Amazon has announced some significant changes regarding U.S. Amazon storage fees and policies for 2018. Here we will discuss the latest changes in the FBA fees and what you should do about them.
Let’s talk about the new Amazon storage Fees in brief. The biggest change is that Long-Term Storage Fees (LTSF) will be assessed and billed monthly instead of biannually. There will be a new minimum charge for the fees as well. Also, the monthly Amazon storage fees will increase slightly and a storage access limit policy will be introduced based on a new inventory performance index for FBA Sellers.
The policy is changing to make inventory management easier for professional FBA Sellers. The new FBA fees need to be taken into consideration when formulating an effective strategy for inventory management.
As explained in our post How to Deal with Long Term Storage Fees, most Pro Sellers understand the need for Amazon to keep optimizing warehouse space. Amazon has stated they seek to “allow the most efficiently managed inventory to flow through the network, while limiting less efficiently managed inventory.” The Amazon storage fees encourage merchants to develop strategies to move and sell their products rather than allowing it to remain unsold in the Amazon Fulfillment Center.
Below are some of the important highlights of the Inventory Fees and policy updates.
New FBA Storage Fees & Policy
Monthly Inventory Storage Fees:
Taking effect on April 1, 2018, monthly inventory storage fees will be increased by $0.05/ft3 for standard-size and oversize items. This change will first be reflected in May 2018 charges for storage that occurs in April 2018. See the Monthly Inventory Storage Fees section for in-depth details.
Long-Term Storage Fees (LTSF)
Beginning on September 15, 2018, long-term storage fees will be adjusted and the assessment dates will be changed from a biannual basis to a monthly basis. See the Long-Term Storage Fees section for more details.
Minimum Long-Term Storage Fees:
On August 15, 2018, Amazon will introduce a minimum charge of $0.50 per unit per month for items in fulfillment centers for 365 days or more. The greater of the applicable total long-term storage fee or minimum long-term storage fee will be charged. See the Minimum Long-Term Storage Fees section for more details.
FBA Storage Limits Changes
To help maximize the inventory capacity in the fulfillment center during crucial shopping seasons, Amazon will introduce a new scoring system: the Inventory Performance Index as assessment on inventory performance which will take effect on July 1, 2018.
For Pro Sellers with a performance index below 350, the storage access will be limited, whereas Pro Sellers who maintain an index score of 350 or greater will have unlimited storage for standard-size and oversize items (monthly storage fees and long-term storage fees still apply). The score is updated weekly based on your ongoing inventory.
For the Pro Sellers with the performance index already below 350, starting July 1, 2018, storage limits will be evaluated every three months on a quarterly cycle. If the Inventory Performance Index is less than 350 six weeks before the start of a quarter, the Pro Sellers will be notified of the potential storage limits. If a Pro Seller’s Inventory Performance Index score is still less than 350 at the end of that quarter, those limits will apply for the next quarter.
The Inventory Storage Overage Fee
Most importantly, the new policy may impact the functionality of the Repricing Central at BQool given the fact that the Pro Sellers with an index below 350 won’t be able to create a new shipment to Amazon until the inventory level drops below the given storage limits.
If existing inventory exceeds the storage limits for a given month, an Inventory Storage Overage Fee will be charged on the portion of the inventory that exceeds the storage limits, in addition to monthly inventory storage fees and, if applicable, long-term storage fees. The overage fee will be charged monthly at $10.00 per cubic foot, based on the daily average volume of inventory that exceeded the Pro Seller’s storage limits throughout the month. See FBA Storage Limits Changes for more details and examples.
Our next article will focus on how to deal with the new regulations. Please visit Plan in Advance: Countermeasures to New FBA Inventory Policy.