It is this time of the year again – Holiday Season! As we are approaching the most lucrative season (and quarter), keep a couple of things in mind:
- Storage fees for non-dangerous goods go up from $0.75 to $2.40 per cubic foot (285% increase)
- Storage fees for dangerous goods go up from $0.99 to $3.63 per cubic foot (a 366% increase in cost)
Remember, the increase only lasts for October, November, and December. Now is the time to go through your FBA inventory and make a decision on what to do with excess inventory.
Usually we have these 3 recommendations for clients if they need to get rid of FBA inventory quickly:
1) Sell off products quickly: Lower your price for the ASIN by 30-50%, to quickly sell it off. That should free up some storage and lower the cost.
Positive side effect: You might be able to get a couple of good reviews in the process, and a better sales rank for the product.
2) Remove inventory: Especially with the holiday season coming up, Amazon often offers free(!) inventory removal. If you have excess inventory, you should definitely take advantage of this. Especially if you sell higher ticket items with a value of $65 and higher, we usually recommend this option.
After you request a removal of inventory, the goods will be sent back to you.
3) Destroy inventory: If you have excess inventory in Amazon’s warehouses that won’t sell or is outdated, you always have the option to destroy that inventory as well. Amazon will then simply take your products to the dumpster and destroy the goods to make space in their warehouses.
We usually shy away from recommending it, except the product value is below $25. If it is between $25 to $65 it becomes a judgment call.
Helpful tools that Amazon provides you:
Amazon’s FBA Fee Calculator: Here you can quickly calculate what the fees are going to be for your ASINs. Or if you haven’t listed the product yet, you can add your dimensions and weight and calculate the FBA storage costs and profits.
FBA Fee Report in Seller Central: A relative new feature within Amazon: It will allow you to pull a plethora of different reports, here are the most important ones:
– Stranded Inventory
– Restock Inventory
– Reserved Inventory
– Dangerous Goods Status
– Amazon Fulfilled Shipments
– Fee Preview (Very important for the holiday season!)
– Monthly Storage Fees
– Long-Term Storage Fees
– …and many more!
Best practices to calculate how many products you need in FBA:
- Try to keep your weeks of cover between 2 (or the number of weeks it takes you to replenish) and 13 (inventory for a quarter), except when stocking up for the holidays and other busy selling periods.
- Review your weeks of cover based on different average weekly sales periods. For example, if your weeks of cover based on the last 30 days of sales is larger than your weeks of cover based on your last week’s sales, it could mean that your sales have been increasing recently and that you will need to replenish your inventory sooner than normal.