Hidden costs of Amazon warehousing

Release time:2021-12-22 Reads:148


Before being an Amazon, it was easy to listen to others say how much money they made, but when they did it, they found that they had to spend money everywhere. Seeing the rising costs, they couldn't stop the pain. So, do you know the hidden costs of Amazon platform storage?

1、 What is warehouse splitting and why

What is sub warehouse

By default, after the seller creates the warehousing plan, the shipment may be divided into multiple shipments, and each shipment will be sent to a different receiving center or Amazon operation center (called "distributed inventory configuration"). Amazon will select the FBA operation center according to the goods to be delivered by the seller and the place of shipment.


1. Amazon divides all types of products into appropriate FBA warehouses according to the facility conditions, temperature, humidity and other factors of each FBA warehouse and the seller's product type, so as to make rational use of the warehouse and prevent the polarization of warehouse explosion or vacancy. (warehouse restrictions)

2. Amazon focuses on the buyer's consumption experience. After the seller's inventory is distributed to multiple Amazon operation centers, the buyer who purchases goods can receive goods faster than when the inventory is far away. On the one hand, it improves the shopping experience of buyers, and on the other hand, it also saves FBA's own distribution expenses. (distribution timeliness requirements)

Sometimes sellers don't want their goods to be divided into different FBA warehouses, because Amazon defaults to FBA warehouses, resulting in higher initial expenses for sellers. Many of FBA's first trips, including express delivery, start from 21kg. Assuming that the seller just makes up for this weight, but is divided into two or three warehouses, it can only be delivered at a higher price. In addition, for example, in the sea plus delivery mode, many logistics need more than 100kg for the first journey. If they are divided into warehouses, they may not reach this weight. If they choose express again, the cost will be much higher.

How to avoid being split:

1. Use Amazon logistics warehouse; (it needs to pay warehouse fees, and large goods may not fit together)

Background - Settings - Amazon logistics - receipt settings (Edit) - inventory configuration options - select inventory configuration service

2. Use Amazon global logistics to lock the warehouse with one click. (100kg by air and 1m3 by sea)

You can contact our service docking colleagues to introduce the official personnel of Amazon logistics

3. If the number of a single SKU exceeds 18, it is not easy to be divided into warehouses (there is a certain probability)

4. Before approving the shipment, build several more warehouses to see the distribution, but pay attention to the frequency

5. Set the place of shipment according to the warehouse address (with a certain probability)

2、 How to avoid long-term storage costs

Actively managing over aged inventory can help you avoid long-term storage costs. To remove over aged inventory before the next inventory count date, you can do the following:;

Submit removal order: if you submit an inventory removal order before the count date, these inventory will not incur long-term storage fees, even if the inventory is not substantially removed before the count date. The deadline for submitting removal orders is 11:59 p.m. (Pacific time) on the 14th of the current month. Inventory in a saleable condition can be sold until removal is completed. You will not be charged a removal order fee until we return the removed inventory to you or discard it. Even if the goods are sold after paying the long-term storage fee, you will not receive a refund of this fee.

Set automatic removal: according to the automatic removal of long-term storage fee as of the 15th day of each month, the specified removed inventory will not need to pay long-term storage fee. To set automatic removal, go to the settings menu in the seller's platform, and then click Amazon logistics.

You can remove all inventories that need to pay long-term storage fees, or you can select the commodity price range to determine which commodities to remove. You can also choose to keep the inventory whose price is higher than a specific amount in the operation center, and only pay the long-term storage fee for these goods, and then we will return the remaining inventory to you or discard it. Applicable standard removal costs. For more information, see automatically remove inventory.

All items that you have removed and are available for sale will continue to be sold and meet the requirements of Amazon Prime and free distribution.

3、 FBA inventory performance interpretation - the importance of maintaining good inventory performance

Inventory management capability is the core competitiveness of Amazon sellers, which can distinguish sellers from each other, especially FBA sellers. In order to enable sellers to better manage inventory, eliminate those products that cannot be sold, and improve overall revenue, Amazon has launched a new inventory performance index (IPI), which has been implemented since July 1, 2018. The calculation of the performance index is based on your ability to ensure that popular goods are available, maintain a good inventory level and solve the problem of commodity information

4、 Storage restriction standard

A fixed storage limit of 10 cubic feet is imposed on [personal sales account], which will not change. The storage limits of personal sales account will not be increased.

Flexible warehousing restrictions are imposed on [professional sales account], which depends on the following standards:

Sellers who maintain an inventory performance index (IPI) score of 400 or above will not have capacity restrictions when storing standard size, large pieces, clothing, shoes and boots.

Sellers with IPI scores below 400 within 6 weeks before the end of each quarter will be notified of possible warehousing restrictions. If the IPI score is still below 400 during the last full week of the quarter, we will impose these storage restrictions on you in the next quarter.

New sellers whose sales time is less than 26 weeks, or sellers who do not have enough sales data to generate IPI scores within two score check weeks, will not receive storage restrictions.

When storing standard size, bulky goods, clothing or shoes and boots, professional accounts with storage restrictions will still have at least 25 cubic feet (0.70 cubic meters) of storage space.

5、 Key date of IPI evaluation period

IPI assessment starts from mid quarter, about November 19, February 19, May 19 and August 19. If your IPI score is below 400, you will receive the first warning notice.

The IPI assessment will continue until the end of the quarter, i.e. the last day of December, March, June and September. If your score falls below 400 again, you will receive an inventory limit notice.

The inventory limit will be implemented on the second day after the notice is issued, that is, the first day of the new quarter (January 1, April 1, July 1 and October 1). The limit may not be lifted until the next quarter, that is, three months later.

In terms of product sales rate, sellers should pay attention to controlling the quantity and proportion of products, and note that this is an assessment of the data on the 90 day sold inventory.

In terms of redundant inventory, we should pay attention to product preparation and reduce storage costs caused by product backlog.

In terms of products not on sale, sellers should pay attention to the reasons why these products cannot be sold, and timely repair these problems so that these products can continue to be sold. If they cannot be sold, they can consider removing them.

When Amazon's inventory performance index is lower than 400, the easier way is to reduce redundant overstocked inventory, sort out products that are not on sale, and continue to sell them online. These data can help improve their indicators, so that they can continue to have unlimited inventory in the first quarter of next year, Otherwise, sellers will encounter charges for excess inventory. For those excess inventory, Amazon's charging standard is: (existing inventory - given inventory) * monthly warehouse rent excess fee of $10 per cubic foot

6、 Amazon compensation policy

Product categories in compliance with Amazon's compensation policy:

1. Damaged goods in Amazon warehouse

2. Goods lost in Amazon warehouse

3. Goods not found in Amazon warehouse for 30 consecutive days

4. The goods entrusted by Amazon to the carrier are lost or damaged during the delivery of goods

5. Amazon customer service is allowed to return the goods. If the customer fails to return the goods, Amazon will compensate

In determining the amount of compensation, we will consider a variety of factors, including: · your sales history.

Average price of sales through Amazon logistics on Amazon website · sales history of this specific asin

If there is not enough information to calculate the compensation amount of goods, we will issue you a certain inventory compensation according to similar goods.

If the seller applies to reassess the amount of compensation received for the goods, provide documents (such as receipts or invoices).

The amount of compensation for any single item will not exceed US $5000. For goods worth more than $5000, we recommend that you consider buying third-party insurance.

7、 Amazon FBA order return problem

If the customer requests to return the FBA order on Amazon, the general category seller does not need to pay additional fees (FBA staff will pick up the returned parts free of charge), but does not include the following five categories:

Apparel, watches, jewelry, shoes, bags & sunglasses, luggage

If the returned products belong to one of these five categories, they will be charged the same fee as the FBA fee at that time

In the peak season, sellers should understand Amazon's storage rules carefully in order to avoid stepping on thunder later. The seller should note that the storage fee in the peak season has increased a lot than usual. When shipping and warehousing, we should also pay attention to the size and prepare the goods carefully.

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