Exceed inventory refers to products that are unlikely to move off the shelves due to low demand, outdated or insufficient supply. The longer inventory is kept, the more expensive it can be. FBA sellers will have to pay more Amazon storage fees, which can reduce their cash flow and impact their profit margin.
What is excess stock?
- Forecasting Low Demand
Inaccurate forecasts of demand can cause inventory problems. This is usually due to poor demand forecasting methods such as using complex spreadsheets or not using demand forecasting software. - Ignoring seasonality
You should also not ignore seasonal changes in demand. This can lead to products that are too expensive or sell too slow. To increase forecast accuracy and ensure proper inventory control, you must identify whether the product is a seasonal product. - Lack of strong competitor analysis
To avoid stocking up, strong demand forecasts should also take into account the human factor. If there is competition in your market, the demand will drop. This can cause excess stock to be created. - Product lifecycle
A product’s life cycle refers to the time it takes for a product to go from being introduced onto the market until it is either removed or declines from the market. It includes the four stages of growth, maturity, decline, and introduction. As a product becomes more popular, its demand will also change. Therefore, sellers must know the lifecycle stage of every inventory item that they manage so that replenishment adjustments can be made accordingly. - Make bad purchase decisions
Sellers will often negotiate bulk buying deals with suppliers. However, it can lead to overstocked products in their warehouse that don’t reflect the demand.
The disadvantages of excess inventory
Although excess inventory can be a boon for customers, it can also help you meet or beat your competitors. However, excess inventory can have negative effects on your cash flow and slow down your business’ cash flow. Understand how to remove inventory from amazon fba to store it in more space which will result in higher storage costs.
Amazon charges FBA sellers to store their inventory in fulfillment centers based on the daily volume (measured as cubic feet) of inventory that is occupied in fulfillment centres.
FBA storage fees can be divided into two categories: long-term and monthly.
Monthly inventory storage charges
Amazon monthly inventory storage fees are usually charged between the 7th to 15th of each month. Your January inventory storage will be displayed in the February Payment reports. This applies to transactions between February 7-15. If your account has insufficient funds to cover the payment, the money is automatically taken from your account balance. The product size and year determine the fees. It doesn’t matter if the products are hazardous goods.
Long-term inventory storage fees
Long-term storage fees apply to units that are kept in Amazon fulfillment centers for longer than 365 days. These fees are in addition to the $6.90 per cubic feet inventory storage fee or $0.15 per unit. Between the 18th-22nd of each month, fees are assessed. Amazon conducts an inventory clean-up on the 15th each month. Amazon will pay you no fees if you remove any older inventory prior to the next inventory cleanup date.
You should make preparations for stock maintenance before you start selling holiday merchandise. To avoid Amazon’s long term storage fees, you must make sure that your inventory is in good condition.
Tips to Manage Excess Amazon Inventory
These tips, in addition to Amazon’s inventory management tool are able to help you avoid long-term storage fees from FBA for excess inventory.
1. Reduce your prices
Lowering your price is the best way to get rid of old inventory. To lower the initial high price, you can work slowly and gradually. To attract customers’ attention, you can also offer a promotion. You might offer discounts of up to 30% and as high as 80%. Although this may seem excessive, these products must be sold.
2. Resell your product
Your products may not be selling because they are not good. To regain customer interest, you can revise your product marketing strategies. You can take new product pictures, update your keywords, and revise the product titles, descriptions, and descriptions for slow-moving inventory.
3. Make a bundle
Combine excess stock with other popular products and offer a discounted combination. This will increase your overall profit and help you get rid of slow-moving products. The product bundle usually contains items that complement each other. A camera and a bag are complementary enough to make it worthwhile to purchase the bundle.
4. Advertise it
The product doesn’t have enough visibility could be one reason for excess inventory. Although Amazon is fiercely competitive, advertising can be a great way to make your product stand out from the rest.
To increase sales of excess inventory, you can combine several tactics. To increase sales, you can run a promotion or create a bundle of inventory.
5. Sell on another market
Your product may not be selling well on Amazon, but that doesn’t mean it won’t make sales on other marketplaces. You could sell excess inventory on eBay, Etsy and Etsy or deal sites such as Slickdeals, Groupon and others. You can expand your reach and possibly make more sales by selling on multiple platforms.
Read More : Find Products to Sell on Amazon :Sellers Guide
