. If you store many cheap products - and especially if they are bulky - Amazon’s storage fees will make it very difficult for you to remain profitable.
#2 Shun Bulky Items
Large and bulky items result in higher volume per unit, leading to increased monthly storage fees.
#3 Optimize Sell-Through Rates
Store products with a high sell-through rate to minimize storage duration and avoid additional surcharges. The longer a product is stored in Amazon’s FC, the higher the average daily volume, the more expensive your monthly storage fee. On top of that, products that don’t sell well enough will incur a monthly storage utilization surcharge.
#4 Avoid Overstocking
Amazon charges storage fees based on the volume and weight of your inventory, so the more you store, the higher your fees will be. To avoid overstocking, make sure to carefully track your sales data and inventory levels with the help of a tool such as 3fin. 3fin will help you identify trends and patterns in your sales to avoid any potential overstocks and associated unnecessary storage costs.
#5 Be careful with seasonal products
Once the season is over it may become difficult to sell them and you will still incur storage costs.
#6 Steer Clear of Dangerous Goods
Dangerous goods require special handling and storage from Amazon, and as such, incur storage costs that are 10% to 50% higher than regular products.
#7 Beware of Peak Season Storage Costs.
Amazon typically triples the monthly storage rate between October and December. During peak seasons (October to December), store only products relevant to that season to avoid inflated storage rates.
#8 Store additional inventory outside of Amazon FBA.
Consider storing additional inventory outside Amazon FBA, reducing inventory volumes at Amazon's fulfillment centers.
#9 Optimize Product Size and Packaging.
Remember: storage fees are calculated off the volume (i.e. the space) that your inventory occupies at Amazon’s FCs. An effective, yet often overlooked, tactic to lower your storage fees is simply to optimize your products’ packaging to ensure their volume is as optimized as possible. A 10% decrease in packaging volume means a 10% decrease in monthly storage costs.
#10 Manage Unfulfillable and Stranded Inventory
Unfulfillable inventory is the items that cannot be sold or shipped for any reason, such as damaged or defective products. Stranded inventory is products listed on Amazon but is not available for sale. Stranded inventory can occur for a number of reasons, such as if you have incorrectly listed the product, defective, or expired inventory. Amazon charges storage fees for all inventory, including unfulfillable and stranded inventory. To reduce your storage fees, you should regularly review your inventory and remove any unfulfillable inventory.
By implementing these ten tricks, you can significantly decrease your Amazon monthly storage fees and enhance your overall profitability. Stay tuned for more expert tips on maximizing your success as an Amazon seller with 3fin!
