Welcome to the fourth quarter where everything is amped up and your budgets don’t matter. Amazon’s recently redesigned long-term storage fees kicked off last September. Combined with the annual increase in monthly storage fees, it’s getting more challenging to leave your products in a fulfillment center. Sellers have to balance the right amount of inventory to keep their product in stock without costing them a fortune in fees. With the heat turned up, some sellers have decided to take themselves out of the kitchen. Programs like Seller Fulfilled Prime, FBA Onsite and e-Fulfillment are making the reasons to keep your products at an Amazon fulfillment center obsolete.
Going Through Changes
In March Amazon declared that they would be changing a number of Inventory Storage Fees and Policies. First, monthly storage fees would be in increasing $0.05 across the board for items of all sizes. Then they said they would be changing the Long Term Storage Fees as well. There would now be a minimum long-term storage fee of $0.50 for any product over 365 days old at an Amazon Fulfillment Center. That means even the tiniest of items would cost at least $0.50 per until to store after 365 days.
But possibly the largest change was taking the long-term storage fees from semiannual to monthly. Starting September 15th, products over 180 days old would be charged some kind of long-term storage fee. Inconveniently, this plan was implemented after the last semiannual fee date and the month before the monthly storage fees triple for the fourth quarter. Avalanche found themselves in a pickle and began exploring options to relieve the financial stress of storing their products with Amazon.
Become Self Fulfilling
Amazon has a program called Seller Fulfilled Prime which allows sellers to get a prime badge while sending the products from their own warehouse. Sellers can enroll online through their existing account. They just have to provide their information and location, complete a trial, and then they can offer prime to the people around them.
Whether a customer has Amazon Prime or not, they’re more likely to purchase products from a Prime seller. The Prime badge holds a certain amount of trust and integrity. People know they can get what they want, within two days, without paying for shipping, and they know Amazon wouldn’t endorse anything less.
The main setback with classic Seller Fulfilled Prime is that you’re geographically limited. If you shop our products outside of a certain distance, our account no longer offers prime. Because we’re located on the east coast, we’re fortunately able to reach major cities like Philadelphia, Washington DC, and New York. However, we still cannot provide Prime to places like Los Angeles or Houston.
Keep it Close to Home
Avalanche has been working on their FBA Onsite game for about a year now, and the payoff is immense. Onsite gives us the ability to receive things in our own warehouse and list them for sale on Amazon while maintaining our Prime badge and listing us as Fulfilled by Amazon. Essentially, our warehouse has been turned into an Amazon Fulfillment Center. The more we’re able to store on our own campus, the less we have to pay in storage fees, and we can do it all while still maintaining the integrity of an FBA seller.
Because we don’t have to pay storage fees of any kind for Onsite products, it allows us to sell and ship oversized items that were once too expensive to send to Amazon. It’s also a great help for when Amazon is backed up on checking in products. If we check our inventory in on Onsite while it’s in transit to Amazon, we can cover potential out of stock days. This will be especially convenient come December when Amazon can no longer guarantee that your product will be checked in before Christmas.
Certainly, this isn’t without its own fees and complications. We have to have our warehouse and equipment inspected and regulated by Amazon, ensuring that we’re meeting all their requirements. There are still Onsite fees to be paid to Amazon, but whenever these fees are cheaper than sending it to Amazon, we keep the products on campus.
UPS Ups the Game
The most recent endeavor on which Avalanche is embarking is UPS’s new e-Fulfillment program. UPS has two fulfillment centers, one in California and one in Kentucky where sellers can now send their products. In these centers, sellers can store and ship their products through their account on Amazon under Seller Fulfilled Prime. They even fulfill to 15 different sales channels, expanding the customer base for sellers.
Because Avalanche is located on the east coast and the UPS warehouses are in Kentucky and California, it gives our account the ability to show Seller Fulfilled Prime nationwide. It also improves our rate of replenishment. While typically we stop ordering Halloween products from west coast companies at the beginning of October, we’re able to order well into the season and have them shipped directly to an e-Fulfillment center. This also helps out our own shipping department who have enough on their plate during the fourth quarter. UPS even guarantees that all products will be checked in within two days of receiving, which will be especially helpful come December 2nd when Amazon can’t guarantee a product will get checked in before Christmas.
The program is still in its very beginning stages, but Avalanche is already showing profits on a handful of products that they’ve sent in for e-Fulfillment. The more successful the program is and with the addition of new sellers, they could expand their fulfillment centers and may promise to be a convenient alternative to fulfillment by Amazon.
There’s Always an Answer
Amazon has been throwing curveballs our way since we’ve listed on their site in 2009. Sometimes we strike out and other times it’s a home run, but no matter what’s happening on the field, our team is always working to find new and innovative solutions. The change in storage fees may have been a setback, but it helped us explore and expand other avenues of sales, which could prove to be more lucrative than our previous approaches. We live each day like it’s the first and see every hurdle as an opportunity to learn and grow.