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  • Writer's pictureBrian Cummings

How to Liquidate Inventory on Amazon (Amazon Inventory Liquidation Guide 2024)

Updated: Apr 8

Are you a seller with excess or unsold products on Amazon? If so, it may be time to consider liquidating your inventory.

You're likely aware that having excess inventory can create challenges. Not only does it occupy valuable space, but it also results in extra storage fees, immobilizes your funds, negatively impacts your IPI score, and hampers both your growth and profit margins. For these reasons, it can be a wise decision to swiftly liquidate unsold items if you're an Amazon seller.

In this article, we will explore why you may need to liquidate your inventory, how to do it quickly, and the benefits of doing so. Whether you overestimated demand or are pursuing different business ventures, we will provide you with strategies to minimize losses and make the most of this process.

So, if you're ready to tackle your excess inventory and improve your business, keep reading to learn how to liquidate your Amazon inventory effectively.

Did you know there are over 260 fulfillment centers in the US? Read here to find Amazon fulfillment centers located near you.

Why Do You Need to Liquidate Your Amazon Inventory?

If you find yourself with excess inventory on Amazon, it's important to consider liquidating your inventory to avoid extra storage fees.

Liquidating your inventory can also improve your cash flow by freeing up capital that's tied up in unsold products.

Additionally, liquidation allows you to test new products and increase your sales velocity by quickly moving slow-moving inventory.

Avoiding extra storage fees

Every year on February 15 and August 15, Amazon FBA conducts a warehouse clean-up. During these times, any inventory that has stayed in Amazon's fulfillment centers for over six months is subject to long-term storage fees.

These semi-annual long-term storage fees are separate from and in addition to the regular monthly storage fees. What's the takeaway for sellers? There's a financial incentive to move your inventory as quickly as possible, ideally within six months, to not only generate sales and income but also to avoid these extra charges.

Improved cash flow

One of the major advantages of cutting down on inventory is enhanced cash flow.

Excessive inventory occupies both physical space and financial resources that could be allocated to other vital aspects of your business. Minimizing inventory levels liberates crucial working capital, which can then be channeled into areas such as R&D, promotional initiatives, or scaling efforts. A healthier cash flow equips your business with the agility to capitalize on emerging opportunities.

In addition, optimizing your inventory can reduce the likelihood of running out of stock. A more streamlined inventory allows for more accurate demand forecasting, enabling you to maintain sufficient stock to meet customer requirements without the burden of overstock. This diminishes the risk of missed sales and the extra costs incurred for emergency orders or expedited delivery.

Testing new products

Testing new products allows you to explore different market opportunities and potentially find new profitable niches. It's a great way to diversify your inventory and attract new customers.

By testing various products, you can gather valuable data on customer demand and preferences. This information can help you make informed decisions about which products to focus on and which ones to liquidate.

Testing new products is an essential strategy for staying competitive and maximizing your revenue on Amazon.

Increased sales velocity

Boost your sales velocity and experience a surge of success by increasing the speed at which your products fly off the shelves.

One effective way to achieve this is by running flash sales and Lightning Deals. These limited-time promotions create a sense of urgency among customers and encourage them to make a purchase quickly.

By offering attractive discounts and promoting these deals through targeted marketing campaigns, you can significantly increase your sales velocity and move your slow-moving products faster.

How to Liquidate Amazon Inventory Quickly

If you want to liquidate your Amazon inventory quickly, you should consider an inventory-minded marketing approach to optimize sales and prevent excess inventory.

Additionally, you can explore using a liquidations program or create a removal order on Amazon to sell your excess inventory on other channels or remove it from Amazon's warehouses.

Also, here are the steps to speed up Amazon FBA check-in times in 2024.

Inventory-minded marketing approach

As Chelsea Cohen of SoStocked has pointed out, the concept of Inventory-Minded Marketing is crucial for business scaling. This approach marries inventory management and marketing, focusing on how each aspect affects the other. Inventory has a substantial impact on cash flow, influencing costs tied to running out of stock.

The brilliance of Inventory-Minded Marketing also lies in its focus on the financial drawbacks of overstocking. The approach takes a comprehensive view of the issue, considering both stockouts and overstocks as detrimental to cash flow, profit recovery, and effective capital utilization. When your money is tied up in unsold goods sitting on a shelf, that capital is essentially being wasted. It's time to reframe inventory as a valuable asset rather than just merchandise gathering dust.

Think of inventory like real estate—it can either generate profit or incur losses. Excess stock acts as financial deadweight by draining resources, locking up capital, and incurring storage fees.

Generally, 20% of your products are responsible for 80% of your revenue. However, businesses frequently focus solely on these top-performing items, neglecting the other 80% of products that aren't as profitable. Instead, start viewing that 80% as a resource, not as a collection of underperforming items. Procrastination in managing these products only heightens the cost.

So how can you convert idle inventory into a financial asset? One strategy is to reduce the price and ramp up your Pay-Per-Click (PPC) advertising to accelerate sales. This can also help improve the product's ranking, generate more reviews, boost cash flow, and reclaim tied-up capital.

By shifting your perspective, what you initially saw as a "dud" product could transform into one of your best sellers. If the strategy fails to improve sales, at least you've taken proactive steps to liquidate the stock, regained some capital, and can move forward with other opportunities.

Running a flash sale

Flash sales are temporary discounts applied to select products or an entire online store, lasting anywhere from a few hours to up to three days. This approach to sales and marketing has gained considerable traction in recent years, as it tends to capture the attention of online consumers, boosts social media engagement, and increases click-through rates in email and advertising campaigns.

The potency of flash sales lies in a simple psychological concept: the sense of urgency created by scarcity prompts action. Knowing that an attractive discount is available for only a limited time encourages shoppers to make quick decisions, bypassing the typical comparison shopping that usually characterizes online buying. It’s a great way to relieve yourself of excess inventory.

Joining the Amazon Outlet program

Discover the incredible opportunity of joining the Amazon Outlet program and watch as your products gain exposure and fly off the shelves!

By participating in this program, you can offer discounted products in new condition and original packaging. This not only attracts customers looking for a deal but also helps you sell slow-moving inventory quickly.

Take advantage of this platform and maximize your chances of liquidating excess inventory while increasing your sales.

Using a liquidations program

Make the most of your excess stock and watch your business thrive by exploring the benefits of participating in a liquidations program.

By joining a liquidations program like Back-Track or Returns Worldwide, you can recover profits by selling your inventory on other channels.

While these programs may require higher removal order fees compared to Amazon's FBA Liquidation program, they offer a revenue share financial model, allowing you to receive 50% of net sale profits each month.

Creating a removal order on Amazon

Take control of your excess stock and reclaim your profits by initiating a removal order on the e-commerce platform. With a removal order, you can efficiently liquidate your inventory and free up valuable warehouse space.

Simply go to the inventory planning page or the Recommended Removal report, create the liquidation order, and add the items you want to liquidate. Review and confirm the order, and Amazon will handle the rest, returning the items to your inventory if the order is canceled.

Effective Liquidation Leads to Successful Inventory Management

In conclusion, if you find yourself in a situation where you need to liquidate your Amazon inventory, there are several strategies you can employ to do so quickly and minimize losses.

Lowering prices, using PPC advertising, creating scarcity, hosting giveaways, and utilizing influencers can all help attract buyers and increase sales.

Additionally, bundling with popular items, selling on deal sites, and improving return policies can also be effective tactics.

Ultimately, liquidating excess inventory is a smart move to free up space and improve cash flow for your business.

Curious about the Amazon FBA Capacity Limits? Our updated guide 2024 has it outlined for you.

Ready to take the first step toward seamless ecommerce operations? Connect with us asap.

Frequently Asked Questions

1. Are there any alternatives to liquidating Amazon inventory?

Yes, there are alternatives to liquidating Amazon inventory. Instead of liquidation, you can try fixing your business, selling to someone else, or exploring options like giveaway campaigns, selling on deal sites, or donating to charity.

2. What factors should be considered before deciding to liquidate inventory?

Before deciding to liquidate inventory, consider factors like product quality, timing, social proof, SEO optimization, and pricing. Evaluate if other tactics can sell slow-moving products and if liquidation is the best option for your business.

3. How does the Amazon FBA Liquidation program work?

The Amazon FBA Liquidation program allows you to sell your excess inventory to liquidators at a discounted price. Amazon deducts fees, and you can recover 5-10% of the average selling price within 60-90 days.

4. Can liquidating excess inventory help improve my Amazon IPI score?

Yes, liquidating excess inventory can help improve your Amazon IPI score. By reducing your inventory levels, you can improve your IPI score and avoid storage fees, leading to better cash flow and a healthier bottom line.

5. Are there any financing options available for sellers looking to liquidate their inventory?

Yes, there are financing options available for sellers looking to liquidate their inventory on Amazon. Banks, alternative financing companies, and providers like Payability offer inventory loans and lines of credit to help sellers with funding.

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