Amazon’s shipping services for suppliers who store the various items which are sent to the end customer under the Fulfilled By Amazon brand, have made suppliers’ lives easier, with most of the logistic activity, including the packaging of the product on its way to the end customer, inventory management and shipping, done by Amazon. The products are stored in huge logistic centers across the United States or UK in optimum conditions. However, if some of the products are not sold, Amazon charges suppliers an additional fee (a kind of fine) for the use of its warehouses. In this article we will examine the different options available to you, suppliers, in order to reduce that fee.
How is the cost of storing products in Amazon calculated?
Amazon counts the days from the time the products reach its warehouses. When six months pass (or 181 days to be exact) where the products did not leave the warehouse, additional cost is added on storage of products in its warehouses. The inventory of Amazon’s logistics centers is conducted twice a year – on 15.2 and 15.8, with products left in the company over half a year bearing a commission of $11.25 per cubic feet, and products stored for more than one year bearing a commission of $ 22.50
When does Amazon charge the fees?
The additional cost of the remaining products in the Company’s warehouses is charged on the day the products leave Amazon’s warehouses, returning to you as the supplier or are delivered to other warehouses. Shortly before the due date, Amazon will send a notice to the supplier, alerting him to the added long-term storage fee, but before the due date he can still continue to try and sell the product.
Can I remove the products from the warehouses for a few days and then send them back to Amazon warehouses?
Yes and no. Amazon has set a minimum period in which it will not be possible to ship the products to its warehouses again. Even if you decide to order a different product with the same code number, you will not be able to use the Amazon FBA service until 8 weeks have passed. Therefore, many use the solutions of external logistics experts, for temporary storage services for a period of two months, and only then continue to use Amazon FBA services. A small number of the products still remain so that Amazon can continue to send them if necessary.
Possible solutions to avoid paying the fine
In order to avoid paying this fine many suppliers tend to find a variety of creative solutions for storing their products. The first is to ship a relatively small amount of each item to Amazon warehouses, while most of the goods are stored in external storage in the US. When the products are sold, these logistic centers send Amazon an additional small quantity of items of each type (Small amount of SKU). This option is suitable for suppliers of only a few types of products.
Another option is to use centers that also include some of the logistical options offered by Amazon. For example, logistics experts who offer a service similar to Amazon’s ship products that are not sold in bulk. This option is also suitable for products whose cost is particularly high and only a few units are sold throughout the year, or for large products that take up considerable space in the company’s warehouses and are not sold frequently.
Seasonal products – send to Amazon only at the right time
Another niche of products are those targeting specific seasons. For example, Christmas trees, Purim costumes or “Halloween” and similar products. These products are recommended to be shipped to Amazon stores shortly before the holiday in order to avoid high fines.
We will mention another common situation. In many cases, the products are imported from the East, such as from China, and before the holidays the suppliers are swamped. In order to solve this logistical problem, it is possible to send the goods from the manufacturer in China to an outside warehouse, and only just before the holiday, to send them from the local logistics center to Amazon warehouses for the holiday period only. The unsold products can be returned after the sales season to a storage center that does not require additional fines on long-term storage.
To sum up, Amazon’s storage policy, originally designed to ensure that the company’s warehouses store only saleable products, makes it difficult for new suppliers or those who sell a wide range of products, which only some are distributed quickly. In order to overcome this difficulty and avoid paying the fines, you can use external warehouses that send the products back to Amazon in order to reboot the six-month count in which the products are stored without being sold