If you’re an Amazon seller in 2022, you’ve likely experienced the frustration of having “unsellable” or “excess” inventory taking up valuable space in your fulfillment center. This can happen for a variety of reasons – perhaps the product is damaged or expired, or maybe it simply didn’t sell as well as you had hoped. Whatever the reason, having unsellable inventory can be a major headache for sellers. Not only does it tie up your capital, but it can also negatively impact your seller metrics and reputation on Amazon, so it’s important to know what to do.
In this blog post, we’ll answer all your questions about what to do with unsellable inventory, including how you can manage your Amazon FBA removal settings. So whether you’re a seasoned pro or just getting started, read on for some helpful information and practical tips to deal with your unsellable inventory and excess inventory on Amazon.
What is Unsellable Inventory on Amazon
First, let’s start with the basics: Unfulfillable inventory (a.k.a. unsellable inventory) includes any units that are not actively moving and have been sitting in your FBA warehouses for 180 days or more. This can include products that are expired, damaged, or defective, as well as products that do not meet Amazon’s requirements for sale.
In some cases, you may have received an unsellable inventory notification from Amazon, which means that the company has determined that one or more of your items is no longer eligible for sale on their platform. If you’re wondering why; we have answers.
What Causes Unsellable Inventory on Amazon?
There are a few different reasons why you might end up with unsellable inventory on Amazon. At Lab 916, we find some of the most common reasons are that the product has become damaged or expired, which means it can no longer be sold as new.
Another common reason sellers end up with unfulfillable inventory is that the product simply didn’t sell as well as you had hoped – this can happen for a variety of reasons, such as poor marketing or incorrect pricing. (See: Marketplace Management for tips on how to improve sales.)
If you’re an FBA (Fulfillment by Amazon) seller, dealing with unsellable inventory can be especially tricky. This is because Amazon has very strict guidelines for what constitutes an unsellable item. If you violate these guidelines, you may face penalties or even have your account suspended.
Types of Unsellable Inventory
There are different types of unsellable inventory that may arise on Amazon. These include:
These are products that have passed their expiration date and are no longer considered safe or effective for sale.
These are products that have been damaged in some way, whether during shipping, handling, or storage. This can include products with torn packaging, dents, scratches, or other forms of physical damage.
These are products that are not functioning properly or as intended. This can include products with manufacturing defects, faulty components, or other issues that prevent them from being sold.
These are products that do not meet Amazon’s requirements for sale, such as products that are prohibited by Amazon’s policies or that are not properly labeled or packaged.
In order to avoid any consequences, it’s important to understand Amazon’s FBA removal policies and have a plan in place for dealing with these types of unsellable or excess inventory.
What is Amazon excess inventory
The major difference between unsellable and excess inventory is that excess inventory is in sellable condition, it just isn’t moving as quickly as it needs to be.
Amazon Excess inventory refers to items that you have overstocked. Or, in other words, you have more product than you can currently sell. This could be because you overestimated demand for the product, or because sales have slowed down for some reason.
When it comes to inventory, too much of a good thing can be a bad thing. This is especially true for sellers on Amazon, who can quickly find themselves with warehouses full of excess stock that they can’t sell.
What Causes Excess Inventory
There are many factors that can contribute to excess inventory, including poor planning, unrealistic forecasts, supplier errors, and more. Let’s take a closer look at some of the most common causes:
One of the main reasons businesses experience excess inventory is because they don’t plan properly. This often happens when managers make assumptions about future sales instead of basing their decisions on accurate data. As a result, they end up ordering too much product or not enough product, which can lead to an accumulation of unsellable items over time.
Another common cause of excess inventory is unrealistic forecasts. When sellers overestimate future demand for products or services, they may end up with too much stock – only to find out later that there was never really as much demand as they thought there would be.
This can be especially problematic when the forecasting process is based on inaccurate or incomplete data, as it can lead to incorrect predictions that result in excess inventory.
To avoid this, businesses should use a rigorous and detailed forecasting process that takes into account a variety of factors such as historical sales, customer demand trends, market pricing fluctuations, competitor activity, seasonality patterns, and more.
Additionally, having accurate information about current stock levels and warehouse capacity is essential for avoiding problems related to excess inventory.
Another reason businesses may end up with too much stock is because of supplier errors. If suppliers aren’t able to meet demand or don’t ship items on time, it could cause an accumulation of unsellable products in warehouses.
To avoid this issue, businesses should establish strong relationships with trusted vendors and ensure they have sufficient redundancy built into their supply chain so that orders are fulfilled on time and in full.
Finally, overstocking can also happen due to human error or miscommunication between departments. For example, if the purchasing department orders too much stock without informing the sales team first — it could lead to a buildup of unsellable items that no one realized were coming in until it was too late.
To prevent this from happening, businesses should have clear lines of communication between departments and ensure everyone involved in inventory management has access to the latest real-time data about stock levels so they can make informed decisions about ordering new products.
Tips For Managing Excess Inventory
Here are four tips for managing your excess stock effectively.
1. Evaluate Your Stock Levels Regularly
It’s important to constantly evaluate your stock levels in order to ensure that you’re not carrying too much – or too little – inventory. This involves taking into account factors such as past sales trends, expected future demand, and production lead times.
Check your seller central reports. If you notice that your stock is starting to get out of hand, take action quickly to bring it back under control.
2. Set Reasonable Sales Targets
When setting sales targets, it’s important to be realistic about what you’re capable of achieving. Don’t set yourself up for failure by aiming too high or too low; instead, find a target that represents a healthy balance between meeting customer demand and staying within your operational capabilities.
Remember: It’s always better to sell more than you anticipated rather than less!
3. Use Technology To Streamline The Process
Technology can be a great tool for helping to manage excess inventory. Amazon, for example, has several tools that make it easier to track and manage stock. These tools allow sellers to set automatic re-order points and automated replenishment orders, as well as receive real-time notifications when stock levels run low. This helps ensure that they never miss a sales opportunity due to stock shortages.
Amazon’s Warehouse Deals platform allows sellers to automate liquidation to liquidate any excess inventory at discounted prices, which not only helps them clear out the extra stock but also generate revenue from it. (more on that later)
For Amazon sellers who want more control over their inventory management process, there are third-party solutions like inFlow Inventory or Zoho Inventory that offer more robust features and customization options. These systems provide detailed insights into the current state of inventory and can automate activities like order fulfillment, price tracking, and restocking alerts so the seller can focus on other areas of their business.
4. Get Creative
Additionally, businesses should look into creative ways of repurposing or reselling their excess stock so that it doesn’t go completely to waste – this could include donating the items to charity or selling them through secondhand marketplaces like eBay or Depop.
Finally, businesses should always consider actively managing their excess inventory instead of just letting it sit idle in warehouses. For example, if a product is no longer selling as expected, don’t hesitate to try different tactics such as offering promotional discounts or bundling with other products to help move it quicker.
If you are having trouble with excess inventory, contact Lab 916. We have plenty of experience assessing and helping clients find the best solutions to manage inventory.
How To Remove Amazon Unsellable or Excess Inventory
Now that we know what unsellable inventory and excess inventory are and what causes them, let’s talk about how to deal with them.
In both cases, it’s important to take action to deal with these items in a timely manner to avoid incurring additional fees and to free up storage space for more sellable products.
The first step is to identify which items are in fact unsellable and which ones are excess. You can do this by checking your “Excess and Unsold Inventory” report in Seller Central – this report will list all of the units that have been sitting in your fulfillment center for 180 days or more.
So, what do you do with the unsellable or excess inventory? While there are some steps you can take to try and move the excess inventory, in many cases, you’ll simply have to dispose of the unsellable inventory responsibly. Let’s look at some of your Amazon removal service options.
Amazon FBA Removal Settings
One of the key things to understand about Amazon’s FBA removal policies is that they’re designed to protect the customer experience. This means that Amazon will remove any items that are deemed to be unsafe, expired, or otherwise not fit for sale.
In some cases, Amazon will automatically remove unsellable items from your inventory, and in other cases, they’ll give you the option to either return the items to you or dispose of them.
The first step in setting up your FBA removal settings is choosing how you want your products to be removed. You can select all of the products in a certain category, or choose specific products that you want to remove.
Once you’ve selected the products you want to remove, it’s time to decide what you want to do with them.
1. FBA repackaging and refurbishment services
Amazon FBA provides repackaging and refurbishment services for sellable items with damaged packaging.
The major difference between repackaging and refurbishing is: Repackaging is automatic for eligible items, while refurbishment is an optional service.
Amazon automatically evaluates any customer-returned units to determine whether it can be repackaged and sold as new. If they are eligible, FBA repackages your customer returns. The service applies both to retail and FBA return items.
Refurbishment is an optional service. Depending on the item, FBA can re-tape, re-glue, and re-staple boxes; remove excessive tape, non-product labels and stickers; and re-box branded and unbranded corrugated boxes. Shoes and apparel refurbishment can include steaming and removing stains and odors.
*You CANNOT disable repackaging in your settings, but you CAN change refurbishment settings anytime in seller central. As categories are added to repackaging services, your units will automatically be included.
Liquidation may prove to be an effective option for managing unsellable inventory. FBA Liquidations is designed to help you recover value from excess and customer-returned inventory and prevent disposal. It works for items that are still in good condition but simply aren’t selling well enough on Amazon.
What is Liquidation
Instead of paying to remove or dispose of excess or customer-returned FBA inventory, you can choose to use Amazon’s FBA Liquidations program to have the inventory sold to generate some cash through a liquidator.
How it works
By liquidating inventory, you recover a portion of your inventory cost (net recovery value) while avoiding monthly storage fees and aged-inventory surcharges, formerly known as long-term storage fees.
Amazon determines the average selling price (ASP) of your inventory by evaluating several factors, including:
- Your sales history
- The average FBA selling price on Amazon
- The sales history of the specific ASIN
Based on contracted rates, liquidators will purchase this inventory for a gross recovery value, which is about 5% to 10% of its ASP. Amazon will then deduct fees and pay you the net recovery value.
You can submit inventory to be liquidated by creating a removal order or Amazon gives you the option to automate liquidation. Automated liquidations removals are available for both fulfillable and unfulfillable inventory.
Eligibility is subject to legal, safety, and regulatory guidelines. Products not eligible for liquidation include dangerous goods (hazmat) and recalled inventory. Unfulfillable items are only eligible for liquidation based on the reason for their status. Customer Damaged, Carrier Damaged, or Distributor Damaged are eligible for liquidation. Items with a reason of Expired, Defective, and Warehouse Damaged are not eligible for liquidation, they will automatically be up for disposal.
Amazon will apply two separate liquidation fees to each item you liquidate:
- The liquidations processing fee is per item and based on item size and weight.
- The liquidations referral fee is 15% and calculated on the gross recovery value.
Finally, if all else fails, consider simply disposing of your unsellable inventory responsibly – either through proper recycling methods or by taking advantage of Amazon’s FBA removal settings.
For products that are unusable due to damage or other issues, disposal may be the best option for Amazon sellers.
Considerations Before Disposing of Unsellable Items
We recommend that you familiarize yourself with Amazon’s policies for returning or disposing of unsellable inventory.
Amazon’s FBA removal settings allow sellers to arrange for proper disposal according to state laws and regulations. Through these settings, you can arrange for Amazon staff to handle the removal process and/or dispose of the items correctly according to state laws and regulations, but you will need to be aware of any charges you will incur.
Before disposing of unsellable items it’s important that sellers remain aware of relevant rules and regulations pertaining to disposal practices in their area – particularly when disposing of hazardous materials such as batteries or aerosol cans – so that they remain compliant with local law enforcement authorities during the process.
Additionally, double-check Amazon’s FBA removal guidelines before attempting any disposal activity; this will ensure that your account remains in good standing on Amazon, while still properly managing your excess stock effectively.
*Keep in mind that this might be the easiest option in the short term, but it’s not always the best choice. Not only does it mean that you’re losing out on the money you spent to purchase the inventory, but it also means that you’re potentially contributing to the waste problem. If you do choose to dispose of unsellable items, be sure to do so in an environmentally responsible way.
Removal Order Fees
Removal fees are charged per-item removed.
It can take 90 days or more for a removal order to process and the shipment to leave the fulfillment center, and an additional two weeks for the carrier to deliver the shipment.
For more information, go to Remove inventory (overview).
One of the most effective ways to manage unsellable or excess inventory is through Amazon automated removal settings.
If you receive a notification that you have unsellable inventory that needs to be removed, you can quickly automate the process to avoid any future issues.
With this approach, amazon will automatically return, refurbish/liquidate, or dispose of items that won’t be sold or are no longer eligible for sale due to expiration dates or other issues.
- If your products are still in fulfillable and in selling condition, but you have amazon excess inventory, you will have 2 automated process options.
- Amazon returns your inventory to the address you provide
- Amazon sends your inventory through liquidation (if eligible). Ineligible inventory will be disposed
2. If your products are still unfulfillable, you will have 2 automated process options:
- Amazon returns your inventory to the address you provide
- Amazon sends your inventory through liquidation (if eligible). Ineligible inventory will be disposed
*All automated items are charged the applicable per item removal fee.
Steps for Automating Removals
- Log into your seller central account
- Go to automated Fulfillable Inventory Settings or Automated Unfulfillable Inventory Settings
- Fill in all your info and check preferences
- Track your removal order status in the Removal Order Detail Report
*keep in mind that it can take up to 90 days to process the return of your inventory
Opt out of automated removals at any time by selecting disable under your Automated Fulfillable inventory settings.
What To Do With Removed Inventory
If you’ve set up your FBA removal settings and receive a return, you’ll need to decide what to do with the item(s) once they are removed from FBA and sent back to you. There are several options available to you.
1. Return To Manufacturer
First, you can simply send the unsellable inventory back to the manufacturer or supplier. This may be the best option if you’re running low on storage space and don’t want to waste any more resources on unsellable products.
Many manufacturers have a return policy in place for defective or damaged goods, and they may be willing to take back the unsellable items and issue you a credit or refund.
Before returning the items, be sure to check the manufacturer’s return policy and follow their instructions for packaging and shipping the goods. Also, keep in mind that Amazon does charge a restocking fee for returned items, so make sure you read up on the specifics of the company’s return policies before you make a decision.
Another option is to donate your unsellable items to charity or non-profit organizations. This can be a great way to get rid of excess inventory while still giving back and helping those who need it most. For example, many retailers have partnered with organizations such as Goodwill, Dress for Success, and other charitable causes to help donate their leftover merchandise and help those in need.
3. Repurpose Unsellable Inventory
A third option is to repurpose your unsellable items into something new. For instance, if you sell apparel but have some damaged items that can no longer be sold as they are, consider using them as fabric scraps for crafting projects or donating them to sewing classes. You could also look into selling the damaged items in bulk as wholesale goods – some companies specialize in buying off-season clothing at reduced prices for resale purposes.
4. Discount Items
Another option is to try and sell the unsellable items as “seconds” or “irregulars”. This means offering the items at a discounted price with the caveat that they may have defects or damage.
While you won’t be able to sell these items at full price, you may be able to recoup some of your costs and avoid having to pay storage fees for items that you can’t sell.
5. Return Inventory Back to Amazon & Sell at a Later Date
If you believe your items will be in demand again (and they don’t have expiration dates) you can hang on to them and return them to Amazon at a later date.
If you decide to return the item(s) to Amazon, be aware that there may be fees associated with doing so and make sure that these costs are factored into your overall budget for managing excess inventory.
(Need to check your fee charges? Check out our Guide to Calculating Amazon fees)
Managing excess and unsellable inventory can be a challenge for even the most seasoned Amazon sellers. By understanding the causes of excess and unsellable inventory, implementing strategies such as regular inventory checks, and adjusting FBA removal settings, you can effectively manage and minimize excess and unsellable inventory. This will help you avoid potential penalties and fees, and improve your overall performance on Amazon while ensuring that no unnecessary assets build up over time.