Amazon allows other brands to sell on their website through a Fulfilled by Amazon system. This is when Amazon holds the goods in stock and ships them to the customer when ordered. It is a great system, but it also means that some of these orders are returned. And this is when Amazon Liquidation can help.
What Is Amazon Liquidation?
Amazon has 2.3 million active sellers across the world. These items include clothing, books, DVDs, games, toys, and more. And some of these orders are sent back to one of their warehouses for one reason or another.
Amazon Liquidation takes these items, places them in bundles, and then sells them off to bidders at a reduced rate of their value.
Items that are included within the Amazon Liquidation can also be overstocked, as items that need to be sold quickly because they are being discontinued or coming to their end of life.
Liquidation can be sold to liquidation values, such as discount stores.
Some of these are sometimes made available to private customers. These items are not entirely known to the buyer. Instead, they are boxed in pallets or surprise boxes and sent to the customer.
What Is FBA Liquidation in 2023?
FBA Liquidations is a program that Amazon has implemented to help sellers use the FBA system to recover value from returned orders from customers. It can also be used to sell overstock items. These items can be boxed into pallets or mystery boxes and sold for a reduced amount to encourage a purchase.
FBA Liquidation can be bought by other businesses, normally discount stores or wholesalers. They can also be bought by individuals from third-party sellers.
The individual customers do not know what is in each box or pallet. The contents are a complete mystery and will only be known when they arrive. Therefore, they have become a good source of content for some YouTubers.
What Are the Benefits of Liquidating Inventory?
There are numerous benefits for the seller to use the FBA Liquidation system. For one, it provides the FBA seller to avoid having to pay storage fees that can accumulate when there is excess stock.
In addition, FBA sellers can dispose of products that are not in demand and are only using up profits from other sales. These are the two most cited reasons for using this system.
However, other benefits can help FBA sellers to make more of their stock and inventory. For example, using the Amazon FBA Liquidation allows you to improve your Inventory Performance Index Score, otherwise known as IPI.
When using the program, the excess inventory is removed, and therefore, you are protecting your IPI score. This score influences your FBA sell-through rate.
A high IPI score can become too low. When it is too low, there can be overage fees and limits on what you can store. There might be other issues, such as being able to send products to fulfillment centers, which can impact high-sale products and high-volume sale periods.
When Do You Need to Liquidate Your Inventory?
There are numerous times when you might want to liquidate your inventory. And each time that you go through the process it might be for a different reason.
Knowing the triggers for requesting an FBA Liquidation can allow you to know the right time to start the process without leaving it too late that you’re incurring excessive costs.
Dead inventory or Dead stock is goods that have remained in storage on sale and have not been purchased by a customer before they’ve been removed from sale. For instance, those selling holiday products but the season is over and the items are still in stock.
Selling dead inventory is an important move because if you have seasonal goods that are unsold after the season, they’re just going to incur storage costs. Selling these at a reduced value is more cost-effective than storing them for the year. Also, stored items will lose value as they can become damaged.
Seasonal goods are a double edge sword. You can either make a huge profit or end up with a massive unsold inventory. To avoid this, get your inventory management in order. Ensure right timing of your shipments and optimize your listings.
There are some products and inventory that are going to cost more than others to store. For example, those which have special storage instructions, big bulky items, or those that weigh a lot. These items probably need to be sold quickly to ensure that the storage costs are not too high.
Other items that might be considered costly inventory are small ticket items that have proportionately high costs. For example, a $1 item might only have a profit value of twenty cents per unit. Therefore, these items need to be sold in quantity and fast before too much of these profits are used up on storage.
Using the FBA Liquidation option allows sellers to sell items before storage costs erode profits.
9 Ways to Liquidate Your Inventory this 2023
FBA Liquidation is probably the last resort when you want to sell stock that is no longer selling or is on a slow sales system. Other options could be more cost-effective and offer better profitability than the FBA Liquidation. Here are nine options that FBA sellers might want to consider first.
Discounts are one of the most used promotional options for brands. They allow a brand to still claim some of the profit while offering customers a good deal. Customers are more likely to purchase if they think they are getting a deal.
Discounts can also be associated with special occasions. For example, Black Friday, Cyber Monday, post-Christmas, Halloween, Valentine’s Day, etc. Use these times carefully to ensure sales are positive for all.
Increasing PPC budgets
Another option is to always improve the PPC budgets that are being used. PPC can be an effective option for bringing in sales because as customers search for a product, like a Christmas Jumper or Valentine’s Card, search results will show your product and customers can click through on them.
There is a balancing act however with PPC budgets. PPC costs can be high. The average PPC Acquisition cost can be as high as $59.18. So you need to ensure that you’re getting more than that in profit for you to make it more effective than using the FBA Liquidation system.
Scarcity marketing is when you portray the limited stock that is available or that you are only running a deal for a limited time. This can be very effective for creating a sense of missing out on customers. Many, especially millennial customers, react to this type of marketing and will make the purchase.
Scarcity marketing can also be an effective way to create mass purchases. Some customers will buy multiples of a product if they think it will be sold out in the future and would like to have a regular stock. Some customers will be willing to pay more for a scarce product.
This type of promotion can be offered in several different ways. For one, you can say there is a limited amount of stock. Or you can state how many people have made a purchase of the product within the past 24 or 48 hours.
Influencers can make a big contribution to sales. They can use their Instagram, Facebook, YouTube, or TikTok account to promote themselves using your product. Once published, this content then pushes their audience, who trust their opinion as to what products to buy and brands to trust.
Influencer marketing can be expensive. Influencers often ask for an upfront fee or a share of the sales they help make. But both can be great options for selling products quickly and effectively.
Create a bundle offer
Bundles are a great way for customers to learn more about lots of different products you sell. They can also be a good option for selling less-sold products with high-volume products. You can offer one of the products at a discount in the bundle or you can offer a product as a gift.
Using bundles on Amazon is a good option because there are ‘frequently bought together’ options. These options can be tailor-made so they are for you and deals can also be added with this feature.
You can create lots of different bundles for your products too, allowing customers to choose which bundle would be best for them.
Sell products on deal sites
Deal sites are those sites that offer products at a discount. Customers can browse lots of different offers on these discounts and can then be taken directly to them. To get more sales you can offer a discount at a significant percentage and limit the number you’re willing to sell at that price.
One example could be offering the first 100 people 40% off the recommended retail price (RRP) and then the next 500 will get 20%. This also creates a sense of urgency and scarcity. Often this tactic helps to improve sales.
Sell to your competitors
It isn’t just customers that you might want to sell too. There are times when you might want to sell to your competitors. Competitors are sometimes interested in buying your stock at a reduced rate because they know that you can’t sell it to customers whereas they can and make a profit.
It also might be cheaper to buy from you because the shipping costs can be reduced.
What for competitors that are constantly out of stock when you have excess stock? Then you can contact them and see if they’re willing to sell to you.
Run a Giveaway
While you’re not making much money on a giveaway immediately, you can run a good campaign that can help you build email lists, social media followers, and more. There are several different giveaways you can run.
Sometimes you can provide some goodwill to the community. If you’ve got products that have an expiry date or would be useful to some charities, you can provide them free-of-charge. There are lots of different charities and programs that can help move stock to a charity cause.
What Fees Are Involved in the FBA Liquidation Program in 2023?
Since June 2021, there have been fees charged for sellers to use FBA liquidation. Sellers will pay these fees when the stock has left the Amazon warehouse to the liquidators. The fees are processing and referral fees and can depend largely on the item that is being sold and its value.
For those that are on the standard side, the cost can be between $0.25 and $0.40 depending on the price.
Oversized items are sold at a higher price. The costs for this can range from $0.60 and $1.90. These are based on a per-item basis.
Some fees are charged based on the value of the discounted items with percentage costs ranging from about 8% to 40%.
The Best Amazon Liquidation Program according to Reddit:
Cvg2 serves as a returns facility where returned items are processed. These items are then sold to third-party companies specializing in item checking and refurbishing. These third-party companies take on the responsibility of refurbishing the items and subsequently list them for sale on platforms like eBay or other similar platforms. Rather than undertaking the refurbishing process internally, Cvg2 opts to sell the returned items in bulk, often on pallets, at a discounted rate to these third-party companies.
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How much do liquidators pay for inventory?
The Wholesale Liquidators will usually make the purchase of the stock for a gross value based on what is known as the constricted rates for 5-10% of the Average Selling Price. And this is what makes Amazon Liquidations valuable for some businesses as you can make some profits for high-value excess stock.
Are FBA Liquidations open for non-US sellers?
FBA Liquidation auctions are available to any FBA seller regardless of where you live. If you have stock to sell on Amazon, you can take advantage. Therefore, sellers can get rid of excess stock before they become a financial burden.
Can you cancel your liquidation order?
Once you’ve made the liquidation order, there is no chance for you to cancel the order. However, you can still use the stock and sell it to customers while the liquidation is pending. As soon as you make the order, the inventory will immediately stop accruing storage fees.
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Amazon Liquidations and FBA Liquidations are excellent ways for excess stock to be sold before it because it is too costly. Sellers can take advantage of the system to ensure they have a profitable journey on Amazon.