Sometimes as an Amazon seller, even your best laid plans go awry. A pandemic, recession or even just a drop in demand can leave you with lots of unsold goods. While it’s a good practice to replenish inventory ahead of peak season and anticipate delays, occasionally you’re left with overstock inventory that can become costly. Overstock inventory incurs storage fees, lowers your IPI score and takes away from capital you could be using elsewhere. Here we discuss how to liquidate your inventory effectively in order to recoup losses.
Steps To Take Before Liquidating
Generally speaking, liquidation should be a last resort. Naturally, you won’t be able to recover all the capital you devoted to overstock inventory—so you’ll want to make sure you’ve eliminated factors that could have caused the problem in the first place. If you can turn things around in time, you might not have to liquidate as much inventory as you thought.
The main factors that contribute to overstock inventory are
- A Lack of Competitive Pricing
Unfortunately for Amazon sellers, there are always competitors who will try to outbid you for a sale. If you’re not keeping an eye on the competition, they might start to offer a lower price, better reviews or simply a more professional-looking listing. Your sales could dip and cause overstock inventory, and all the while you could have avoided the problem in the first place. Before liquidating, make sure to check on your competitors’ listings to see if there’s anything you could be doing differently to recover.
- Defective Products
Every now and then, one of your products will turn out to be defective. The only way you’ll know about it, of course, is if you keep watch over your reviews. Customers will be sure to let you know when they’re not satisfied! While bad reviews will turn other potential customers off from buying your products, they do serve a purpose: they’ll let you know when your products are defective. Before liquidating, take a peek at your reviews to see if there’s anything wrong with the products themselves.
How to Liquidate
If you’re absolutely sure liquidation is the only option, make sure to coordinate your liquidation effort with your various teams. SellerMobile’s High Inventory/ Liquidation Report allows you to get regular updates of products that require liquidation. If you’re going to recoup losses effectively, you’ll need to make sure everyone’s on the same page.
- Join the Amazon Outlet Program
Amazon’s Outlet program helps sellers offer products at a discount. Customers receive a fixed-rate discount, regardless of quantity purchased. You’ll have to be a Professional Seller, however, and your products need to be in their original packaging, unopened and in “New” condition. After joining the program, you’ll create a listing on the Outlet marketplace. The program then promotes your products according to demand and star rating.
- Offer Lightning Deals
One way to liquidate overstock inventory is using Amazon’s Lightning Deals feature. This is essentially a flash sale, and can help improve the sell-through rate of underperforming products. It’s the first thing to consider before giving up on a product completely, as you stand to recoup the most losses. With Amazon’s Lightning Deals, you’ll be giving substantial discounts for a limited time.
Amazon’s Lightning Deals only last for 12 hours, assuming you don’t sell out your stock before then. The best part of the Lightning Deals is that your products will be featured on the Amazon homepage and promoted through emails and social media. It’s a great way to boost visibility for products you need to get rid of—the catch is that they need to be in “New” condition. If your products are “Like-New,” you’ll have to use Amazon’s FBA Liquidations program.
- Use Amazon’s FBA Liquidations Program
Assuming you can’t offer a Lightning Deal, your next best bet is Amazon’s FBA Liquidations program. It’s Amazon’s in-house liquidation option, where you sell overstock inventory to liquidators like Bstock. The FBA Liquidations program is certainly the fastest and easiest way to get rid of products, though you’ll have to pay the 15% referral fee as well as a per-item processing fee that depends on weight and size. Roughly one month after you place your liquidation order, Amazon will send the net recovery value to your Seller Account. Generally speaking, you stand to make 5 to 10% of the products’ selling price.
- Place a Removal Order
Of course, you can use other liquidations programs like Returns Worldwide or Backtrack. You’ll have to pay a fee to remove your inventory from FBA, however, and the fee is usually twice what it would cost to simply use Amazon’s Liquidations program. Once your products are removed, you can offload them on eBay, Etsy and the like.
You can place a removal order from your inventory planning page. Select the ASINs you want to liquidate, then create a removal order from the “Action on selected” menu. Removal orders are best for sellers whose sales don’t cover their storage costs, though it’s worth noting that these orders won’t count toward your sales velocity. This should be a last resort when the other options aren’t viable.
While liquidating your products can seem like a headache at first, there are plenty of options for getting rid of overstock inventory and avoiding hefty storage fees. Many sellers choose to further avoid a hassle by using automated third-party systems.SellerMobile’s High Inventory/ Liquidation Report allows you to get regular updates of products that require liquidation. Use this and other account and product level alerts to stay on top of your business operations.
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