If you are an Amazon FBA seller, managing your inventory effectively is key to keeping your business profitable. Want to improve your performance further? Learn how to increase sales on Amazon. While Amazon offers incredible benefits via FBA, it also comes with fees. Some of these fees, however, sometimes catch some of the sellers by surprise. One such fee is the Amazon Long-Term Storage Fee (LTSF). If you have noticed a bump in your earnings or a sudden change that seems nonsensical, LTSF might be the reason.
In this comprehensive article, we will cover everything you need to know about Amazon Long-Term Storage Fees—what they are, how they are calculated, when they are charged, and how to avoid them.
What Are Amazon Long-Term Storage Fees?
Amazon Long-Term Storage Fees are additional charges that are charged for the inventory that has been sitting in Amazon's fulfillment centers for more than 365 days. These fees were introduced to encourage faster inventory turnover and optimize warehouse space. Basically, Amazon wants brands to stock what sells quickly and not collect dust on the products that linger around for months. These fees are on top of the regular monthly storage fees and can significantly affect your budget if not managed properly.
Why Does Amazon Charge Long-Term Storage Fees?
FBA centers are built for efficiency and fast shipping. Holding onto a good amount of inventory makes operations less effective and takes up space that could be used for fast-moving products.
To maintain the inventory and high level of service, Amazon uses LTSF as an incentive for sellers to manage their inventory better.
When Are Long-Term Storage Fees Charged?
Amazon assesses Long-Term Storage Fees monthly, usually on the 15th of every month. This is done so that sellers monitor their aged inventory regularly, without fail, to avoid recurring charges.
Amazon evaluates each product at the ASIN level, and charges apply to units that have been stored for more than 365 days.
How Are Amazon Long-Term Storage Fees Calculated?
Amazon calculates LTSF based on the stored volume of inventory, which is measured in cubic feet or a per-unit rate (whichever is greater).
The LTSF rates are:
$6.90 per cubic foot
$0.15 per unit
Example:
Supposedly, you have 200 units of ASIN, which is literally slow-moving and has been in storage for over a year. Now, each unit occupies 0.05 cubic feet.
Volume-based fee: 200 units x 0.05 cu ft = 10 cu ft x $6.90= $69
Per-unit fee: 200 units x $0.15 = $30
Amazon will charge a higher one. So, that's $69 you are paying for every month until you either sell that inventory or remove it.
How to Check Inventory Age and LTSF Risk
To monitor your inventory's age and identify which items are at risk of Long-Term Storage Fees, you can use the following reports:
Inventory Age Report: This report shows how long your inventory has been in storage.
FBA Inventory Health Report: This includes age buckets like 0-90 days, 91-180 days, and so on, up to over 365 days.
Inventory Age Report: This reflects how long your inventory has been in storage.
Recommended Removal Report: Lists inventory that Amazon recommends you remove before it incurs additional charges.
You can access these reports easily in your Seller Central dashboard under inventory> Inventory Planning or Reports> Fulfillment.
Reasons Why Sellers Incur LTSF
Seasonal items that don't sell year-around
Overstocking new products without knowing the market demand
Poor listing optimization, leading to low visibility
Failure to monitor aged inventory
Ineffective pricing strategy
Stocking excess inventory too soon, especially for less selling products
In addition, a lot of sellers on Amazon overlook how quickly the demand for their products might change. Even a strong ASIN may slow down as a result of new product introductions, price reductions by competitors, or shifting consumer tastes because market trends change swiftly. Sellers frequently wind up with stationary units that subtly surpass the 365-day threshold if they don't routinely examine sell-through rates and refill frequency.
Ineffective forecasting is another ignored factor. Sellers frequently deliver too much goods "just to be safe" when they rely on shaky data or intuition rather than precise demand forecasting methods. In a similar vein, sellers who operate several marketplaces occasionally misalign their inventory, which results in an excess of stock in one fulfillment location. Higher exposure to long-term storage results from this mismatch.
Finally, sellers who manage huge catalog portfolios might just forget about slow-moving SKUs. When Amazon does its monthly LTSF review, those products secretly build storage time without automated tracking or frequent inventory audits, leading to expensive shocks.
The Impact of Long-Term Storage Fees
If you are storing hundreds or thousands of slow-moving items, the charges accumulate quickly. This case is especially harmful to sellers operating on thin margins or dealing with seasonal products. And the worst part? Well, paying this huge chunk of money doesn't even improve your product's visibility or help it sell. It simply means you are losing money on unsold inventory.
Avoiding or Reducing Amazon Long-Term Storage Fees
Here are some proven ways to reduce or avoid these fees:
Send Smaller Batches of Inventory
Rather than sending 500-1000 units at once, start with 100, monitor sales, and then restock accordingly. This just-in-time method keeps your inventory fresh.
Use Inventory Age Reports Religiously
Make it a habit to check the inventory once every week. Remove items that are approaching the 365-day threshold and take quick action.
Optimize Product Listings
Ensure that your listings are as per Amazon standards. Improve your product titles, bullet points, images, and keywords to increase visibility. To make smarter optimization decisions, explore how to maximize your ROAS with AMC. Remember, most of the time, slow-moving inventory isn't due to demand; it's due to poor listings.
Create Bundles
Start bundling aging products with popular items or offer the same with combo/multi-packs. This can help you move your inventory faster.
Run Coupons and Promotions
Another strategy to move old inventory faster is to consider lightning deals, limited-time discounts, or coupons. It's better to make a smaller profit rather than paying huge monthly storage fees.
Use Amazon's Aged Inventory Dashboard
Leverage this tool as it shows the SKUs at risk of LTSF and recommends the best course of action, like lowering prices or running a discount.
Remove inventory Before the 365-day Mark
If a product isn't moving and you don't see even a bit of a turnaround, consider submitting a removal order before the 15th of the month. You can have these items returned for a small fee.
Conclusion
Amazon Long-Term Storage Fees are designed to keep inventory flowing, not stagnant. While the fees can be frustrating, they are manageable with proper planning and regular monitoring. The key is to stay on top of your inventory health and use data to guide your decisions. This way, you will never let aging inventory go unnoticed. By working strategically and proactively, you will not only avoid the Long-Term Storage Fees but also improve overall FBA performance.