EcommerceBytes-NewsFlash, Number 2545 - May 18, 2011     5 of 5

Amazon Clears up Confusion over Long-Term FBA Storage Fees

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Some online merchants using Amazon.com's fulfillment service were upset over new fees announced last week. As AuctionBytes reported, FBA is instituting a new annual Long-Term Storage Fee of $45 per cubic foot for any Units that have been stored in an Amazon fulfillment center for one year or longer. The fee translates to $1.10 for an average-sized book or $4.58 for an average-sized toy, according to the company.

Amazon.com sent an email to sellers on Tuesday evening containing additional information to address some of the questions sellers had about the new Long-Term Storage fees that take effect on August 15.

According to the email letter, FBA will conduct an Inventory Cleanup on August 15 and every six months thereafter. One Unit of each applicable product ASIN will be exempted from annual Long-Term Storage Fee.

At the same time it had announced the new storage fee, it announced it would reduce removal and disposal fees. On Tuesday, Amazon.com said it would lower those fees even further from May 15 to August 15: "any inventory over 270 days old may be removed for $0.20 per-Unit with no shipping fee ($0.40 with no shipping fee for Oversize Units), or disposed of for no charge."

Some merchants had wondered how Amazon would count the age of goods stored in its warehouse - Amazon said FBA accounts for inventory on a first-in-first-out (FIFO) basis.

In its letter, Amazon said a recent survey of FBA sellers showed that 98.6% of respondents said that they did not expect to store merchandise in FBA for longer than one year. "Inventory that is overstocked or stored indefinitely in our fulfillment centers limits our ability to provide you with space for fast-selling products customers want. Through this program we will provide you with the information and tools to enable you to improve your return on your inventory investment and focus your business on products that customers desire most."

A full list of FAQs can be found on the Amazon website.

Amazon pointed to its recently released Inventory Health Report that helps identify inventory affected by the Long-Term Storage program, and said that in advance of each Inventory Cleanup, it would notify merchants of any Units that would have been in its fulfillment centers for 365 days or more as of the cleanup date.

Additionally, FBA will be launching functionality in June to automatically identify any of Units that would have been in its fulfillment centers for 365 days or more on the next Inventory Cleanup date; the functionality will also enable merchants to directly create a request to remove or dispose of the items if they choose to do so.

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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