This post is by Chris Dunne, Product Marketing Manager at eDesk.
If you are an Amazon seller, it’s likely you will need to liquidate excess inventory at some point. Clearing stock is a normal aspect of running a business, but it can appear daunting and may feel like a sign of failure.
Excess stock tied up in capital impedes cash flow, can take up valuable storage space and affects your bottom line. It also prevents you from reinvesting in your business. The longer your excess stock hangs around, the further it depletes your resources.
If this is the case within your business right now, or you ever have a slow-moving product that starts to cause you problems, you should be aware of the options available to you should you need to liquidate your stock.
When do you need to liquidate your inventory?
First, let’s look at the two main issues that may cause you to try and liquidate your excess Amazon inventory.
1. Dead inventory: you’ve got a dud product
Dead inventory, to put it simply, is a product that just does not sell. This can happen from the moment you start selling the product, due to poor research or other factors. Or it could be a product that was once popular, but its sales have now waned.
You may be surprised to learn that most products have a limited lifecycle, so this is not unusual. Either way, dead stock can be a drain on your resources. The longer you keep hold of that stock, the bigger the loss. In this case, you should choose to liquidate as soon as you can.
2. Costly inventory: long-term fees payable
Your product may be held in one of Amazon’s warehouses as part of its FBA program. FBA is fantastic when sales are consistent but, if sales slow down, the Amazon warehouse simply becomes a storage facility rather than a distribution center. Amazon only wants to store products that sell, and will impose additional storage fees if your items aren’t moving.
If this happens, you should recall your inventory to avoid storage fees. Once you have the stock back in your own hands, consider the best way for you to dispose of it.
The benefits of liquidating inventory at the right time
You might think that there is no “right time” to liquidate inventory. But actually, the best case scenario is to make a positive decision to shift the excess stock at a time that works for you.
In the case of FBA inventory, the first obvious benefit is the immediate removal of costly and unnecessary extra storage fees. There are other benefits too. Making the decision releases you from the stress and panic you might feel about having stock that’s going nowhere. It allows you to concentrate on your other current products, or throw yourself into researching new products.
What to consider before liquidating your excess inventory
So, you have excess Amazon inventory and it’s no good to “man nor beast” gathering dust in a warehouse. But does this mean that you must liquidate the stock through other channels? Well, not necessarily!
Liquidating your stock should really be a final resort once you have tried a number of other tactics. For example, you should consider these points:
- Is your stock not selling due to the product itself, or is it down to other factors such as the time of year? If your product is seasonal and the season has passed, then of course you’ll see a drop in sales! So, make the decision to store for next season or to liquidate.
- Is your Amazon selling account in good standing? If you have received some negative reviews then this is likely to have an impact on sales. If your account is in poor health or does not have any reviews at all, take steps to fix this and you may see a rise in sales of your product.
- Are you listing your product in the correct category and with the best keywords? If your product cannot be found then it won’t sell. It’s vital you choose the most suitable category and subcategory and optimize your product listings.
- How competitive is your pricing? Is your product able to compete against other similar products on the market? You could be pricing your product out of the market, in which case you should consider using a repricer to ensure your product remains competitive at all times.
If you’ve checked all these scenarios and you’re sure that you want to get rid of it as quickly as possible, then there are plenty of ways you can liquidate.
10 ways to liquidate excess Amazon inventory
1. Lower your prices
This is the most obvious way to liquidate your stock, and potentially the fastest way. You might choose to gradually reduce your price, or you may offer a deal that consumers can’t resist!
Either way, a sale is a traditional method of reducing excess stock levels. Options available are to offer a percentage or fixed amount off, for example 50% or $10. Alternatively, you could offer Buy One Get One Free (BOGOF) or you could simply sell the excess products in packs of two, three or four – whatever suits your needs depending on how fast you wish to sell the stock.
Bulk sales work well with products that consumers don’t mind stocking up on such as beauty products, clothes and accessories and popular food or drink items.
2. Increase your advertising spend
Maybe your stock isn’t selling simply because there are not enough people who are aware of it. If this is the case you can increase your PPC advertising bids to push the product.
Whilst this is initially going to involve spending money, it can ultimately help to kick start sales, particularly if you combine this strategy with a sale promotion or similar. Just set a budget and stick to it, so you aren’t adding to your losses unnecessarily.
3. Create a bundle
Combining an unpopular product with a best-selling product is an ingenious method of liquidating excess Amazon inventory efficiently.
By bundling items together, you can increase your overall price and at the same time offer a unique bundle to your customers. If you use this strategy, it’s important that your bundled products are complementary to each other so they appeal to consumers.
4. List your excess Amazon inventory on deal sites
Just because your product isn’t selling well on Amazon, that doesn’t mean it won’t achieve sales on an alternative platform.
There’s plenty to choose from: eBay, Etsy, Walmart and Craigslist are just a few – even Facebook Marketplace, Shopify and Wish.com. This way you can still potentially make some profit. Perhaps you simply chose the wrong platform at first?
Before you can sell through other channels, you will need to remove your stock from Amazon. This does come at a cost but you will save on storage fees.
5. Sell your excess stock to competitors
Yes, this is one of those crazy ideas that sometimes slips under the radar but it could pay off!
This strategy will depend on your product and whether it’s your own brand, someone else’s brand, or unbranded. The more generic your product is, the better the chance you have of offloading it to a competitor. Let’s be honest, they are hardly likely to want stock with your branding on it.
You’ll need to make sure you hone your negotiating skills for this one as the aim is to try and achieve as close to your original cost price as you can, to minimize any losses.
6. Sell your excess stock to a liquidator
This is perhaps the easiest way to liquidate your stock. Simply sell everything to a liquidator.
Liquidation firms can easily sell your excess stock – it’s what they do all day, every day. However, you probably won’t get the best price for your stock this way and you have absolutely no control over what happens to your products once they are in the hands of the liquidator.
Unfortunately, Amazon has now discontinued its own liquidation service, so if you want to sell to a liquidator you will need to work with a third party.
7. Donate to charity
Here’s an alternative that won’t make you any money back, but it will give you a warm fuzzy feeling inside and of course will benefit those less fortunate. Simply donate your stock to charity.
This won’t work for all products but items for the home could be donated to nursing homes, hospitals, institutions and such like. Gardening products could be donated to schools or clubs. Camping items could be donated to Scouts, and you could donate clothing or accessories to thrift stores. There will always be someone or someplace in need that will appreciate your generosity.
8. Return or exchange your excess inventory
Depending on how long you have held the stock, and what kind of relationship you have with your supplier, there may be an option to return or exchange your products. The products will of course need to be in their original packaging and undamaged.
Some suppliers are prepared to “swap” products if they are not selling. After all, if your products are not moving then you won’t want to re-order from your supplier. It’s in your supplier’s interest to exchange them for products that will sell, so you return for more in the future.
9. Offer your excess stock as a free gift
This option is best implemented with small, inexpensive items! Offering a free gift as an incentive if a customer spends a certain amount of money might be just what you need to convert the sale. Who can resist a freebie?
10. Destroy your inventory
Finally, if every one of the options above fails, or you feel it simply isn’t worth the effort, the only route left is to ask Amazon to destroy your stock. This might sound radical, but there is little point in having stock returned to you and then destroying it yourself, particularly if there is a large quantity involved. You will pay to remove the stock, and pay again to have it destroyed, so you might as well let Amazon do it for you.
You’ll need to make a disposal request and pay a fee, but by destroying the stock you remain in control and others won’t be able to devalue your brand as can happen when stock is sold through liquidators.
Amazon inventory management best practices
Managing your Amazon inventory so that you don’t get to the point of having too much (or too little stock) is crucial. Without good inventory management you cannot manage your cash flow effectively, and if you pick the wrong product you’ll see all your capital tied up in slow-moving stock.
So, to avoid having too little or too much inventory, make sure you know the answers to these questions:
- What is your reorder point and lead time? You should always be aware of the minimum level of stock you are comfortable reaching before you reorder. You also need to know the number of days it takes from placing an order to the product being available on Amazon, and factor that into your planning.
- What is your stock buffer? Decide on the number of extra units you want to have in stock in case of a sudden sales surge. Too many can easily turn into excess stock!
- How fast does your stock sell? You should know how many units you sell per month and the typical seasonal pattern of sales for your product.
- What are your current stock levels? Seller Central shows you how much stock you have left, so make sure you check it regularly.
By keeping on top of these basic facts and figures you should always be able to manage your inventory accurately, and lower your risk of experiencing excess stock.
Whether you have unsold inventory from a seasonal offer, or a best seller that has fizzled out, one of the ten options covered here can help you capitalize on your excess Amazon stock.
Long term though, inventory management is key.
This post was by Chris Dunne, Product Marketing Manager at eDesk. eDesk gathers customer interactions from websites, marketplaces and social channels into a simple dashboard for customer support teams.
Leave a Reply