Amazon sellers have to pay the FBA inventory fees to store the products in the Amazon warehouse. Sometimes these fees reach an unbearable level that it’s hard to make a profit. Then if a seller has to pay fees for items that are jammed in the warehouse, it’s just killing your margin. If you wanna return them to your warehouse, you have to pay the shipping fees. Even if you want to totally destroy them, you have to pay fees to destroy them! Don’t fret, because there’s a solution to turn this loss into gain. Today, we’re going to delve into the Amazon Liquidation Program and explore strategies to liquidate your excess inventory effectively.
Understanding the Issue
Amazon’s customer-friendly return policy, offering a whopping 72 reasons for returns, means a substantial 25% of products end up back in the inventory. Additionally, sluggish sales can also lead to inventory stagnation, resulting in financial loss due to storage fees and return charges.
When to Decide for Liquidation
When managing your inventory in Amazon’s FBA warehouse, it’s essential to understand how Amazon evaluates your stock and sales velocity. Let’s break it down.
Sales Velocity and Inventory Ratio
Suppose you have 1,000 units in stock, and your daily sales average around 30 units. Amazon’s algorithm will analyze your sales ratio against your inventory ratio. If it determines that your sales velocity aligns with your stock level, it will indicate zero estimated excess units.
Managing Inventory
However, if your daily sales are lower, such as 10 units per day, indicating a potential excess of inventory, Amazon’s system will flag the surplus. For example, if you aim to maintain a three-month supply and you calculate you need 900 units, but you have 2,000 units on hand, Amazon will identify the additional 1,100 units as excess inventory.
The Liquidation Programs
Enter the Liquidation Program, a lifeline for sellers facing inventory woes. But how does it work?
Method 1: Leveraging Amazon Outlet
The simplest method involves utilizing Amazon Outlet, offering discounts of up to 50% on overstocked items. By enrolling your products in this program, you can swiftly clear out excess inventory while recouping a significant portion of your investment.
How to Enroll Your Product in Amazon Outlet: Step-by-Step Guide
1. Navigate to Amazon Seller Central and access your FBA inventory.
2. Identify excess inventory through the “Estimated excess units” column.
3. Select the product you wish to liquidate and opt for the Amazon Outlet deal.
Method 2: Harnessing the Power of Influencer Marketing
For a more targeted approach, consider leveraging social media influencers to promote your products. Here’s how:
1. Identify relevant hashtags related to your product on Instagram.
2. Scout for influencers with engaged audiences in your niche.
3. Negotiate a deal wherein the influencer creates content showcasing your product in exchange for a nominal fee and a free sample.
4. Witness a surge in sales as the influencer’s followers flock to purchase your endorsed product.
Conclusion
By implementing these innovative strategies, you can bid farewell to excess inventory woes and transform potential losses into profitable opportunities. Remember, proactive liquidation is the key to sustaining a thriving Amazon FBA business.
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