As we all know that FBA storage fee of the peak period, Oct-Nov-Dec, is triple of the normal period. How many units do you guys leave (or plan to remove from) there? I have 2 products that are overstocked. One sells pretty fast and would be out by 2-3 months. So I’ll leave it there. Another one is the opposite; selling only 5 units a day and there are 700 units left in Amazon warehouses. Ouch! That’s over 4.5 months worth of inventory. I didn’t overly optimistic and sent too many to Amazon. It was the algo changed that caused the sales of this product to drop significantly. I’m considering removing half of it now. That would leave about 2 months of inventory and safe some storage fee. This item only sells about 20-30% extra on Q4 anyway.
I wonder how do you guys deal with overstock before Q4, or do you guys stock up. Please share your thoughts.
Precisely this way. Just keep less than half of the slow moving sku…anything that is fast moving just suck it up and stock as there is something to FC penetration and volume on a volume seller
If it’s 4.5 months of inventory I would just eat the storage fee.
The removal fee, inbound shipping fee to eventually send it back in, plus the work on your end to process the removals and the inbound shipment, plus the units that will inevitably be lost or damaged during the removal process means just paying the fee is probably the better option.
I agree with @GGX. I would just leave the stuff in there. We all know the horrible condition inventory arrives when we have it sent back to us. If it will eventually sell within the next 6 months, then just let it sit there.
Now if you overstocked on stuff that won’t sell much and you don’t plan on replenishing the skus in the future, I would just send it to liquidations and be free of the headache. I’m currently going to be doing this with a few skus.
Thanks for your reply. Frankly, I was waiting for this opinion because of all the reasons that you mentioned; units lost or damage, extra work to ship back, extra inbound shipping fee, etc. I haven’t calculate the extra inbound shipping fee yet. However based on my calculation, if I don’t do anything (leave all inventory there), by end of December I would be paying $1442 in storage fee. Compared to if I remove half and gradually ship it back (not include extra inbound shipping fee), by end of December I would be paying $701 in storage fee. That $700 in saving is quite tempting. This is based on the 320 cubic feet of this product. I should try to calculate the inbound shipping fee and add 10% unit loss during the removal process to help in the decision making.
Thanks for another vote in this matter. I would leave it there if the item is small. We’re talking about 320 cubic feet in volume… I favor leaving it all there because of all the reasons that you mentioned; units lost or damage, extra work to ship back, extra inbound shipping fee, etc. I haven’t calculate the extra inbound shipping fee yet. However based on my calculation, if I don’t do anything (leave all inventory there), by end of December I would be paying $1442 in storage fee. Compared to if I remove half and gradually ship it back (not include extra inbound shipping fee), by end of December I would be paying $701 in storage fee. That $700 in saving is quite tempting.
(copied and pasted from another reply) I just calculated the cost of shipping back and you were right. It doesn’t make sense to do a removal order to save $700.
Cost of shipping back = $342 (inbound fee) + $57 (carton) + $450 (labor) + $272 (10% loss) = $1121
So, I will eat the storage fee Maybe I’ll do a deep discount…
I figured as much, because even though your items seem large (hence why you care about the storage fees), the bigger the item the more expensive shipping and labor is. Removal and reshipping from FBA only makes sense to avoid LTSF. Other than that you’re wasting time and money for the most part
BTW you didn’t even include the per unit removal fee in your calculation, so the math is even worse.
Not only that, you gotta look at other metrics too,your IPI is valuable - if that takes a hit beyond the threshold then all yours savings is worth 0 - similarly other KPI’s like sell-thru etc.
I have no clue what your capacity and storage scores are but I would do whatever I could to keep them in good standing.
True, that’s one of the reasons I wanted to do removal order, to save storage fee and keep IPI a little prettier. My score is still around 445. It could take a small hit. So I’ll leave the inventory there.
My IPI score dipped down last holiday season close to where you are at now. What I did was find some non-profit organizations that could use some stuff I had in abundance (which were also very slow movers) and placed MCF orders and sent stuff to them (I never told them what I was doing, I just sent it with a note saying Merry Christmas). I did it with approximately 8-10 non-profits and sent multiple units to each. The benefit of it was reduced holiday storage fees, increased cubit feet capacity (so I could send more profitable and faster selling units in), and it felt good knowing I was sending stuff to some worthy causes. Now, I will admit that it wasn’t cheap but it was much more inexpensive than losing gross margin on stuff that had a higher inventory turnover rate.
I did also pull inventory and had it returned to me as well. That made a huge difference in IPI score but the cost definitely outweighed the benefits. I won’t be doing that again unless there are no other options available.
That page also says it can take 90 days or more for a removal order to process. So in the OP’s situation, by the time it processes it’d be time to ship it back in.
So yeah, this idea can just be forgotten about completely.
What a kind hearted person you are. Just curious, why use MCF orders? It’s expensive. Can’t you use the removal orders with the addresses of the non-profit? Or do the removal orders to your house/warehouse first, then distribute them locally?
OMG! the removal order fee has gone insane! I haven’t done removal for a long time. The last time I paid was around $0.50 per unit. Wow, thanks for the link. Now I know how crazy the fee has gone up.
Yep, that was the original idea. However if it takes 90 days to process, the items might not come back in time when I need to ship it back. Man, Amazon has made everything more difficult.
Maybe I’ll do a deep discount…
the removal order fee has gone insane! I haven’t done removal for a long time. The last time I paid was around $0.50 per unit. Wow, thanks for the link. Now I know how crazy the fee has gone up.