Inventory Liquidation

If you just launched a product and you’re using Fulfilled by Amazon (FBA), it is important to know that you have 12 months to sell through your entire inventory. Otherwise, Amazon will return, dispose of or liquidate your inventory depending on the return settings you’ve setup.

If you launch a product in January, for instance, and you still have a lot of inventory by October, use the Fall Prime Day and Black Friday/Cyber Monday sales events to flush your inventory by offering steep discounts or a sale price equivalent to your break-even price to at least recover costs especially if you’re not planning on reordering from your supplier. If it’s taking you a year anyway to sell through your first inventory order, then it’s probably best to discontinue the product and launch a new one or launch the same product with an updated design based on customer feedback.

If you want to avoid liquidation, make smart decisions about how much inventory you should initially order to your supplier.

Nevertheless, whether you choose to have your inventory returned, disposed of or liquidated, there are still corresponding costs that Amazon will charge you.

How many should you order initially?

That depends on a lot of factors: cost per unit, minimum order quantity (MOQ), production lead time, delivery lead time, your budget. Order too little or below MOQ, your supplier will give you a higher cost but you also minimize the risk of having excess inventory in the event that the product is a failure. Ordering a lot to save on product costs might end up costing you more. It’s all about the risks that you are willing to take.