The FBA fulfillment services from Amazon make selling on the marketplace a more relaxed process. You can take it easy when it comes to inventory management on the marketplace. You can even enjoy faster delivery, systematic returns, and the trust of online consumers. Beyond that, you also gain higher visibility and better ratings claims the multi-channel order and inventory management firm, Browntape.
However, this storage facility from Amazon comes at a cost and if you leave your products at an FBA centre for more than 6 months you are subject to these high charges that could cost you lakhs, claims bags and accessories category manager, Shashank Shenoy from Browntape.
Why does this happen?
If your stocks remain unsold and are lying at Amazon’s warehouse for long periods of time, Amazon loses valuable space that it could offer to other sellers that may make better use of its FBA facility. So, every six months the etailer conducts an assessment to charge Long Term Storage Fees (LTSF).
Products in the FBA warehouse for six to twelve months are eligible for LTSF charges.
These charges amount to Rs.424 per cubic feet, that is exclusive of taxes.
In case products remain in a warehouse for more than 12 months the charges go up to Rs.850 per cubic feet, which again is non inclusive of taxes.
How can you avoid LTSF under FBA?
There are a couple of simple ways to avoid being charged LTSF by Amazon. The marketplace sends you an email reminder about your products eligible for LTSF in advance so you can make the necessary arrangements. Here are 4 simple steps you can to avoid being charged LTSF.
Send Amazon only fast moving products
The best thing to do as an FBA seller is ship only fast moving consumer goods to the Amazon fulfilment warehouse. To know which are your fastest selling items make sure you conduct a data analysis of all your items. Look at which items sell the quickest and during which seasons of the year. Make a list of this and prioritize when to send which item to your FBA centre.
Check LTSF charges report/ Inventory health report
FBA sellers have the option of viewing an LTSF charges report. This shows them how much and on which products they will be charged the long-term fees. Make it a habit to check these at least every one to two months to know which products need to be removed from the FBA centre to avoid LTSF.
Viewing inventory age can help you collect data about LTSF eligible units, opportunities to increase traffic and sales for your aged inventory.
Preset Auto LTSF mode
This is the most preferred method. Here sellers can automate removal of inventory from their FBA centre when it is eligible for LTSF.
To activate this setting:
Step 1- Head over to the seller panel
Step 2 – Select the settings option
Step 3 – Next go to Fulfilment by Amazon
Step 4 – Enable the Automated Long Term Removal setting
Step 5 – Add your address, phone number, email id and other requested details
Sell off your inventory beforehand
According to Browntape’s Shashank, becoming an FBA seller does not necessarily increase your product saleability. FBA is simply a seller convenience. To make sure your products sell better you can engage in product advertisements on the online marketplace. You have the option of banner ads and sponsored ads at your disposal. Make sure to use them. You can also promote products through discounting.
Shashank mentions that every quarter there is an end of season sale. Sellers must make sure to sell off products during these peak periods. He says plan discounts and advertisements according to the season to capture attention for more sales.
Another way to clear off inventory is to price appropriately. Compare your prices to your competitor’s and see if you can lower your product prices. This may cut your profits short, but it will help you in the long run.
Which of these techniques do you use as an FBA seller? How helpful are they in saving costs? We’d like to know from you in the comments section below.