When to remove inventory from Amazon’s Fulfilment Centers
Returns are a natural part of selling on Amazon and as a result, you will have to determine if/when you create Amazon removals or dispose of your inventory. In this post, we cover the options and provide some best practices for when you should remove your inventory or dispose of it.
When Amazon accepts returns from your customer, they determine whether your inventory gets returned as sellable or unfulfillable at FBA. The items that get marked unfulfillable will need to either be removed or destroyed. For high-value items, removing products to a 3PL or your own space is probably a better option than destroying them. We often find that a good share of the items is new in the package and for whatever reason have been classified as unfulfillable so by removing them from the inventory, you can inspect the products and sort them.
Quality control issues
Quality control issues usually arise when freight is not inspected before being sent to Amazon’s Fulfilment Center. A lot can happen to your inventory on the long journey from your supplier to FBA. Unfortunately, you won’t find out that there are quality issues until the product has already reached your customer and negative reviews start showing on your product listing. The true damage of quality control issues are not the negative reviews but rather, clearing your inventory from Amazon. Amazon can’t only remove the goods from your most recent shipment that might be damaged, you will need to remove all of the inventory. This removal process can be devastating if your launch is in the early stages or if your product is still young and isn’t able to absorb the negative reviews. It can also tank your sales velocity, hurt your listing rank and it will feel like you have to start from scratch.
Inventory is the lifeblood of any retail business. If you have too little inventory you are stunting your growth and if you have too much inventory you run into issues with cash flow, unnecessary Amazon storage fees, and potentially hurting your IPI score. If you invest too much cash on existing inventory, you might also lose opportunities for new products because your cash is tied up. Finding the right balance isn’t always easy but people often realize that they have way too much inventory at FBA and it is hurting their bottom line. This is where having a staging warehouse can be a great tool to support your business. You can generally find cheaper storage, a team to handle any issues with your inventory as well as trickle your inventory into FBA as needed.
Receiving Issues – incorrect relabeling
We have all heard the horror stories of the inventory that successfully reached FBA, but upon receiving, something went awry and the products got relabeled with the wrong ASIN. It’s the nightmare we all hope will never happen but it does happen. During the busiest season, sellers cannot afford an error like this to occur and the only way to fix it, is again, to remove the inventory and relabel it to go back into Amazon if Amazon is not willing to fix the issue.
Having your listing disabled is the worst nightmare of any Amazon seller. Your listing can be disabled for various reasons including suspending your ASIN. If your ASIN is suspended by Amazon, the goods need to be removed, potentially repackaged, and relisted as an entirely new product. This is rare, but it does happen, and when it does you need the right partners to handle this for you.
The product is a dud.
Believe us, this happens. Like it did with Fidget Spinners. When it does, you don’t want to leave your goods sitting at Amazon and sometimes you just need to know when to cut losses.
Now that you know the reasons why you would need to remove inventory from Amazon’s Fulfilment Centers, here are a few ways you can use to remove your inventory:
You can create a removal order in your Amazon Seller Central Account where you will input which units you want to remove and the location you will send them to your office, 3PL warehouse, or home. Removal orders can take a couple of weeks to be processed and if Amazon is busy, like during Q4, the removal orders seem to be the lowest priority for FBA handling and it can take months to remove. Removals are unfortunately also packed haphazardly and, from our experience, removed goods can arrive from FBA with one unit per box, ten units in another box, and by pallets barely held together with product hanging off the edges. Since removals arrive in such disarray, it is important to have a plan or a team to sort and handle the removal order.
Amazon removals – Paid and Free
Paid removals mean that you will pay a per-unit fee to have Amazon remove and send your inventory to your selected location. Every once in a while, Amazon will offer free removals and these usually occur during a period right before they need additional space, such as during Q3. We are currently in a free removal promotion timeline while FBA prepares for Q4. This is the best time to remove aged, overstocked, and unproductive inventory before standard removal fees apply again. Note: the ASINS you create for free removals will be subject to restocking restrictions based on sales velocity.
Amazon also offers a disposal option to remove your inventory. Beware that Amazon doesn’t throw all your goods into the dumpster but rather, they load them on pallets and sell by the truckload to closeout and second buyers. The cost is the same for disposal as it is for removal orders, but when you dispose of your inventory you don’t need to sift through all of your customer returns and deal with unpacking, and sorting.
Disposal by Donation
– Amazon recently added an additional service to the disposal workflow: donations. When you request disposal of eligible overstock, returned, or other unwanted FBA inventory in US Amazon fulfillment centers, you can choose to donate your unwanted inventory to selected US charities.
What receiving removed inventory looks like
When removing inventory, you need to remember that your goods have been spread out to multiple Amazon FBA distribution centers and are no longer in their master cartons. What happens is that Amazon will start to pull your individual products and box them up in random quantities and slowly start trickling those boxes back to your return destination.
On the receiving end, the boxes received are of random quantities, often containing damaged packaging and are slowly trickled from all over the country, causing the process to be drawn out, very inefficient, costly and, often with missing units.
We had a client who had to remove 2000 units of a product that was missing a component. The process of receiving all parts took 5 weeks. We had to open almost 1500 separate boxes, hold the inventory in a location (not case packed) and once we were certain, we inspected and re-worked those units. It took endless man-hours to receive, catalog, re-work, and repackage the items and thankfully for our client, it was worth it, but that is not always the case due to the high cost of labor involved. We have also received the wrong goods, instead of the goods that a removal order was placed for.
When to remove your goods: deciding to remove your goods can be a tough decision and to ease the decision, here are a few questions to ask yourself to clarify if it’s the right move.
Is it necessary to remove the goods? If you have enough reviews, can you weather the storm and provide excellent customer service to the unlucky customers who received the bad units? If so, it may not be worth it to pull all of your inventory only to find there was a 1%-3% bad quality rate. To test this, place a few test orders yourself and see how many bad units get shipped to you to help make the determination.
If you find that removal is necessary, make sure that you are ok with running out of stock. One good strategy could be to align with a provider to do Merchant Fulfillment on your behalf while you remove your inventory from Amazon. Putting a solid re-ranking strategy in place to rerank the listing is also important. Note: on occasion Amazon will accept a customer return of the old item and return it into your freshly cleansed inventory at FBA and while this does happen, it is usually not many units so no need to worry when it does.
For some of our top sellers, we find regularly scheduled removals necessary. This makes the flow of removals regular and we salvage a high % of units that are new but marked as unfulfillable by Amazon. Like anything tedious and not fun, allowing removals to pile up is not a great way to manage your unfulfillable inventory.
Also, when faced with the question of removing goods, paying for them to be sorted through, and/or disposing of/donating them, think about whether these goods are salvageable. We know that for some sellers there are emotional attachments to products since they are the fruits of our labor, however, we must be prudent in not spending good money on a bad product that might be a dud. If it’s not likely to sell, it might be time to end your relationship with that product and take the loss/donation deduction.
When to destroy or donate your goods: If it doesn’t make financial sense to recall your goods and have them worked over, you’re better off destroying or donating your goods via Amazon. Keep in mind, with this option, Amazon may sell your goods off at an auction and you run the danger of having an arbitrager selling those units back on your listing.