Effectively managing inventory on Amazon is essential for every seller’s success. Yet, there are occasions when circumstances demand inventory liquidation, be it due to overstock, seasonal shifts, or changing market dynamics. Navigating the liquidation process can be daunting for Amazon sellers encountering this scenario.
This guide aims to address these challenges by exploring strategies and best practices for efficiently liquidating inventory on Amazon while optimizing returns. From understanding the reasons behind liquidation to implementing effective tactics, we’ll provide comprehensive insights to assist sellers in navigating this process confidently.
Why Would You Liquidate Your Amazon Inventory?
Selling on marketplaces like Amazon undoubtedly holds significant profit potential. Nevertheless, the journey isn’t always seamless, and at times, sellers may find themselves grappling with substantial unsold inventory, unsure of how to proceed. This surplus stock can quickly transition from an asset to a liability. Here are several reasons why liquidation might be necessary to address this challenge:
Dead inventory that isn’t selling
It’s no secret that consumer trends are ever-changing and stocking up the hot-selling item today may turn into hosting warehouses full of ‘dead’ inventory tomorrow. Remember when fidget spinners were all the rage? Fast forward a couple of years and they are now collecting dust on store shelves.
Overestimating demand or diversifying too much into new products without validating market interest can result in a significant pileup of goods that neither sell nor return any profit —in fact, they contribute towards losses by eating up storage space and effort.
Costly inventory incurs long-term storage fees
Excess stock not only remains idle but also accrues costs through prolonged storage, making liquidation a compelling choice. Every Amazon seller is well aware of the platform’s long-term storage policies. Starting from April 1st, 2024, Amazon announced FBA charges will amount to approximately $0.78 per cubic foot for standard-size products and £0.56 during off-peak months. However, these rates nearly triple during peak holiday seasons, such as October to December.
Moreover, sellers face additional removal or disposal fees if stored products expire within their lifecycle while in Amazon fulfillment centers or fail to meet safety and compliance standards during inspection.
Products have a limited shelf life
For certain categories of items (like foodstuff, cosmetics), time is even more critical since these goods cannot outlast their shelf life or expiration date regardless of how well they’re preserved—making liquidation the only viable option.
3 Things to Consider Before Liquidating Your Excess Inventory
Before diving into how to sell excess inventory, you need to be aware of certain factors that can influence the success or failure of your efforts. Here are three critical things to mull over.
Seasonality
First and foremost, it’s essential to acknowledge seasonal fluctuations in demand for your products. Certain items might not sell well during particular times of the year but surge during specific seasons.
For example, Christmas decorations won’t have much appeal in August, but by November their demand is likely to skyrocket. You don’t want to make the mistake of liquidating products short-sightedly only to find they would have sold naturally at a later date. So prior reviewing your stock for liquidation, consider any cyclical sales patterns that could affect product performance.
Amazon Seller Account Health
Pay close attention to your Amazon Seller Account Health. This metric indicates how well you’re meeting Amazon’s performance targets and correlates with buyers’ confidence in making purchases from you.
If you’ve received recent negative reviews or if many orders aren’t dispatched on time, it affects both your seller rating and visibility in search results on Amazon, even after lowering prices drastically as part of your liquidation strategy. Quickly responding to customers queries, usually within 24 hours, and addressing their main concerns is essential for maintaining a healthy seller rating. Therefore, ensure that your account stands in good health before you proceed with liquidating excess inventory.
Competitive Pricing
Finally, competitive pricing stands as a pivotal factor in maintaining competitiveness and boosting sales on Amazon, whether an item is slated for liquidation or not. Establishing competitive prices can expedite inventory turnover, as buyers tend to gravitate towards products with slightly lower price points, even with a marginal 5% price difference. Additionally, employing a repricing solution like Repricer, which automatically adjusts prices in response to competitors’ changes, can enhance your chances of winning the Buy Box more frequently—an effective strategy for increasing sales and swiftly moving inventory.
Related: 6 Tips to Improve Amazon Inventory Management for FBA Sellers
10 Ways to Liquidate Amazon Inventory
Whether you’ve exhausted all avenues to swiftly sell your inventory and minimize fees, or you’re considering closing your operations altogether, here are 10 methods to effectively liquidate your Amazon inventory.
Lower Your Prices
As mentioned earlier, competitive pricing is a proven method to accelerate inventory sales. If your sales aren’t picking up for any reason, consider undercutting your competitors significantly. Price plays a crucial role in consumers’ purchasing decisions, and offering substantially lower prices than competitors can attract buyers and expedite inventory turnover. Within Repricer, you can utilize the stock cover-based pricing feature. This enables automated repricing to gradually reduce prices until your inventory is depleted. This functionality is particularly beneficial for sellers managing numerous SKUs who may find manual adjustments impractical.
Create Bundles/Kits
Another creative strategy involves bundling similar or complementary items together in kits at discounted rates, thereby clearing slower-sales products faster. It’s an excellent tool to upsell and cross-sell products and encourage bulk purchases amongst consumers who perceive value in set-offerings.
Offer Amazon Lightning Deals
You should consider offering lightning deals –prime time-bound promotional offers featured on Amazon’s dedicated deals page. It’s a novel way to spur sales promptly but remember it may demand higher discounts than standard promotions permit.
Use Amazon Vine
Another valuable platform for sellers is Amazon Vine, where they distribute free samples of products in exchange for reviews from Amazon-vetted reviewers, known as ‘Vine Voices.’ A surplus of well-written reviews inevitably enhances product visibility, stimulating discussions among potential buyers—assuming the feedback is positive. This avenue not only facilitates the disposal of excess stock but also fosters greater awareness of your product, potentially boosting sales. Consequently, it may even prompt reinvestment into stock replenishment.
Consider Returning Items to Suppliers
If all selling strategies prove ineffective, consider the feasibility of returning unsold merchandise to suppliers, if permitted within the agreed terms and conditions. Though initially unattractive, this last-resort option could spare you from incurring additional storage charges or potential disposal costs.
Sell Your Goods on eBay
Sometimes, selling platforms matter. Try moving your Amazon stock to eBay where a different consumer base may be interested in your items. It not only allows geographical boundary expansion but also provides access to distinct customer segments such as collectors or bargain hunters.
Using listing software can easily allow you to move your product listings from Amazon to eBay.
Use the Amazon Outlets Program
Amazon Outlets features discounted products from various categories, including overstock items, clearance merchandise, and markdowns. It serves as a marketplace for sellers to offer discounted products to attract bargain-seeking customers.
Sellers can participate in the Amazon Outlets program by submitting promotional offers through the Create Outlet deal section found on the FBA Inventory page. Selected deals are then featured on the Outlet page for a fixed duration of two weeks.
To qualify for participation in Outlets, sellers must have a Professional selling plan and maintain an overall customer rating of at least 3.5 stars.
Sell to Your Competitors
Ironically, competitors hoarding similar stock might find value in your non-performing inventory. They can use it as buffer-stock during seasonal demand peaks without inflating their stocks throughout the year inadvertently serving mutual interests!
Donate the Inventory
If commercial options are closing and large quantities remain unliquidated, charitable donations are worth contemplating – putting your redundant stock into good hands while attracting tax deductions and public goodwill simultaneously.
Destroy The Inventory
Finally, if all else fails and keeping stock regularly incurs more fees at any point—it’s time to bite the bullet. Destruction or convenient recycling of obsolete merchandise may end up most economically sensible—which underlines why managing inventory well remains key so that product elimination stays minimized.
Final Thoughts
When facing stagnant sales and escalating storage fees on Amazon, liquidating inventory becomes a last resort to avoid capital loss and sustain business operations. It’s crucial to exhaust all options to revitalize sales and mitigate costs before resorting to liquidation. Competitive pricing stands out as a key strategy to overcome sluggish sales; offering more competitive price points than competitors can significantly enhance sales velocity, reduce fees, and ultimately increase profits.
If you’re interested in automating repricing on Amazon, consider starting a 14-day free trial of Repricer to optimize sales and minimize storage expenses.
