Amazon Storage Utilization Surcharge

Recently, Amazon has introduced a number of FBA inventory surcharges. Understanding and calculating them has become a real headache for Amazon sellers. One of these is the storage utilization surcharge.

This monthly FBA inventory storage fee targets sellers with excess inventory, calculated by how long items sit in storage compared to sales.  

In this post, we will discuss what the surcharge is, how it's determined, and how to potentially reduce it to keep your Amazon business profitable.

What Is Amazon Storage Utilization Surcharge?

Amazon storage utilization surcharge is a monthly FBA inventory storage fee that Amazon may charge some sellers on top of their regular monthly storage cost (base monthly storage fee).

Amazon storage utilization surcharge is optional. This extra storage fee applies only to sellers with inventory that stays in fulfillment centers for a longer period compared to their sales. 

The Amazon storage utilization surcharge was introduced in April 2023. In essence, it targets experienced sellers with a lot of standard-sized inventory occupying space during peak times. That reflects the increased expenses associated with storing these sellers' inventory. 

The fee depends on the inventory size tier and is calculated based on how efficiently sellers are using the storage space. 

What Sellers Pay Storage Utilization Surcharge?

Amazon storage utilization surcharge applies specifically to professional sellers who consistently hold a large amount of inventory in storage relative to their sales.

Criteria for the storage utilization surcharge

• Professional sellers;
• Sellers with the first shipment 365 days ago;
• Sellers with an average daily inventory volume of more than 25 cubic feet in any product size tier;
• Sellers with a storage utilization ratio above 22 weeks (26 weeks before April 1, 2024).

How Does Amazon Calculate Storage Utilization Surcharge?

Amazon's storage utilization surcharge calculation considers both your storage utilization ratio  (inventory storage habits) and the impact on their fulfillment centers.

Storage utilization surcharge calculation values 

• Product size tier;
• Current month;
• Product dimensions and volume (longest side x median side x shortest side); 
• Average monthly units stored in FBA minus average pending removals;
• Storage utilization ratio;
• If the product belongs to the Dangerous goods category.

Storage utilization surcharge calculation 

Storage utilization surcharge is charged per cubic foot of stored inventory. It is calculated considering product size tier, storage utilization ratio, and peak (October-December) or off-peak (January - September) periods. 

The rates also differ if the product is Dangerous goods. If a seller is subject to a surcharge, it is added to the monthly storage fee.

Example of storage utilization surcharge calculation

Below you can find two examples of how the storage fees are calculated depending on if the storage utilization surcharge applies to your inventory.

Amazon Storage Utilization Surcharge Rates 2024

From April 1, 2024, Amazon introduces new storage utilization surcharge rates. The surcharge will apply to sellers whose storage utilization ratio exceeds 22 weeks (against 26 weeks previously). Units in stock between 0 and 30 days are exempt from the surcharge.

Non-dangerous goods rates

Dangerous goods rates

What Is the Storage Utilization Ratio?

The storage utilization ratio, used by Amazon to assess storage utilization surcharge, is a metric that reflects the efficiency of your inventory management within their fulfillment centers. 

It compares the average daily volume of inventory you store with the average daily volume of inventory that gets shipped. Both of these volumes are measured in cubic feet over a specific period (typically 13 weeks).

A low ratio indicates efficient storage utilization. That means, your inventory is selling at a healthy pace, and you're not holding onto excess items for extended periods. Conversely, a high ratio suggests you have a significant amount of inventory sitting in storage compared to your sales. That could be due to slow-moving products, overstocking, or other factors. 

If your ratio exceeds a specific threshold set by Amazon (currently 22 weeks after April 1, 2024), you'll be subject to the storage utilization surcharge.

How does Amazon calculate the storage utilization ratio?

To calculate the storage utilization ratio, you must divide the average daily volume of stored inventory by the average daily volume of shipped inventory in the past 13 weeks and divide it by the number of days in a week. 

Storage utilization ratio formula

The ratio is calculated for each product size tier level (standard-size and oversize) separately. To determine the storage utilization surcharge, Amazon applies the storage utilization ratio from the last day of the month. 

Example of storage utilization ratio calculation

Below is an example of how the storage utilization ratio is used to calculate storage fees.

How to know your storage utilization ratio?

You can look up your storage utilization ratio in the FBA dashboard in your Seller Central. 

In the FBA dashboard, you can access your average daily inventory volume, average daily shipped volume, and storage utilization ratio for each product size tier. It will also notify if you are close to or exceed the storage utilization surcharge threshold.

How to Quickly Calculate Amazon Storage Fees?

The fees for storing products with Amazon FBA have a complex system, making it difficult to determine the costs. Fortunately, you can use the FBM&FBA Profit Calculator by Seller Assistant App to effortlessly calculate your monthly FBA storage fees. 

This platform is an efficient product sourcing tool that simplifies the process of selecting items to sell on Amazon. The FBM&FBA Profit Calculator reveals the monthly storage fees of your products in Amazon's fulfillment centers directly on the Amazon product pages. You can easily locate the monthly storage costs under the "Sto" category in the Fees and Logistics Costs section.

Related: Amazon FBA Calculator: Free vs. Paid

How to Reduce Storage Utilization Surcharge?

The storage utilization surcharge is an essential part of your storage fees on Amazon. Here are some effective tactics to reduce the surcharge by lowering the storage utilization ratio.

Analyze inventory performance

Identify slow-moving products. Utilize sales reports and inventory age data to pinpoint products with low sales velocity. These are prime candidates for removal, discounting, or bundling with faster-selling items.

Shrink stored inventory

The most direct approach is to reduce the overall volume of inventory you store in Amazon's fulfillment centers. This can be achieved through various means, like increasing your sell-through rate (selling more products faster). Run promotions, or consider bundling slow-moving items with popular ones.

Liquidate slow movers

For slow-moving items, explore options like requesting a liquidation order (selling your inventory at a discounted rate through Amazon). While you might take a hit on revenue, it frees up storage space and potentially saves you on long-term storage fees.

Remove excess stock

Evaluate your inventory and identify SKUs with the highest amount of excess volume (number of units exceeding demand). Use removal orders to get these items out of Amazon's fulfillment centers. That might incur removal fees, but they could be lower than ongoing storage charges, especially with the surcharge in play.

Monitor your storage utilization ratio

Make it a habit to check your FBA dashboard frequently. Keep an eye on your storage utilization ratio for each product size tier and address any areas where the ratio is trending toward the surcharge threshold.

FAQ

Do Amazon charge storage fees?

Yes, Amazon charges storage fees for inventory stored in their fulfillment centers. These fees are based on the size and weight of your products, as well as the length of time they are stored. There may also be an additional Storage Utilization Surcharge for sellers with excess inventory.

How do I find my monthly storage fee on Amazon?

You can find your monthly storage fee on Amazon Seller Central. Go to Reports > Fulfillment and select Monthly Storage Fees. This report details your storage costs for the chosen month.

How is Amazon FBA storage calculated?

Amazon FBA storage is calculated based on the daily average volume of your inventory in cubic feet. This considers both the size and quantity of your products. The fees are higher during peak season (October-December) and for oversize items.

Where can I find my FBA storage limit?

A single, overall storage limit isn't displayed  However, you can find storage usage insights in your  Seller Central. Check "Inventory Performance" in the FBA Dashboard: for current usage and estimated limits for the next 3 months. Also, in Manage FBA Shipments, you can look for "Storage Volume" and "Restock Limits" for limits by storage type and location.

Final Thoughts

In conclusion, by understanding the storage utilization surcharge you can optimize your inventory costs. Regularly monitor your storage utilization ratio, identify slow-moving items, and accurately calculate your Amazon storage fees. 

Seller Assistant App’s FBM&FBA Profit Calculator can help you quickly calculate all your Amazon fees and find the products that will bring you profit. This ultimate product sourcing platform provides all the extensive features and tools necessary for your product research process.

With Seller Assistant App’s FBM&FBA Profit Calculator, Quick View, ASIN Grabber, IP Alert, Restrictions Checker, and other product research tools, you can automate product data collection. That will provide you with insights about product profitability, competition, demand, and other essential product information to select high-margin items for Amazon.