Storage Fees

What Are Storage Fees?

Storage fees are the charges a 3PL or warehouse bills for keeping inventory on its premises. They are one of the core recurring costs of outsourced fulfillment. Because storage is priced in different units by different providers, comparing fees requires knowing how much space a brand's inventory really uses.

How It Works

Warehouses commonly charge storage in one of several ways:

• Per bin or shelf: for small items stored in bins or on shelving, often used for fast-moving DTC products.
• Per pallet: for bulk inventory stored on pallet racking.
• Per cubic foot: based on the actual volume of inventory.
• Per unit: a fee for each item stored, less common for small brands.

Billing periods vary, too. Some warehouses charge daily, some weekly and some monthly, often based on peak or average usage. For example, a brand storing four pallets of reserve stock and twenty bins of pick-ready inventory would pay a pallet rate on the reserve and a bin rate on the pick locations. As inventory sells down, the number of bins and pallets falls, and storage fees fall with it when billing is based on actual daily usage.

Why It Matters for Ecommerce Brands

Storage costs grow with slow-moving inventory, so they reward good inventory planning. Brands that over-order or keep large amounts of discontinued stock can pay for space that is not generating sales. Reviewing storage fees by SKU helps identify products to discount, bundle or stop reordering. When comparing 3PLs, brands should check the storage unit, the billing period and whether long-term storage fees apply to aged inventory.