Introduction
Managing inventory is one of the most challenging aspects of selling on Amazon. Overstocked and aging inventory can quickly eat into your profits due to monthly storage fees, long-term storage charges, and potential account health issues. If your inventory isn’t moving, it’s time to take action before the costs pile up further. This guide will break down why aged inventory is a problem, the best options for clearing it, and strategies to prevent future overstocking.
Why Overstocked and Aging Inventory is an Issue
Amazon levies sellers with numerous fees for storing inventory, ranging from monthly storage fees to long-term storage fees for products not sold for quite some time. Monthly storage fees are accrued monthly, reducing your profit. The aged inventory surcharges also incur on products aged between 181 and 270 days, while in case storage is over 365 days, the fees get even larger. High inventory numbers can also detrimentally affect your Inventory Performance Index (IPI) score and, as such, could invite storage restrictions by Amazon. Such overstock also means a lost opportunity, with the inability for sellers to utilize funds in items that are currently in high demand and would serve to earn a better revenue.
If your product is not being sold and it continues to hold fees, something needs to be done before your business is badly impacted.
Best Options for Clearing Old Amazon Inventory
If price adjustments and marketing strategies have not been successful in moving your inventory, there are three primary options to consider: removal orders, disposal orders, and liquidation.
Removal Orders
A removal order allows sellers to request return of unsold inventory from Amazon fulfillment warehouses. The facility costs around $1.25 per unit, although the fee is weight and size-dependent. It is appropriate for sellers who would like to sell their inventory elsewhere on platforms such as eBay, Walmart, or Shopify. Even the recalled stock can be repacked and re-branded if need be. Sellers with the use of third-party logistics (3PL) warehouses can also consider this option. Nevertheless, although this method does remove long-term storage charges, it can be costly if dealing with a large inventory. Without any definite strategy for dealing with the returned products, the sellers risk only transferring the issue instead of resolving it.
Disposal Orders
A disposal order is an option for merchandise that is not resaleable or is no longer useful. Amazon will dispose of the products for a flat fee, usually about $1.25 per item. This is best for products that are damaged, expired, obsolete, or otherwise not sellable. The biggest drawback is that sellers get nothing back from the process. But for bona fide dead stock, this can be the best option to avoid recurrent storage charges from building up further.
Liquidation Orders
For sellers who prefer to get some money back and not incur more storage fees, liquidation can be an effective solution. Liquidation is available on Amazon whereby sellers can liquidate their products by selling them to third-party liquidators. Liquidation will cost around $0.20 per unit, and sellers generally get back between 5% and 10% of the retail price. This is an effective option because it provides a low removal fee while also getting some money back. But once the inventory is sold, sellers have no say about who buys it or where it gets resold. Though liquidation does not generate high returns, it usually represents the most viable middle-ground option for clearing surplus inventories while minimizing losses.
Prevention of Overstocking and Stale Inventory in the Future
Although it is required to remove old stock, simultaneously it is also required to adopt practices that would not encourage overstocking in the first place. Effective inventory management can assist sellers in streamlining their stock and not have to incur excessive storage charges.
Enhance Demand Forecasting
Accurate demand forecasting is the secret to proper inventory management. sellers are able to make well-informed buying decisions. Sophisticated technology like Amazon Selling Coach, Helium 10, Jungle Scout and some other tools gives sellers very valuable information about product trends and estimated sales volume. Using these tools, sellers can adjust their inventory plans ahead of time, stocking only enough.
Maximize Replenishment Strategies
Sellers should utilize Amazon’s Restock Recommendations to the fullest. Over-ordering will result in unwanted storage fees and stale inventory, and under-ordering can result in stock-outs and lost sales. Finding the correct proportion, like ordering an initial test batch smaller before trying bulk orders, can provide the optimal levels of stock.
Optimize Replenishment Strategies
A well-planned replenishment strategy prevents both overstocking and stockouts. Amazon’s Restock Recommendations can guide sellers in maintaining the right inventory levels based on recent sales velocity and demand trends. Instead of placing large bulk orders upfront, sellers can start with a smaller test batch to gauge product performance. This measured approach helps maintain a balanced stock and avoids unnecessary storage costs.
Utilize FBA Aged Inventory Reports
Amazon provides sellers with reports such as the Inventory Age and FBA Storage Fee reports, which allow sellers to track slow-moving products and identify potential issues before they become costly. Regularly monitoring these reports can help sellers take proactive measures to move stagnant inventory before long-term fees apply.
Run Promotions to Move Inventory
Before resorting to removal or liquidation, sellers should attempt various marketing strategies to boost sales. Running Lightning Deals and coupons can attract more buyers by offering temporary discounts. Investing in Amazon PPC advertising can also drive additional traffic to slow-moving listings. Bundling or creating multi-packs of related products may enhance perceived value, making inventory more appealing to customers.
Diversify Channels of Sale
In case an Amazon product underperform, the sellers ought to diversify into other platforms like eBay, Walmart Marketplace, or Shopify. Multichannel selling eliminates sole reliance on the Amazon fulfillment system and provides diversified sources of income. This means inventory flows quickly and avoids clogging up warehouses with stock at Amazon.
Final Thoughts: Make the Right Decision Before It’s Too Late
Keeping unsold inventory idle in Amazon’s fulfillment centers will become a drain on finances sooner than later. When products don’t sell, sitting around to long to respond could lead to enormous losses in storage fees building up. The sellers need to analyze their inventory and take the most profitable course of action—either by starting marketing efforts, pulling inventory out, selling off products, or destroying non-saleable merchandise.
With a proactive inventory management approach, vendors can decrease chances of overstocking, diminish storage costs, and increase the overall profitability. In the near future, deploying better forecasting and replenishment systems will help the vendors to possess a balanced stock flow and not have similar kinds of issues arise in the days to come.
