As an Amazon seller, effectively managing inventory levels is crucial to strike a balance between avoiding overstocking and preventing stockouts. However, it's not uncommon to encounter the challenge of unsold inventory, especially when market demand fluctuates or market predictions go away.
In this blog, we'll explore the problems that come with unsold inventory and find ways to reduce its impact on your Amazon business. We'll help you understand why keeping old inventory is a problem and show you effective strategies to manage your inventory better. By the end, you'll have the knowledge and tools to handle unsold inventory challenges successfully.
What are unsold inventories?
Unsold inventories refer to products or goods that have yet to be sold within a specific timeframe or sales cycle. These are the items that remain in stock after a certain period, and their continued presence can tie up capital and affect the overall profitability of a business.
Why Pay Attention to Old Inventory
Amazon's Fulfillment Centers are not intended to be long-term storage centers for third-party sellers. Amazon has implemented storage fees to encourage sellers to ship inventory that will sell quickly. If you have a lot of old, unsold inventory, you will pay extra storage fees. These fees include monthly storage fees and long-term storage fees (LTSF) for inventory that has been in the warehouse for more than 180 days. Apart from the fees, unsold inventory also ties up your sourcing money, slowing down the growth of your business.
How to View Unsold Inventory in Seller Central
To effectively manage your unsold inventory, it's essential to have a quick way to view your oldest unsold items. In Seller Central, you can access your Inventory Dashboard and navigate to Inventory > Inventory Planning > FBA Inventory Age. Here, you can find the FBA Inventory Age section, which displays your inventory units sorted by age. Sorting by Inventory Age or Estimated LTSF can help you identify which inventory has been sitting in Amazon's warehouses for a long time.
Is unsold inventory an expense?
Unsold inventory is not considered an expense until it is recognized as a loss due to obsolescence or any other factor. Initially, inventory is recorded as an asset on the balance sheet. It is only when the inventory becomes obsolete or its market value declines significantly that it is written off as an expense, reducing the company's net income.
Strategies for Dealing with Unsold Amazon Inventory
Optimize Your Listing
Enhance your product listing with compelling descriptions, high-quality images, and relevant keywords to improve visibility and attract potential buyers
Explore alternative sales channels
Consider selling your unsold inventory on platforms like eBay or Etsy to reach a different customer base. Research the fees and logistics involved to ensure a smooth transition
Leverage Amazon outlet and Warehouse Deals
Utilize Amazon's Outlet and Warehouse Deals sections to offer discounted prices on your unsold inventory. This can attract bargain-hunting customers and increase your chances of sales
Wholesale to Liquidators
Explore partnerships with liquidation companies or wholesalers who specialize in buying and reselling unsold inventory. This can help you recover some of your investment and free up storage space
Donation and Charitable Initiatives
Consider donating unsold inventory to charitable organizations. This not only supports communities in need but also generates positive public relations for your business.
Reprice Your Inventory
If you still have a good margin on the product and believe it will eventually sell, adjust the price to attract potential buyers. Use repricing software or Seller Central's "Manage Pricing" page for efficient repricing.
Return or Negotiate with Suppliers
If you have a good relationship with your supplier, explore the possibility of returning unsold inventory for a refund or negotiating alternative arrangements.
In conclusion, Amazon sellers often face the challenge of unsold inventory, but there are solutions available to minimize its impact on their business. Evaluating the aforementioned strategies can help determine the most suitable approach for each situation.
One highly effective solution is leveraging XENA Intelligence's Inventory Forecasting service. This specialized feature utilizes a variety of data sources to predict future demand for a seller's products accurately.
By implementing inventory forecasting, sellers can effectively tackle unsold inventory. The accurate predictions enable the optimization of inventory levels and adjustments to purchasing and restocking strategies. This empowers sellers to maintain a healthy inventory management system, leading to improved profitability and long-term success.
If you need further guidance or have any questions regarding inventory management or running a successful Amazon business, feel free to reach out to us. We're here to help you navigate the challenges and maximize the potential of your e-commerce venture.