Amazon Ends Excess Storage Fees: How Should Sellers Choose Logistics?

Amazon recently announced an important new policy: from July 1, 2024, the United States, Europe, and Canada will no longer charge excess storage fees. This policy is designed to help sellers reduce operating costs, especially during peak sales seasons.

Background and purpose of Amazon storage fees policy adjustment

In order to help sellers simplify operations and manage inventory more efficiently during peak sales seasons, Amazon has decided to cancel FBA excess storage fees in the United States, Europe (including EU and UK sites) and Canada. This policy aims to reduce sellers' operating costs, increase profit margins, and encourage sellers to prepare in advance to better cope with market demand fluctuations.

FBA storage fees implementation time

Cancellation of excess storage fees: From July 1, 2024, Amazon officially cancels FBA excess storage fees for the above sites.

Contents of Amazon Logistics New Policy

Definition of Excess Storage Fee

Previously, when a seller's inventory exceeded the storage capacity limit of Amazon's fulfillment center, Amazon would charge an excess storage fee of a certain amount per cubic foot.

Cancellation of Fees

Starting July 1, 2024, sellers will no longer need to pay additional fees for exceeding the specified inventory at the above sites.

How does the new policy of excess storage fees work?

No Excess Storage Fee: Sellers will no longer pay excess storage fees for inventory stored in Amazon distribution centers for more than six months.

Standard Storage Fee: Regular storage fees will still be charged, but there will be no additional fees for long-term storage.

Other Notes: Other FBA fees (such as relocation fees and disposal fees) will continue to be effective.

Impact and suggestions for sellers

Reduce operating costs

After canceling the excess storage fee, sellers can save additional fees incurred due to inventory exceeding the limit, thereby reducing operating costs.

Pre-stocking in advance

In order to ensure excellent performance in the peak sales season at the end of the year, Amazon recommends that sellers prepare in advance and ensure that all inventory is delivered to the fulfillment center before the specified date. This can avoid the trouble of excessive storage fees and ensure that products receive Prime marks during important promotions, thereby increasing sales potential.

Optimize inventory management

Sellers should use the inventory management tools provided by Amazon to monitor inventory status in real time, accurately predict market demand, and arrange inventory reasonably. Avoid the risks of overstocking or understocking.

Other related policies

Amazon Logistics Refund No Return Solution: Amazon has also launched the "Amazon Logistics Refund No Return Solution" for US FBA sellers, allowing sellers to choose to let consumers get a refund directly without returning the goods. This can help sellers simplify the return process, reduce return processing and removal fees, improve return processing efficiency, and improve customer satisfaction.

Amazon's new logistics policy means that sellers will not incur additional fees even if their inventory at these sites exceeds the specified limit. This is very good news for sellers who need to maintain a large amount of inventory during peak seasons. Sellers should seize this opportunity to optimize inventory management strategies, reduce operating costs, and increase profit margins. At the same time, they should also pay attention to other related policies and services launched by Amazon to better respond to market challenges and opportunities.

What factors should be considered when choosing to use FBA or 3PL?

Amazon Logistics (FBA)

Advantages

Convenience: FBA provides one-stop services, including storage, picking, packaging, transportation and customer service, which can save sellers a lot of tedious operations.

Prime qualification: Sellers using FBA can provide Prime delivery options for products, enjoy fast delivery services, improve customer shopping experience, and attract more Prime members to buy.

Customer trust: Amazon's brand reputation can increase buyers' trust.

Multi-channel delivery: FBA supports sellers to sell on platforms other than Amazon, such as eBay or the seller's own website.

Logistics efficiency: FBA provides efficient logistics services, including fast delivery, order processing and customer service.

Brand reputation: Using FBA can improve the seller's reputation and ranking on the Amazon platform, increase exposure and sales.

Return processing: Amazon provides convenient return processing services, which helps reduce sellers' return costs.

Cancellation of excess storage fees: Under the new policy, the United States, Europe and Canada stations will no longer charge excess storage fees, reducing sellers' storage costs.

Disadvantages

Cost: Although the excess storage fee has been cancelled, other fees of FBA (such as warehousing configuration fees, low-volume inventory fees, etc.) may still be high.

Inventory control: Sellers need to accurately predict sales trends to avoid inventory backlogs or out-of-stock situations.

Third-party logistics service providers (3PL)

Advantages

Flexibility: 3PLs usually provide more flexible service options and can customize logistics solutions according to the specific needs of sellers.

Customized services: 3PLs can provide personalized services such as special packaging, labels, and customer communication. Sellers can also customize logistics services according to their own needs, including transportation methods, delivery time, etc.

Avoid dependence on a single platform: Using 3PL can help sellers reduce their dependence on Amazon and achieve multi-platform sales.

Cost control: Third-party logistics service providers may provide more flexible pricing and fee structures, which can help sellers reduce logistics costs. For large quantities or specific types of goods, 3PLs may provide more economical transportation and storage options.

Inventory management: Third-party logistics service providers may provide more professional inventory management services to help sellers optimize their inventory structure.

Diversified services: Third-party logistics service providers usually provide a variety of logistics solutions, such as "sea freight plus delivery" or "air freight plus delivery", to meet logistics needs at different stages.

Disadvantages

Logistics efficiency: Compared with FBA, the logistics efficiency of third-party logistics service providers may be lower, affecting customer experience.

Brand reputation: Using third-party logistics service providers may not get the same brand reputation and ranking advantages as FBA.

Return processing: Return processing may not be as convenient as FBA, increasing sellers' return costs.

Amazon's cancellation of excess storage fees may make FBA more attractive to sellers because it reduces storage costs and risks. However, this does not mean that all sellers will tend to use FBA. Sellers may make choices based on the following factors:

Cost-benefit analysis: Sellers will compare FBA fees and 3PL fees, including transportation, storage and additional service fees.

Service scope: Sellers will evaluate the service scope and reliability of different logistics service providers.

Business scale: For smaller or just starting sellers, FBA may be a more manageable option. For large or mature sellers, 3PL may provide better economies of scale.

Specific needs: If sellers have special logistics needs, such as special-sized goods, perishables, or high-value goods, they may look for a 3PL that can meet these needs.

Sellers consider a variety of factors when choosing logistics services, including cost, service, flexibility, and business needs. Amazon's new policy may affect their decision-making, but the final choice will be based on the best solution for the business.

Sellers should choose the logistics method that best suits them based on their own needs and actual conditions, taking into account factors such as cost-effectiveness, logistics efficiency, inventory management, and brand reputation. As a professional third-party logistics service provider, ChinaDivision can provide sellers with customized logistics solutions to help you optimize logistics costs and improve customer satisfaction. If you need professional advice or help on logistics services, please contact ChinaDivision. We look forward to working with you to jointly drive your e-commerce business forward.