3 Tips to Avoid Long-Term Amazon FBA Storage Fees

Inventory problems have always been one of the most interesting and complicated situations in which the seller must be well adapted to making decisions that are backed by factual data. If you just look at any financial statements, you will see that inventories are part of the company’s assets. However, it is not a liquid asset and it entails money or capital. Imagine that you invested thousands of dollars in producing the product, however, because of poor inventory planning, it does not add to your bottom line. The question is “what went wrong”? One possible reason is the costs associated with it. Inventory related costs order cost and carrying a cost. Unfortunately carrying cost has positive relationship with the number of inventory. This means that while your inventory is getting higher, the carrying cost associated with it also goes higher. Storage fees charged by Amazon is similar to that. While your inventory stays in its storage, the fee will get higher. Now, what can you do to avoid such a problem? Most managers use the EOQ or Economic Order Quantity Formula because it minimizes the total cost related to inventory. However, if you can induce sales and encourage the market to buy your product, you can probably avoid these storage fees. Aside from this tip, an infographic showing three steps to cut inventory related costs can be seen here.

1. Plan your inventory. Amazon has provided a feature in its platform where you can plan your inventory. This feature provides data about your inventory such as age, product variety or product assortment. This is a very helpful feature because it provides significant data that will allow you to determine effective inventory levels. The Inventory Planning option allows you to see which products are not selling in the market and decide on removing it from your list of offers. Automatic removals can also be done easily.

2. Analyzing your inventory data is also crucial in inventory-related decisions. When to order, reorder and what level of inventory should be maintained can only be determined if you have data related to inventory. Because of lead times, decisions in when it comes to inventory levels should be proactive and realistic. Do not overestimate the demand especially if you are transacting with other businesses or retailers. Acquiring too much inventory may result in Bullwhip effect which affects not just your own business but also your affiliate sellers. Setting realistic goals is necessary to avoid charges against storage fees.

3. Products that sell fast in the market will be beneficial for your business. However, making it move can be problematic during an economic crisis. There are four ways to sell your products fast. First, use sponsorship strategies. It does not come for free but the return will be worth it. Second, price reduction. You can offer to hear it as a promotional campaign. This is when discounts are available for your products. Third, social media marketing. Maximize your social media accounts to condition the market about your products and services. Fourth, remove it on Amazon.

source: https://www.prospershow.com/media/prosper-blog/avoiding-amazon-fba-long-term-storage-fees-3-tips-every-seller-should-know

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