Tuesday, September 13, 2016

Turnover Tuesday- Getting Around (or Happily Paying) Quarter 4 Storage Fees

For those who are not familiar, I started a series a while back called Turnover Tuesdays. Every Tuesday I like to highlight one item that I have resold. This will include profitable and non profitable sales. I hope that there is always something to learn.

The previous posts in the series can be found at the bottom of this post.

Quarter 4 Storage Fees

This year, Amazon has decided to implement a significant increase in storage fees during quarter 4.  I've talked about this before but now that Q4 is coming upon us rapidly (less than 30 days until the official start but we all know that the magic doesn't start in October) it is time to really get into the details of some strategies to help minimize storage fees.

Standard size storage fees are approximately 4x the regular monthly fee and oversized storage fees are a little less than 3x the normal monthly storage fee.

Ostensibly, the increased storage fees (and decreased fulfillment fees) are to encourage you to sell  inventory earlier in the season so Amazon's fulfillment centers aren't as overwhelmed or stuffed and prices remain lower for customers.  That being said, I think that will partially happen.  I'm not sure a ton of people will sell earlier but I do anticipate many sellers waiting longer to send inventory in to avoid/minimize the storage fees.  In the end I predict Amazon to make a ton of extra money due to the storage fees and to end up with some very unhappy sellers.  I'll explain that later.

Increased Storage Fees Start on October 15th and End on December 15th

Increased storage fees are from October 15th - December 15th which means that the goal is to decrease the number of days that inventory is at Amazon during that time frame but yet to not miss out on sales.  This is a little bit of a juggling act but it is important to know when you want to sell an item.

If you are selling Halloween items, you are selling in October and you don't have to think much about the fees.  Send away!

If you are sending items for sale in November and items you want to sell in December, obviously you want to send in the November items first and then the December items in later but there are plenty of factors to consider.

Sell/Remove Your Non Q4 Large Items Now

I've already started to try and liquidate my larger items that are not related to Q4.  For example, if you are selling swimming items.  The main window is already gone and you might not want to wait until next year to sell.  If you can get a half way decent price, it may be time to just fire sell

Alternatively, you can just remove them to send them back later.  You can remove Q4 items to send them back later but be mindful of timelines to make sure you don't miss out.

Hold Your Inventory Back

Try to hold your inventory as long as your storage space will allow.  You can also send inventory over time.  If you have 100 of something, you can send 10 now, 10 in two weeks, etc.  This is especially nice if you have limited storage space.  You can minimize storage fees but yet try to maximize your sales.

Increased Processing Times

If you are thinking that you want to send your item 1 week before you want it on sale, I would caution you heavily against that.

There are a lot of sellers that are trying to avoid these same storage fees.  Fulfillment centers will be swamped, you can bet on that.  The absolute worst thing you could do is avoid the storage fees and avoid sales at the same time.  If you send in items late and you miss that window, you will definitely be one unhappy seller.  Even worse is if you normally send items to forwarding fulfillment center like AVP1, it will only increase the timeline.

Storage Fees May Be Worth it

Increased storage fees have a real impact on cheap, large items.  If you have an item that sells for $15-$20 and you are paying $0.50 a month in storage for 2 months that can really hurt your margins.

However, I bought a certain monitor.  It cost me $300 and is now selling for $360.  Granted I'll save $9 in storage fees (per unit) if I sell now, but I also will miss out on the price increase.  I fully expect this monitor to be more than $400 during quarter 4.  If I pay $9 to make $30-$35, I think that's worth it.  That means I expect to pay a lot of storage fees and I'm not bitter about it (well, only a little).  For most of the items I sell, it wouldn't be worth it to me to sell at the beginning of November, the prices will just not be high enough.  The storage will work to get me to hold back inventory for as long as possible.

Non Q4 Replenishable Items

Sell out!  You might have a regular routine of sales and replenishing for your replenishables to make sure you are always in stock.  Allow yourself some extra possibilities to be completely out of stock.  Unless your cycle is masterful, those extra couple of weeks with 10-20 extra units can be costly, especially on large items.  Especially if your margins are a bit tight, you may go from decent margins to very small margins just because of increased storage fees so it's important to be aware of that.

Week 64 - The Buy Box
Week 65 - Amazon Restrictions and the Future of Selling on Amazon
Week 66 - Fun with Inventory Reimbursements