Amazon FBA: How Much Should You Pay to Store Your Product?
Are Amazon’s Fulfillment Services Right for You?
Have you heard about the Amazon FBA Program? Or are you already using Amazon fulfillment services? For those of you who need a quick explanation, the Fulfillment by Amazon (FBA) Program enables retailers to store products in Amazon’s fulfillment centers. They’ll pick, pack, ship, provide customer service, and even handle returns for your products.
All of these services come with a monthly fee, of course. But thousands of retailers big and small are more than happy to align themselves with Amazon, the world’s largest online retailer, and not have to worry about order fulfillment, warehousing, inventory, and all of the headaches that come with it. There’s seemingly no downside.
But Here’s the Downside to FBA
Unfortunately, many Amazon sellers are not aware of long-term storage fees that may be accruing on their inventory. Twice a year, on February 15 and August 15, Amazon conducts an inventory cleanup. Any unit of inventory that has been in an Amazon Fulfillment Center between 6 and 12 months is assessed a long-term storage fee of $11.25 per cubic foot. Anything on the shelves for more than 12 months is charged double that amount.
The Reason for the Long-Term Storage Fee
Amazon doesn’t anticipate sellers will store merchandise in Amazon fulfillment centers for long periods of time, so the cost for long-term storage isn’t built into the monthly FBA cost. In the event the seller does need long-term storage, the fee kicks in. According to Amazon, the long-term storage fee helps ensure that they can continue to provide high levels of service to all sellers and provide customers with products that they want.
Ways to Avoid the Fee
Of course, there are a few ways around the fee. For example:
- Discover which products are at risk for fees: Request an inventory health report from Amazon before the clean-up dates to find out which inventory units might be hit with a fee.
- Temporarily lower the price of your goods to boost sales. It’s better to sell your inventory at a lower price than have to pay for storage.
- Request a removal order: The Recommended Removal report from Amazon enables you to easily ask for items to be removed from inventory before fees accrue.
- Forget Amazon altogether: Amazon FBA may be popular, but it’s not your only option for fulfillment services. Consider talking to a third-party fulfillment service provider (3PL) like Taylored Fulfillment Services.
The Benefits of Partnering with a 3PL
Your local 3PL provider has plenty of advantages over Amazon. For example:
- Customization: Amazon fulfillment services provides a one-size-fits-all approach to inventory management and order fulfillment. But with a 3PL you can choose from the most basic fulfillment operations to complex custom workflows and everything in-between. It all depends on your needs and your budget. Plus, you can scale up and scale down as needed and even request special add-on services. Pay for only for what you need and nothing you don’t.
- Personal service: Amazon is a behemoth. Customers come and go with little impact. Your 3PL partner is much smaller, so every customer counts. They want your business and will work with you one-on-one to make sure you are satisfied.
- Cost savings: It’s in your 3PL provider’s best interest to help save you money. They can provide the most cost-effective warehouse solutions and recommend sustainable business practices. No hidden fees. No long-term storage penalties. No surprises.
When you’re looking to outsource your organization’s fulfillment services, remember that Amazon FBA isn’t the only game in town. Your local 3PL provider has a whole range of cost-effective, innovative, and efficient solutions for your business.
Taylored Fulfillment Services is a fully integrated third-party logistics provider specializing in wholesale, retail, and direct-to-consumer unit fulfillment. Established in 1992 and headquartered in Iselin, New Jersey, Taylored Fulfillment Services operates 1.5 million square feet of warehouse and distribution space strategically located near the nation’s busiest ports, including Los Angeles, Long Beach, and New York.