FBA Payment Eaten Up by Storage Fees? Not Anymore
Clear out merchandise before you incur any long-term storage fees, and watch your overall FBA payment go through the roof.
There’s nothing worse than watching your total FBA payment decrease because of Amazon storage fees. Anyone who sells through the FBA program may find themselves paying unexpected warehouse fees for any products that sit in their inventory. If you want to maximize your profits, you need a faster turnover rate for your products. But where should you begin?
The Hidden—and Expensive—Truth About Being an FBA Seller
As an FBA seller, you already have bragging rights. After all, you’re an entrepreneur running a small business on perhaps the most well-known internet marketplace. However, it’s not all fun and games. If you don’t sell the merchandise in your inventory, you may end up paying hefty Amazon fees.
Now for the good news. Amazon doesn’t begin charging long-term storage fees until an item has been in the warehouse for 365 days or more. However, once your inventory passes the one-year point, you will receive an automatic bill each month. There are two ways to avoid these fees: submit a removal order or sell your old inventory. Of course, the latter is the better option for your bottom line.
Protect Your Profits and Avoid Storage Fees
It sounds simple enough. If you sell your inventory before the one-year mark, you won’t have to shell out cash for long-term storage. However, Amazon is a competitive place. Selling items isn’t as easy as putting up a listing—if it were, everyone would do it!
Instead, you need to boost your products to the front of search results. No one wants to scour through page after page of results to find your listing. In most cases, a customer will buy the first product that catches their eye with a reasonable price—and that usually falls on the first page. Where does your listing rank right now? If you don’t find your product on the front page, you know why it’s still sitting in the warehouse.
It’s now time to be aggressive. Price your item to sell. Bundle your merchandise with other items in the same category. And perhaps the most effective plan—give your Amazon sales rank a boost.
Unless you’re an expert when it comes to improving rankings (and if you were, you wouldn’t be in this boat), you’ll need a little bit of assistance. It’s time to partner with a company that specializes in boosting rankings and driving external traffic to your product listings. The more potential customers who see your listing, the better chance you have of closing a sale and cleaning out the warehouse.
Finance Your Inventory Clear-Out
Working with an Amazon FBA expert does cost money, and you may not have enough in your budget to get outside help. However, if you don’t seek assistance, your inventory will continue to collect dust—and unwanted fees—in the warehouse. You need to finance this endeavor to keep your company afloat.
Amazon sellers have limited options when it comes to financing. Many choose to ask for a loan from their local bank, but bankers often deny their application. Why is that? Banks just don’t understand the world of FBA businesses. They don’t necessarily see the value of your company or how the money they finance will help you succeed. If you’re lucky enough to get a bank loan, you may be in for another rude awakening. Banks are notorious for charging every fee in the book. It may cost you even more in the long run than if you paid the warehouse storage fees.
However, if you seek a loan from an online lender who specializes in FBA businesses, you’ll find that coveted pot of gold at the end of the rainbow. The best lender is someone who only works with like-minded e-commerce companies. You’ll find it easier to obtain the money you need, with fair terms that work better for your budget.
Watch Your Inventory Vanish Before Your Eyes
Now that you have the funding to hire an FBA expert, you’ll finally get the boost you need to compete against other top sellers. Watch in awe as your product listings rise to the top of search results and surpass your competitors. When your item makes it to the front page, it’s sure to sell out in no time. Here are some other ways you can increase sales to move out unsold inventory:
- Competitively price your merchandise. The longer it sits in the warehouse, the lower you need to price it.
- Watch your inventory age. Know how long your merchandise has been in storage so that you won’t get hit with unexpected fees.
- Push old merchandise first. Don’t focus on your newer items until you deplete your inventory.
Remember, as an FBA seller, your main goal is to sell products and make money. The more fees you incur in the process, the less you’ll earn overall. You could even end up in the red. Instead of throwing away money on long-term storage fees, it’s time to boost your rankings for older merchandise. Get the financing needed to fund an Amazing ranking promotion. Before you know it, your old merchandise will fly off the shelves, and your FBA payment will grow in size exponentially.
About the Author
Ricardo Pero, Chief Executive Officer of SellersFunding, received an MBA in Finance from Columbia University and has 20+ years of experience in Corporate Treasury and Wealth and Asset Management. As an investor and advisor to companies in the U.S. and Latin America, he enjoys helping start-up e-commerce businesses of all sizes to achieve success.
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