Managing your inventory is one of the most difficult tasks in any Amazon business, whether you are just starting out or well established, it is still tricky to judge inventory levels. Ensuring you do not go out of stock, especially during quarter 4, is crucial because you can lose many thousands of dollars by going out of stock at this peak time.
In addition to managing stock levels you also have to balance the fact that Amazon also charge storage fees. This can start to add up if you have slow moving stock, which can happen for various reasons.
Every year on 15th February and on 15th August Amazon conduct inventory clean ups. Read more here – https://www.amazon.com/gp/help/customer/display.html/?&nodeId=201101150
On these dates all inventory gets assessed for storage charges. This is based on the space your inventory takes up in the various Amazon warehouses.
Inventory that has been in warehouses between 6 and 12 months are assessed at the rate of $11.25 per cubic foot. For items in the warehouse more than 12 months the fee would be $22.50 per cubic foot. This is based on current date of November 2016.
You can identify which, if any, of your SKU’s Amazon estimate will be subject to these fees, by running the ‘Inventory Health’ report.
Go to Reports >> Fulfillment >> Inventory >> Inventory Health
Here is what that report looks like:-
So Amazon are estimating that one of my products may be subject to a long term storage fee at the next date which in this case will be 15th February.
Amazon base their estimates on the date your inventory was received and predicted sales based on your previous months sales.
Do bear in mind that this is an estimate and if you subsequently start to sell more, as in my case I predict I will in November and December, then when we get to the next assessment date in February the position should have changed.
As stated in the guidelines-
“Any inventory that sells before they’ve been in our fulfillment centers for six months, or that sell after they’ve been in our fulfillment centers for six months or longer but before the inventory cleanup dates (February 15 and August 15), will not be charged the long-term storage fee.”
I am quite confident that this particular product will sell quite well over the coming busy Amazon selling weeks in November and December, so I will run this report again in January to see what the situation is at that time.
If I were to run the report again in January, and in fact I have not increased sales of this product and there is still an estimated long term storage fee, then I would be charged the long term storage fee on 15th February.
If that were to happen I would have the option of removing the excess items from Amazon warehouses, in which case I would not be charged the long term storage fee, provided I had submitted a removal order prior to the date the fee would be charged i.e. 15th February or 15th August.
To submit a removal order you can go to the Inventory Age report and click the drop down box on the right:-
Inventory >> Inventory Planning >> Inventory Age
This is what the report looks like showing three of my products including the slower selling one:-
In conclusion if you run the inventory health report maybe every few weeks then you should be able to see in advance which of your products may be subject to fees. However it is likely you will have an idea, because we are usually only too painfully aware of our slow selling products .
You can then take the appropriate measures to reduce the chance of being charged long term storage fees which can really quite quickly add up.
I hope this has helped to clarify yet another one of Amazon’s charges which can pop up and surprise us all!