One of my favorite things about Amazon FBA is how (relatively) hands-off it is.
I've been doing it for so long now that I don't really stop to think about just how much inventory I've shipped or how many orders I must have sold over the years.
It's one thing when you're packing your own orders and shipping them direct to customers. When I was selling on eBay, I always knew EXACTLY how much inventory I was processing each day.
But thanks to Amazon FBA, it's easy to lose track of how much inventory I've sent to their warehouses.
Amazon, on the other hand, never forgets about how much inventory their third-party sellers send in.
It's amazing that Amazon FBA handles storage of our inventory, but trust me, they'd much rather sell that inventory than let it get dusty on their warehouse shelves.
Maybe you're wondering how you end up with inventory that doesn't sell. After all, third-party sellers have good intentions about only buying inventory that will sell quickly for a nice profit.
But even the most experienced sellers with conservative sourcing criteria will still wind up with some old, unsold inventory in their Amazon account. So don't feel bad if you have a few products at Amazon warehouses that just never sold.
Luckily, as third-party sellers, we have options for dealing with inventory that hasn't sold.
Let's take a closer look at why you need to know how much old inventory you have in Amazon warehouses and what you can do about it.
Why You Need to Pay Attention to Old Inventory
Amazon does not want you turning their Fulfillment Centers into your own personal storage centers. Remember, they are in the business ofselling inventory, not storing it.
So they have a few things in place that are meant to “gently” encourage sellers to only ship inventory that will sell quickly. Of course, all of us want to source inventory with a good sell-through rate, but sometimes we make mistakes or run into situations beyond our control.
If your account has a lot of old, unsold inventory, you'll end up paying extra storage fees to Amazon.
Amazon collects two primary fees on stored inventory: Monthly Storage Fees and Long Term Storage Fees. These are separate from the per-item fees that are deducted from your sold inventory.
The storage fees are both assessed once per month. The main difference is that Long Term Storage Fees (LTSF) are only applied to inventory that's been in a warehouse for more than 180 days.
A lot of people get confused about these two fees, so I have a blog post that explains the difference: Everything You Need to Know About Amazon's Storage Fees.
But it's more than just the fees. Sure, paying fees is annoying and can eat into your profit. But the main problem with old inventory is that it's tying up your sourcing money.
The faster you sell items, the faster you can get your money back to reinvest in new inventory. So having too much unsold inventory can slow down the growth of your business.
How to View Unsold Inventory in Seller Central
Before you make any decisions, you probably want a quick way to view your oldest unsold inventory. Especially if you're trying to avoid storage fees.
You can see your inventory sorted by age on your Inventory Dashboard in Seller Central. You'll want to look for the FBA Inventory Age section. You can find this by going to Inventory >Inventory Planning >FBA Inventory Age.
When you click on FBA Inventory Age, you'll see all of your inventory units by age. You might want to sort this page by Inventory Age or Estimated LTSF. Both of these columns should help you decide which inventory has been sitting in Amazon warehouses for a long time.
What To Do With Unsold FBA Inventory
If you've got a long list of unsold inventory in Seller Central, here are some of the different options you could explore.
Different sellers have different business models and criteria for inventory, so some of these options might not feel right for you. I know that I have my own preferences (which I'll share here), but I usually look at things on a case-by-case basis.
Removal Order to Destroy Inventory
Amazon will let you create a Removal Order for any inventory that you want removed from their Fulfillment Centers.
When you're creating a Removal Order, you'll have two options: Return or Destroy/Dispose.
Amazon will destroy your inventory and dispose of it for a very small fee. This fee will be deducted from your account balance within 45 days of the removal.
This is the easiest way to have Amazon get rid of your inventory.
I like this option for certain types of inventory. I probably use this option the most for expired inventory. If an item is about to expire, then I really just want Amazon to get rid of it for me.
There's no real reason for me to have expired inventory shipped back to my house. And it's probably also not a great time to lower my price to get a sale (only to end up with a customer who isn't happy about receiving short-dated inventory).
There are several ways to initiate a Removal Order in Seller Central. You can even do this from the FBA Inventory Age screen. But I tend to start on the Manage Inventory page. Once you're there, simply scroll to the item you'd like to remove and click the Arrows next to the “Edit” menu:
When the menu pops up, select “Create Removal Order.”
On the following screen, you'll decide what kind of Removal Order you want to create. For this one, I want to create a Disposal order.
To do that, I select “Dispose” as my Method of Removal. Doing that will gray out the Shipping Address fields. I also enter the quantity that I want destroyed in the “Specify Ordered SKUs/Units” area. I only have 1 available and I want to have 1 destroyed.
Select the Yellow “Continue” button at the bottom of the page and then confirm your removal order on the next page.
You're done at that point, but note that Amazon can take 10-14 days to complete a Removal Order (either Disposal or Return). So don't panic if you see the item in your inventory for a bit.
You can actually check on the status of your Removal Orders in your Manage Orders area in Seller Central. It should show Removal Orders right alongside your regular customer orders, you'll just see that the Sales Channel is “Non-Amazon”.
If you need to remove several items at once, you can select multiple items on the Manage Inventory screen and go through the same process. You would use the “Action on # Selected” dropdown menu at the top of the Manage Inventory screen to choose “Create removal order”.
Removal Order to Return and Donate Inventory
There are other times when I'd rather have the inventory sent back to me. That's usually if I think that I can donate the item.
Because I sell a lot of toys and household items, I know that I can generally donate these. Sometimes that's to a friend or other times I'll take items to a local thrift store.
Here are the latest FBA removal and disposal fees. You can see that the rates are higher for heavier or oversized items.
Note that this is theentire fee to have something returned. There's no additional shipping costs to have an item arrive at your doorstep.
To initiate a Return order, you follow the same steps that I outlined above. The only difference is changing your Removal Method:
To have an item returned to you, you'll need to complete the Ship-to address. This does need to be your address because Amazon has a rule that states, “We ship returns only to you, your warehouse, your supplier, or your distributor.”
Important!: Amazon does not waste any excess time or energy in packaging up removal order returns. Do not expect your inventory to return to you in gift-giving condition.
Amazon is likely to slap a shipping label right on your inventory or put a lot of returned inventory into one giant box where it's more likely to get damaged.
So even though youmight get lucky and receive New quality inventory, I wouldn't ever count on it.
Removal Order to Return to the Store
Many retail arbitrage sellers want to get inventory returned to them so that they can return it to the store where they originally purchased it. To do this, you would follow the Removal Order – Return process in the previous section.
This is my least favorite option and something I've never actually done. I personally don't want to deal with driving to Target to return inventory just because I made a bad buying decision.
But if this is your preference, then it's an option. Make sure that you'll receive the inventory back within the store's return window. Keep in mind that the inventory might not show up at your door for a few weeks.
If you get stuck with Stranded inventory due to product restrictions, then this might be a good option for you. Though, personally, I would try to sell any returned restricted inventory on eBay or Facebook instead of returning it to the store.
This is where I can't stress enough that the inventory you receive from Amazon is unlikely to be in returnable quality. So don't get your hopes up only to be disappointed when there's a giant UPS label on the box of a new toy.
Reprice Your Inventory
This is my top choice for everything except expired inventory.
If you have inventory that just isn't selling, I think it's worth lowering the price to try to get a sale. Even if you end up selling it for a loss.
I know we all have times where we buy an item and think that we will make a big profit selling it for $40 …and then Amazon comes on the listing at $19.99.
Lowering your price from $40 to $19.99 never feels good. But at a certain point, it really is better to get a little money back. That way you can “move on” from that old inventory, get a payout from Amazon, and reinvest in new inventory.
I used to be more stubborn about holding out for my ideal selling price, but I learned that it stalls business growth. These days, instead of dwelling on Amazon or the “race to the bottom,” I lower my price and move on.
The one time I won't do this is if the price is so low that Amazon would actually deduct the cost of the fees from my account balance instead of giving me a payment. This should only happen if the new selling price is below $7 or $8. I can generally avoid this by sourcing higher priced inventory. But if this did happen, I would pay $0.15 to have the item destroyed.
I know a lot of sellers don't want to lower prices, but it's not a bad option. There are times when I think that lowering my price a bunch will lead to a loss, but when I check the numbers in RevSeller or Inventory Lab, I actually do still make a few bucks profit.
The fastest way to reprice your inventory would be to match the current Buy Box price for your old inventory. You can do this with repricing software or within Seller Central on the “Manage Pricing” page.
Go ahead and try repricing some of your old inventory. You might be surprised how quickly you start getting sales even if you're just lowering your price by a few dollars.
Final Thoughts on Unsold Amazon Inventory
There are a few other options like running PPC ads or cross-listing your Amazon inventory on eBay. But for the average Retail or Online Arbitrage FBA seller, these four options should have you covered.
My best advice is don't waste too much time worrying about unsold inventory from “bad” purchases. It's best to clear it out and reinvest in new inventory.
Of course, if youcontinue to make bad purchases and frequently buy inventory that doesn't sell, it's time to pay attention. Make sure you're using tools like Keepa and Inventory Labthat allow you to analyze your inventory (both for sales rank and profit) so that you can learn from your mistakes in the future.
What strategies do you have for handling unsold inventory? Let's chat about it in the comments.
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