Amazon Raises Storage Fees To Clear Warehouses For Holidays

The Wall Street Journal reported that Amazon is charging its third-party sellers a premium to store merchandise in November and December. This is Amazon’s first experiment in surge pricing.

Starting this month, monthly storage fees will triple from $0.54 to $2.25 per cubic foot. Amazon hopes to incentivize sellers to avoid storing items that will clog shelves through the holidays. About a quarter of the merchandise sold on Amazon’s site is part of its fulfillment program and charged storage fees per volume. The online retailer will offset the storage fee hike by lowering fees for fulfilling orders by 5 percent. Amazon makes more from order fulfillment than from collecting on storage fees.

This year, Amazon increased its square footage by 30 percent by constructing over two dozen new storage facilities. Still, it hopes the fee hike will further streamline the process over the busy holiday shopping season.

Amazon has also stopped accepting shipments from new sellers and is requiring established sellers to have goods in by Nov. 9 for the post-Thanksgiving shopping boom and Dec. 2 for Christmas. One seller, Brad King, is reported to have started making smaller, more frequent shipments to increase efficiency. He estimates his costs may rise up to 30 percent over the holidays.


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