With the 4th quarter of the year upon us, Amazon increases their FBA storage fees as shown in the table below:
| Storage month | Standard size | Oversize |
| January – September | $0.69 per cubic foot | $0.48 per cubic foot |
| October – December | $2.40 per cubic foot | $1.20 per cubic foot |
Which makes now a good time to talk about disposing of inventory that isn’t selling. I’ll break this down into three parts:
- First, I’ll explain how buying a non-selling product can happen;
- then, I’ll walk through the actual disposal process;
- and finally, I’ll offer the best piece of advice to avoid choosing a product that won’t sell in the first place
As you grow your Amazon FBA business, and increase the number of products you sell, you’ll eventually run into the problem of stocking a product that doesn’t sell.
I find this happens to me when I research a product, see an enticing best-seller ranking, (say 50,000 in Home & Kitchen), and decide to purchase a bunch of units. I receive the product, send it into Amazon, and wait.
I check back in a few days and, unfortunately, the ranking now shows as, say, 375,000. Not good. The product that looked like a winner now looks like a loser.
Usually when this happens, it pays to be patient. I’ll check back in another week and find the rank has moved lower again, units of the product have sold, and all is well with the world.
However, in some cases, the rank doesn’t ever recover. Weeks turn into months without any sales. From a business perspective, that means I have inventory in Amazon’s warehouse costing me money (due to storage fees) rather than making me money (no sales happening).
Now I have to decide what to do with this non-performing inventory, and my options are limited.
Lowering the price usually doesn’t work, because over the years I’ve gotten good at setting prices that are fair and competitive compared to my competition. Also, as a general rule, a popular product will usually sell some units even if the price is set too high.
I could try advertising the product, but that usually won’t work for me either. Since I typically sell wholesale products available for anyone to buy for resale, if I pay to advertise the product, it means my competition gets their product advertised for free. I’m here to beat my competition, not help them out.
The only thing left to do: inventory disposal! It never feels good to have to do this, because it means you’re throwing money away. However, if you don’t dispose of the inventory, it’s going to cost you even more because of storage fees. Since we’re in the 4th quarter of the year and Amazon charges much more for storage, it’s even more important to get rid of inventory that isn’t selling.
Now I’ll show you how to create a removal order so you can do this for yourself.
Creating an Amazon FBA Removal Order
To start creating a removal order, starting in the “Manage Inventory” page in your Amazon Seller Central account, you’ll see every product has this button located on the far-right of the screen:
Click the drop-down arrow and choose “Create removal order”:
The next screen shows the “Method of Removal”, choose the button next to “Dispose”:
Then, in the lower-right of the same screen, make sure to enter the number of units you want to dispose of, usually all of them. In the example below, it would be 76:
Click the yellow “Continue” button and you are taken to the summary screen showing the product to be disposed of along with the quantity you chose. Click the yellow button “Place Order” to complete the disposal process:
The next screen will tell you you’ve successfully submitted a disposal order for the product.
You’ve now thrown away perfectly good inventory you paid money for…so how do we prevent this from happening again in the future?!?
The best way to prevent buying non-performing inventory is to be more careful with your research. Specifically, whether you use software to research Best-Seller rank like I do (I use AMZAnalyzer and Keepa) or do it manually, you need to purchase product that has a proven history of selling well.
Best-seller ranks are dynamic, changing multiple times per day. If you are manually researching hundreds or thousands of products at a time, it’s possible your research coincides with the only purchase of a particular product made that week, month, or maybe even ever! So if you go back and check the rank a second time, you’ll have another data-point to inform you decision to buy the product or not.
Speaking from my experiences, oftentimes I will research a product and make a note to buy X number of units, only to go back a few days later to check the rank again and discover it has deteriorated to a point where it no longer makes sense to purchase.
Fortunately, this can also work the other way, meaning the product’s rank could have improved, so you can feel pretty confident you have a winner on your hands!
This is where using a tool like Keepa really makes sense, since it can help you avoid buying products that won’t sell by showing you an item’s Best-Seller rank history over time. I know not everyone has the money to pay for a tool like Keepa, especially if you’re just starting your Amazon FBA business, so the method I describe above will work for you until you can justify the expense for Keepa.
My key message is that while inventory disposal is sometimes necessary, it can often be avoided with thorough, patient research up-front.
Want to know how to get reimbursed for shipment inventory that Amazon loses? See this post.
Curious to learn more about the evolution of my FBA business, complete with a yearly breakdown of my selling stats? Click here.
Want to know if you have all the right tools to sell on Amazon? See my full list of must-have tools here.