Learning Lessons from a 17k Long Term Storage Fee (not mine!)

How bad would it hurt if you had 17 Thousand Dollars removed from your business cash flow, today, right now?

So many people jump into selling on Amazon FBA without actually reading the terms, understand the fee structure, and, most importantly in this case, without acknowledging the Long Term Storage Fees (LTSF).

LTSF happens twice per year, once for items that have sat for over 6 months, and once for items over 12 months.

What exactly are these fees, Joner?

Thank you for asking.  Here is a nice picture, which explains everything.

T

For me, two things jump out immediately.

  1.  February 15th is next week.

  2.  Wtf is a cubic foot?

My wife keeps talking this nonsense about how important February 14th is.  I just ignore her, because I am focused on the day that matters.  The 15th.

 

As for what a cubic foot is, well, I checked my inventory to find an item I have sold, that EVERY RA SELLER IN THE UNITED STATES HAS SOLD, that clocks in at .95 cubic feet.

Not the silly urban cowboy (who really gets down in this fine video), but rather the Intex Inflatabull that we had such a love/hate relationship with last summer.

This exact item is .949 cubic feet.

To extrapolate for a minute, if you bought 100 units and sent in during the summer, and you sold 20, and were left with 80, did you sell at 49.99 and take a loss?  Or did you leave til this coming summer, when the inevitable spike will occur?

If you let sit there, come LTSF Day next week, you will be paying 11.25 per unit sitting there (also known as $900).  That is just one item.  If you have other items that have been there since before August 15th, you will be getting fees on each of those as well.

Jason Wilkey wrote a post detailing how to figure out monthly and long term storage fees that is much more detailed than my layman version.

So, Joner, what can I do to prevent this crazy fee from happening?

Easy answer is buy stuff that sells quicker.  😉

But the reality is we all make mistakes.  Like that time I wore flip flops while I was cutting the grass.

So we have some bad buys, and they are sitting there.  Now what?

Well, there are basically four choices.

  1.  Leave it sit there and get hit with the fee

  2.  Remove it and bring back to your warehouse

  3.  Have Amazon destroy the item for .15 cents

  4.  Liquidate it

 

My original question posted was about a 17k hit to your cash flow.

This actually happened to a seller I know.

He began his Amazon journey as many of us do, with clearance items, and was buying out entire clearance sections at Walmart for dimes on the dollar.  A few months later he transitioned into wholesale and began bundling.

The fees he heard about, but like me in my first year, I didn’t pay attention much because as my sales total grew, I became less engaged with my old, stale inventory and more interested in finding new products to sell.

And then?

BLAM.

$17,000 in LTSF last August.

This is obviously a devastating amount, and could have destroyed most businesses, fortunately he was able to overcome it and is back thriving again.

But the point is the same, by not paying enough attention to the LTSF fees he got hammered, AND SO CAN YOU.

Amazon graciously sends us an email out letting us know fee time is approaching, and what to do to prevent it, and what our estimates are.

Also on the home page of seller central is an Inventory Planning widget, and there is a link that shows how many items you have that will accumulate a fee.

This makes it easy to quickly see the items, and make decisions about how to proceed.

For me, I lower some prices, run ad’s to some items, and start making a plan.  Mike has an awesome case study from two years ago about how to help move slow inventory, and it still holds true today.

 

Last year Amazon had a liquidation program in Beta, and it has been shut down.

But the idea of liquidation is awesome to me, as there are items I buy that have value for someone, just not the customers on Amazon, and I need an outlet.  My garage is already filled with eBay items, and I am very aware of how little priority I place on selling lower priced items on my own.

I also am half hoarder, and I do not want to throw anything away.  I’ll save stuff and be like “I can get .50 cents for that at a garage sale someday.”

So what do I do now?

I use Amzexpiry, which is a liquidation program by an Amazon seller with brick and mortar outlets to move cheap product.

Do I get a lot back?

Well, not for my low priced dead items, but its way better than a swift kick to the face.

The returns are fair and better than destroying or sitting in my garage.

(I don’t know if you’ve ever been kicked by a dog, but canine kicks ain’t no joke.)

 

It says on the site there are 37 slots left, and I am going to wait til probably Monday and then start removing items again, to avoid the fees.

And honestly, just by being aware of my fees, I have done a good job lowering them.

By the time I finish up removing my items to Amzexpiry, my fees will be almost nothing.

So…get your fees in check and make sure you don’t get hit with a HUGE bill…just before tax season!

Leave a Reply