How to remove or dispose of FBA inventory

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Managing inventory is critical to the success of your Fulfillment by Amazon (FBA) business. Over time, you may need to remove or dispose of inventory due to slow-moving products, unsellable returns, or changes in product strategy. Properly removing or disposing of FBA inventory can save you storage fees, maintain account health, and optimize your overall operations. Here’s a detailed guide on how to handle FBA inventory removal or disposal.

1. Reasons for Removing or Disposing of Inventory

Understanding why you might need to remove or dispose of inventory can help you plan and execute these actions effectively. Common reasons include:

  • Excess Inventory: Products that are not selling as expected, leading to increased storage costs.
  • Unsellable Inventory: Damaged or returned items that cannot be resold.
  • Aging Inventory: Inventory approaching Amazon’s long-term storage fee threshold (365 days).
  • Discontinued Products: Items no longer part of your product line.
  • Seasonal Items: Products that are no longer relevant post-season.
  • Policy Changes: Items that no longer meet Amazon’s requirements or are restricted.

2. Inventory Removal Options

Amazon provides sellers with two primary options for dealing with unwanted inventory:

a. Removal Orders

A removal order allows you to have inventory returned to you or sent to another address.

  • When to Use: If the products can be resold, repaired, or liquidated through alternative channels.
  • Process:
    1. Go to Seller Central > Manage Inventory.
    2. Select the products you want to remove.
    3. Click on Action on Selected > Create Removal Order.
    4. Choose the removal method:
      • Return to Address: Specify the address where you want the items sent.
      • Carrier Selection: Amazon chooses the carrier for shipment.
    5. Submit the removal order.
  • Costs: Removal fees vary based on item size and weight.

b. Disposal Orders

A disposal order directs Amazon to destroy the inventory.

  • When to Use: For unsellable items or when removal costs outweigh the value of the product.
  • Process:
    1. Go to Seller Central > Manage Inventory.
    2. Select the items to dispose of.
    3. Click on Action on Selected > Create Removal Order.
    4. Choose the Dispose option and confirm.
  • Costs: Disposal fees apply per unit and depend on the item’s size and weight.

3. Steps to Create a Removal or Disposal Order

Follow these steps to remove or dispose of your FBA inventory:

  1. Log in to Seller Central.
  2. Navigate to Inventory > Manage Inventory.
  3. Locate the items you want to remove or dispose of using the search bar or filters.
  4. Select the products and click on Action on Selected.
  5. Choose Create Removal Order.
  6. Specify:
    • Removal Method: Return or dispose.
    • Quantity: Enter the number of units to be removed or disposed of.
  7. Confirm the details and submit the order.

4. Managing Costs Associated with Removals and Disposal

a. Removal Fees

  • Standard-Size Items: Typically lower fees for small and lightweight products.
  • Oversized Items: Higher fees due to increased handling and shipping costs.

b. Disposal Fees

  • Fees are usually lower than removal fees but depend on item size and weight.
  • Disposal fees are charged per unit, so removing inventory in bulk may save costs.

c. Avoiding Fees

  • Periodically review inventory to take proactive actions before storage fees accumulate.
  • Use Amazon’s FBA Liquidations Program as an alternative to reduce losses (see Section 6).

5. Strategies for Inventory Optimization

To minimize the need for removal or disposal, implement proactive inventory management strategies:

a. Forecasting Demand

  • Use sales trends and historical data to predict inventory needs.
  • Adjust restocking plans to avoid overstocking.

b. Monitoring Inventory Performance

  • Use Amazon’s Inventory Performance Index (IPI) to track and improve inventory health.
  • Address slow-moving and unsellable inventory promptly.

c. Running Promotions

  • Use Amazon’s tools like Lightning Deals or Coupons to clear excess inventory.
  • Offer discounts to attract customers and boost sales velocity.

d. Seasonal Planning

  • Align inventory levels with seasonal demand to prevent overstocking after the season ends.

6. Alternatives to Disposal

Disposing of inventory should be a last resort. Explore alternative methods to recover value from unsold products:

a. FBA Liquidations Program

  • Amazon’s Liquidations Program allows you to sell inventory to liquidators and recover some costs.
  • Benefits:
    • Reduces storage fees.
    • Provides a partial recovery of product costs.
  • Eligibility: Only available for eligible ASINs and marketplaces.

b. Donation

  • Consider donating inventory to charities or non-profit organizations.
  • Benefits:
    • May provide tax deductions.
    • Supports social causes and reduces waste.

c. Reselling Through Other Channels

  • Remove inventory and sell it through alternative marketplaces like eBay or your own website.
  • Package products into bundles to enhance value and attract buyers.

d. Rebranding and Relisting

  • If products are not selling due to listing issues, consider improving the listing or rebranding.

7. Avoiding Common Mistakes

a. Ignoring Aging Inventory

  • Regularly review inventory reports to identify aging stock.
  • Take proactive steps to move inventory before long-term storage fees are applied.

b. Failing to Plan for Removals

  • Plan removals in advance to avoid last-minute decisions that can increase costs.

c. Overlooking Disposal Fees

  • Account for disposal fees in your cost calculations to prevent unexpected expenses.

d. Neglecting Customer Feedback

  • Use customer reviews to identify and fix product issues that lead to returns or slow sales.

8. Tools to Help with Inventory Management

a. Amazon Reports

  • Use the Inventory Health Report and Recommended Removal Report to track inventory status and identify items for removal or disposal.

b. Third-Party Software

  • Tools like RestockPro, InventoryLab, and SellerApp can help forecast demand, track inventory performance, and suggest removal strategies.

c. Automated Removal Settings

  • Enable automated removals in Seller Central for unsellable inventory to streamline the process.

Conclusion

Removing or disposing of FBA inventory is a necessary part of managing an Amazon business. By understanding your options, monitoring inventory health, and taking proactive steps to optimize stock levels, you can minimize costs and maintain a healthy bottom line. Whether you opt for removal, disposal, or alternative solutions like liquidations or donations, the key is to act strategically and consistently to manage inventory efficiently.

Categories: Digital Marketing