Anyone who has used Amazon’s fulfillment network knows the onslaught of charges that can ensue. Amazon has done a great job of monetizing every step of their supply chain, including storage fees for products housed in their warehouse. Carrying costs can be an expensive mistake and can eat away at profits if they are not properly managed.
When your products sit in an Amazon warehouse for 6 months or more, you begin to incur long term storage fees. Starting September 15th, 2018 Amazon will be changing their inventory assessment schedule from semi-annually to monthly. This means that each month your products sit in an Amazon warehouse past the 6 month mark, you are losing margin.
Previously, when inventory was assessed on February 15th, if a product had been in an Amazon warehouse for more than 6 months or 181 days, the owner of the inventory was charged $11.25 per cubic foot, which breaks down to $1.88 per cubic foot per month. But the inventory owner was charged the full $11.25 whether that unit sold on February 16th or sat there until August 14th.
Now, on the 15th of every month, inventory is assessed and products that have been there for 181-365 days are costing their owners $3.45 per cubic foot. If that unit sells within the next 30 days then the inventory owner does not receive another long-term storage bill for that unit. If it does not sell, however, each month that the unit is in inventory from that point forward, an additional $3.45 is assessed on the 15th. If that unit sits in the warehouse for another 181 days, the owner will incur $20.70 per cubic foot of fees, which is nearly double what they would have paid for the same amount of storage prior to this new assessment schedule.
See below for the new assessment schedule and charges:
This change is going to require closer, more careful inventory planning and monitoring your Amazon inventory to mitigate those expensive storage charges. For many brands and manufacturers this can be a confusing and time-consuming process. SupplyKick has expert logistics analysts who know how to manage inventory and minimize storage fees, but what we can’t mitigate, we pay for ourselves and never pass those charges along to our partners.
Last year, we sent millions of dollars of inventory through the Amazon fulfillment network, but spent only $3,000 on long term storage fees. Let us take care of the hassle of managing inventory and long term storage with Amazon and put our expertise to work for your brand.