Chapter 5.2: Storage, inbound and other fees
What you'll learn: what it costs to keep stock in Amazon's fulfillment centers, the two US fees linked to how you send and stock inventory (inbound placement and low-inventory), the surcharges for stock that sits too long, and how returns and refunds are charged.
Monthly storage
Amazon charges a monthly fee for the space your stock occupies, measured in cubic feet (1 cu ft = 1,728 cubic inches). The rate jumps from October to December, when space is in highest demand: for standard-size items it's roughly three times the rest-of-year rate.
| Product type | January to September | October to December |
|---|---|---|
| Standard size (not dangerous goods) | $0.78 per cu ft | $2.40 per cu ft |
| Oversize (not dangerous goods) | $0.56 per cu ft | $1.40 per cu ft |
Dangerous-goods rates and full details: Monthly storage fees (Seller Central).
For a small item this is cents. Our boxed toy from 5.1 (9 × 6 × 2 in) takes up 108 cubic inches, or about 0.06 cu ft, so it costs about $0.05 a month from January to September and about $0.15 from October to December. Storage only starts to matter for bulky items and for stock that doesn't sell, which is why steady sellers are worth so much.
Inbound placement fee
When you create a shipment in Send to Amazon, you choose how your boxes are split across Amazon's network. The choice comes with an inbound placement fee per unit:
- Minimal split (usually all your boxes go to one location): you pay a placement fee. For standard-size items it runs from $0.14 to $0.32 per unit for small standard and $0.20 to $1.90 per unit for large standard, depending on the item's weight and the region you ship to.
- Amazon-optimized split (your boxes go to several locations): no placement fee, but it's only offered when you're sending enough identical cartons of a product to split across several sites.
- No placement fee on extra-large items.
The fee is charged after your stock is received. Inbound placement fee (Seller Central)
shipments of mixed products, a few units of each, rarely qualify for an optimized split, so most small arbitrage sellers pay the minimal-split fee. Budget for it on every unit. Our toy is a light large-standard item, so it sits near the low end of its range. Amazon's new-seller incentives have included a credit toward placement fees; check sell.amazon.com/grow for what's on offer when you join. Chapter 27 covers the placement choice in Send to Amazon.
Low-inventory-level fee
Amazon wants popular products kept in stock. If a product's stock runs low compared with how fast it sells (both its 30-day and 90-day historical supply fall below 28 days), Amazon can charge a low-inventory-level fee on units shipped to customers. It's measured per FNSKU and ranges from $0.32 to $0.89 per unit for small standard, and up to a couple of dollars for bulky items.
You won't normally pay it as a new arbitrage seller, because these are exempt:
- new Professional sellers, for their first 365 days
- products that sold fewer than 20 units in the past 7 days, which covers most arbitrage buys
- Grocery products
- newly listed products, for a period after they launch
Low-inventory-level fee (Seller Central)
It becomes relevant later, when you're replenishing fast-selling products or wholesale lines (Chapter 30). Then the fix is simple: send more stock before you run low.
Inbound defect fee
Amazon charges an inbound defect fee (from $0.32 per unit for small standard up to $5.72 for large bulky) when a shipment doesn't arrive as planned: for example, if boxes go to the wrong location, a shipment never arrives, part of it arrives long after the rest, or you delete a shipment after confirming it. Inbound defect fee (Seller Central)
Avoid it by sending every box in a plan, never reusing labels, and editing a shipment rather than deleting it once it's confirmed.
Surcharges for stock that sits too long
Two surcharges keep stock moving. Neither should trouble a beginner who buys sensibly, but they're worth knowing about:
- Aged inventory surcharge: stock that has been in Amazon's fulfillment centers for 181 days or more pays an extra monthly charge, which rises steeply the longer it stays (and jumps sharply from 271 days). Aged inventory surcharge (Seller Central)
- Storage utilization surcharge: applies when you hold a lot of stock relative to what you sell (more than 22 weeks' worth). New sellers are exempt for their first 365 days after their first shipment, and so are sellers storing 25 cubic feet or less. Storage fees (Seller Central)
The habit that avoids both: buy quantities you expect to sell within a couple of months, and review slow sellers regularly (Chapter 28 covers pricing and repricing).
Returns and refunds
Amazon customers can return most items, and some returns carry a fee:
- Clothing and shoes: a returns processing fee on every returned unit.
- Other categories: a fee applies only to the returns above a threshold return rate for that category (for example, 4.7% for Toys and 8.1% for Home and Kitchen). For small standard items it's about $2 per excess return. Products shipping fewer than 25 units a month are exempt.
- Refund administration fee: when a customer is refunded, Amazon refunds the referral fee but keeps an admin fee of $5.00 or 20% of the referral fee, whichever is less. The fulfillment fee isn't refunded.
Details: Returns processing fee (Seller Central) and Refund administration fee (Seller Central).
Other costs to keep in mind
These aren't Amazon's per-sale fees, but they all affect your profit:
- Your monthly plans: $39.99 for Amazon Professional (Amazon US pricing), plus your ArbiSource subscription.
- Prep supplies: FNSKU labels, poly bags, bubble wrap and boxes, or a prep center's per-unit charge.
- Shipping to Amazon: usually charged per box. A box can be up to 36 × 25 × 25 in and 50 lb in most cases (Chapter 26).
- Removals and disposals: a fee if you ask Amazon to return or dispose of unsold stock.
- Optional extras: deals, coupons and advertising, if you choose to use them.
In ArbiSource
- Storage: if you enter how many months you usually hold stock under Account → Settings → Additional Costs, ArbiSource estimates storage on every product from its size, allowing for the higher October to December rates. It's optional, and fine to leave until you know your typical selling speed (4.3).
- Inbound costs: in the same place you can enter an average inbound shipping cost per pound and a Fixed Cost per unit. Once you know your numbers, the Fixed Cost is a convenient place to include your typical placement fee and prep cost. Until then, allow for them when you check a lead.
- Slow sellers: the sales estimate and price history graph on each result (Part 3) help you avoid stock that would sit long enough to attract surcharges.
Checklist
- I know storage is charged per cubic foot and roughly triples from October to December for standard-size items
- I'll budget for an inbound placement fee on most units I send
- I know the low-inventory fee rarely applies to new arbitrage sellers, and why
- I know the aged inventory surcharge starts at 181 days, and that new sellers are exempt from the utilization surcharge for their first year
- I know clothing and shoes carry a fee on every return