What is the detail of FBA Fee you should know when Selling on Amazon?
If you’re an Amazon seller, you’re probably well aware of the impact FBA (Fulfillment by Amazon) fees can have on your bottom line. These fees can make or break your profit margin, affect your marketing strategy, and influence your outsourcing decisions. As FBA experts, we’ve delved into numerous pricing case studies to help you navigate the intricate web of Amazon FBA fees. In this expert article, we’ll shed light on the fee structure of Amazon FBA Prep services, empowering you to make informed pricing decisions that work for both you and your customers.
Let’s dive into the world of Amazon FBA fees, which can sometimes seem as complex as a labyrinth. We’ll unravel the different types of fees you should be aware of, so you can steer your FBA business in the right direction.
1. FBA Inventory Placement Service Fees
New Amazon FBA accounts will typically find themselves assigned to various Amazon warehouses when they create FBA shipments. To ensure the smooth delivery of your goods to a designated warehouse, you’ll need to set up the inventory placement service, and yes, this service comes with its own set of charges. It’s crucial to work closely with your shipping agent to ensure timely deliveries with visible barcodes. Any hiccups in the process can lead to delays in processing and placing your inventory.
Rate: (per piece)
To make the most of this service, remember to close the inventory placement service after your FBA shipment is created, and reopen it when necessary. Compared to the high shipping costs of sending goods to multiple warehouses, utilizing the inventory placement service can lead to substantial cost savings.
2. FBA Storage Fee
FBA storage fees encompass Monthly Inventory Storage Fees, Long-Term Storage Fees, and Minimum Long-Term Storage Fees. These fees aren’t static; they change quarterly and even seasonally, with a spike in the last quarter. As a savvy seller, consider keeping excess stock in third-party storage facilities when your inventory is running high, and only ship a certain amount to the FBA warehouse.
The monthly storage fee is charged starting from the 7th to the 15th of the following month.
Rate: (per cubic foot)
3. FBA Long-Term Storage Fees
In the past, Amazon used to calculate long-term storage fees once a year, on February 15th and August 15th. But things have changed. Starting on September 15th, Amazon began calculating long-term storage fees on the 15th of every month. The specifics of the charges may vary, so it’s essential to stay up-to-date.
On August 15, 2018, Amazon introduced a minimum charge of $0.50 per unit per month for items stored in fulfillment centers for 365 days or more. You’ll be charged the greater of the applicable total long-term storage fee or the minimum long-term storage fee.
Storage fees are updated yearly, and optimizing your packaging and storage strategy can lead to significant savings. Compact and small packages take up less space and incur lower storage costs.
It’s worth noting that starting July 1, 2018, Amazon restricted access to storage for sellers with an Inventory Performance Index below 350.
4. Inventory Storage Overage Fee
Storage limits are evaluated every three months, taking into account factors like your sales volume, historical Inventory Performance Index scores, and available fulfillment center capacity. These limits are based on your Inventory Performance Index on two specific dates during the quarter.
It’s crucial to keep a close eye on your inventory limits in the background. Exceeding these limits can result in substantial charges. As a new seller, you may have lower inventory limits since Amazon lacks sales data. However, as your sales improve, Amazon will gradually increase your limits. Their algorithm can also boost your listing ranks.
5. Cost of Removal and Destruction of Product
If you find yourself with a large FBA inventory, you’ll also face substantial storage costs. To mitigate this, consider clearing your inventory through various means, such as promotions, removals, or disposals. Of course, these services come with their own costs.
The expenses include the cost of removal and disposal. In many cases, it’s more cost-effective to have Amazon destroy damaged inventory rather than attempting to repair or receive it. This not only saves you time and costs but also frees up resources for business expansion.
In summary, when using FBA fulfillment, you’ll encounter not only the standard FBA delivery processing fees but also FBA Inventory Placement Service Fees, FBA monthly inventory storage fees, FBA long-term storage charges, FBA minimum long-term storage fees, inventory storage overage fees, and costs related to removal and disposal.
At the beginning of any Amazon selling venture, it’s crucial to meticulously assess these costs, develop effective coping strategies, and minimize project risks.