15+ Tips to Effectively Manage Excess Inventory on Amazon

Managing excess inventory is critical for many businesses, but Amazon sellers face unique challenges requiring specialized strategies. Unlike managing inventory for more typical retail, Amazon’s marketplace comes with additional complexities, such as fluctuating demand, stringent performance metrics, and higher storage fees. Fortunately, Amazon offers a range of tools and solutions tailored to help sellers manage excess inventory more effectively.

In this article, you will explore 15+ tips for managing excess inventory on Amazon, most unique to Amazon, including some tried and true methods for managing excess stock:

Implement Dynamic Pricing Strategies

Dynamic pricing is a powerful tool for managing excess inventory on Amazon. By adjusting prices based on real-time market conditions, demand, and inventory levels, Amazon sellers can accelerate sales growth for surplus inventory. This approach involves using automated repricing tools or manually adjusting prices to stay competitive while still maintaining profitability.

When dealing with excess inventory, consider a strategy of gradually lowering prices to stimulate demand without drastically cutting into margins. Monitor the impact of these price changes on sales and adjust your strategy accordingly. Remember that a small reduction in profit per unit is often preferable to incurring additional storage fees or having capital tied up in slow-moving stock.

Utilize Amazon’s Advertising Tools

Leveraging Amazon’s advertising platforms can significantly boost visibility for overstocked items. Sponsored Products, Sponsored Brands, and Sponsored Display ads are very effective in driving traffic to your listings, increasing the chances of selling excess inventory on Amazon. Focus your ad spend on products with high stock levels, creating campaigns that target relevant keywords and shopper interests. Consider increasing your advertising budget for these items temporarily to accelerate sales.

Additionally, Amazon’s targeting options should be used to reach customers who have viewed similar products or are in the market for related items. By strategically using advertising, you can increase exposure for overstocked products and potentially clear excess inventory more quickly. While these marketing costs will affect your profitability, the benefit may very well work in your favor.

Create Product Bundles

Product bundling is an effective strategy for moving excess inventory while potentially increasing the average order value. A strategy from more traditional retail is to combine slow-moving items with popular products to create attractive package deals. This approach not only helps clear out overstocked inventory but also provides added value to customers. When creating bundles, ensure they make logical sense and offer a genuine benefit to the buyer.

Use Amazon’s Virtual Product Bundles feature for FBA sellers or create new listings for physical bundles. Highlight the value proposition of the bundle in your product descriptions and consider offering a slight discount compared to buying the items separately. This strategy can help you move excess stock while maintaining or even improving your profit margins.

Optimize Inventory Forecasting

Improving your inventory forecasting can help prevent excess stock situations in the future. Utilize Amazon’s inventory management tools and reports to analyze historical sales data, identify trends, and make more accurate predictions about future demand. Consider factors such as seasonality, promotional events, and market trends when planning your inventory levels.

Implement a just-in-time inventory approach where possible to minimize the risk of overstocking. Regularly review and adjust your forecasts based on actual sales performance and changing market conditions. By refining your forecasting methods, you can aim for optimal inventory levels, reducing the likelihood of excess stock while ensuring you have enough product to meet customer demand.

Explore Amazon’s Removal and Liquidation Programs

When other strategies aren’t sufficient, consider using Amazon’s removal and liquidation programs to deal with persistent excess inventory. The FBA Liquidations program allows sellers to recover some value from excess stock by selling it to inventory liquidators at a discounted price.

Alternatively, you can create a removal order to have Amazon return the inventory to you or dispose of it. While these options may result in a loss, they can be more cost-effective than continuing to pay long-term storage fees. Before choosing these routes, carefully calculate the costs and benefits, considering factors such as storage fees, potential future sales, and the impact on your overall inventory strategy. Use these programs as a last resort to free up storage space and capital for more profitable inventory.

Implement Cross-Selling and Upselling Strategies

Cross-selling and upselling can be effective ways to move excess inventory while increasing your average order value. Create product recommendations that pair slow-moving items with popular products. This strategy is similar to bundling but doesn’t require the buyers to purchase all the above. For example, if you have an excess inventory of phone cases, suggest them as complementary items when customers view phones or phone accessories.

Use Amazon’s “Frequently Bought Together” and “Customers Who Bought This Item Also Bought” features to your advantage. By strategically positioning your overstocked items alongside best-sellers, you can increase their visibility and likelihood of purchase.

Leverage Amazon’s Subscribe & Save Program

For products that are suitable for repeat purchases, consider enrolling them in Amazon’s Subscribe & Save program. This can help create a steady stream of sales for items that might otherwise become excess inventory. Customers who sign up for regular deliveries often receive a discount, which can make your overstocked items more attractive.

While the above strategy may result in slightly lower margins, it can help maintain consistent sales and prevent inventory from aging. This is a great option for those who like a more consistent cash flow.  Be sure to carefully manage your inventory levels to meet the demands of both one-time purchases and subscription orders.

Optimize Your Amazon Storefront

Use your Amazon Storefront to showcase and promote overstocked items. Create dedicated sections or pages for special deals or clearance items, making it easy for customers to find your discounted products. Use attractive images and compelling copy to highlight the value proposition and benefits of these items.

You can also use your Storefront to create themed collections that incorporate excess inventory items alongside complementary products. This approach can help present your overstocked items in a more appealing context, potentially increasing their perceived value and likelihood of purchase.

Utilize Amazon’s Inventory Performance Dashboard

Make full use of Amazon’s Inventory Performance Dashboard to manage your inventory levels proactively. This tool provides valuable insights into your inventory health, including excess inventory alerts and recommendations for improving your Inventory Performance Index (IPI) score.

Regularly review metrics such as sell-through rate, days of supply, and stranded inventory. Use these insights to make data-driven decisions about which items to restock, which to promote more aggressively, and which might require liquidation. By staying on top of these metrics, you can prevent excess inventory situations before they become problematic. Amazon promises the tools that used to be only available to large corporations. 

Implement Seasonal Inventory Planning

Develop a robust seasonal inventory planning strategy to minimize the risk of excess inventory. You are always better at staying ahead of excess inventory than playing catch up. Analyze historical sales data to identify seasonal trends and adjust your inventory levels accordingly. For products with strong seasonal demand, consider implementing a just-in-time inventory approach to avoid overstocking during off-peak periods.

Create a calendar of key selling periods (e.g., Halloween, back-to-school season) and plan your inventory and promotional strategies around these events. For slow-moving seasonal items, consider early markdown strategies to clear inventory before the end of the season rather than carrying it over to the next year.

Create Targeted Promotions and Flash Sales

Create time-limited promotions or flash sales specifically for your excess inventory items. This sense of urgency can motivate customers to make quick purchasing decisions. Use Amazon’s promotional tools like Lightning Deals, Best Deals, or Deal of the Day to increase visibility.

Develop promotional messages that highlight the value proposition of the discounted item you are looking to sell quickly. Consider offering bundle deals that combine slow-moving products with popular items to increase overall sales. Monitor the performance of these promotions closely and be prepared to adjust your strategy based on the results.

Optimize Your Product Listings

Revisit and optimize the listings for your excess inventory items. Ensure that your product titles, descriptions, and bullet points are clear, informative, and keyword-rich to improve search visibility. A well-optimized listing can do wonders for your sales through rates. Update your product images to showcase the items in the best possible light.

Consider adding lifestyle images or videos to help customers visualize using the product. If applicable, update your A+ Content to provide more detailed information and enhance the perceived value of the items. By improving your listings, you may be able to attract more potential buyers and increase sales without resorting to deep discounts.

Explore Multi-Channel Selling

When you are still struggling with excess inventory on Amazon, don’t limit yourself to selling excess inventory solely on Amazon. Consider expanding to other e-commerce platforms or marketplaces to reach a broader customer base. Platforms like eBay, Walmart Marketplace, or even your own e-commerce website can provide additional sales channels.

Each platform has its own audience and selling dynamics, which might be more suitable for certain types of excess inventory. Be sure to factor in the costs and logistics of multi-channel selling, and use inventory management software that can help you track stock levels across multiple platforms to avoid overselling.

Implement a Just-In-Time (JIT) Inventory System

To prevent future excess inventory situations, consider adopting a Just-In-Time inventory system. This approach involves ordering inventory only as it’s needed, based on current demand and sales projections. This is a strategy that most retailers use and is always recommended. While this requires more frequent ordering and closer coordination with suppliers, it can significantly reduce the risk of overstocking.

Use Amazon’s sales and inventory reports to identify trends and patterns in your sales data. Develop strong relationships with your suppliers to ensure they can accommodate more frequent, smaller orders. This strategy can help you maintain optimal inventory levels and improve cash flow by reducing the amount of capital tied up in excess stock.

Leverage Amazon’s Inventory Health Report

Use Amazon’s Inventory Health Report to gain insights into your inventory performance. This report details your inventory age, sell-through rate, and excess inventory. Use this data to identify which products are at risk of becoming excess inventory and take proactive measures.

For items with low sell-through rates, consider adjusting your pricing strategy or increasing marketing efforts. For aging inventory, implement promotional strategies to move these items before they incur long-term storage fees. Regularly reviewing this report can help you maintain a healthy inventory balance and prevent excess stock situations on most occasions.

Implement a Minimum Order Quantity (MOQ) Strategy

To prevent excess inventory from accumulating in the first place, consider negotiating a lower Minimum Order Quantity (MOQ) strategy with your suppliers and vendors. This involves negotiating with your suppliers to accept smaller, more frequent orders rather than large bulk orders.

This is especially doable when your products are private or white-labeled. While you may lose some volume discounts, this approach can significantly reduce the risk of overstocking. It allows you to be more responsive to actual demand and market changes, reducing the likelihood of ending up with excess inventory. When implementing this strategy, be sure to consider lead times and shipping costs to ensure it remains cost-effective for your business.

Study Inventory Aging Analysis

Regularly conduct an inventory aging analysis to identify slow-moving or obsolete stock. Use Amazon’s Inventory Age report to categorize your inventory based on how long it has been in storage. Focus on items that have been in stock for more than 90 days, as these are at risk of incurring long-term storage fees.

For an aging inventory, consider more aggressive pricing strategies or bundling with faster-moving items to increase their appeal. When selling on Amazon, it’s imperative to stay ahead of your aged inventory, as it becomes more costly over time. This proactive approach can help you address potential excess inventory issues before they become critical.

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Conclusion

In conclusion, effectively managing excess inventory on Amazon requires a tailored approach that addresses the unique challenges of the platform. Leveraging Amazon’s specialized tools and strategies, such as inventory performance metrics, automated restocking alerts, and partnerships with external services like Overstock Trader, can significantly enhance your ability to manage and reduce excess stock.

By staying vigilant and utilizing these resources, sellers can minimize storage costs, improve inventory turnover, and maintain a competitive edge in the fast-paced Amazon marketplace. Implementing these practices not only helps in handling current excess inventory but also sets the stage for more efficient inventory management in the future.

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