Liquidate my Amazon FBA Inventory - What it means and How does it work?

As an Amazon seller, managing excess and customer-returned inventory can be a significant challenge. Storage fees accumulate, and unsold products tie up valuable resources. But what if there was a way to recover some of your investment while reducing these costs? Enter Amazon FBA Liquidations—a program designed to help you reclaim value from surplus inventory and streamline your operations.

In this comprehensive guide, we'll explore everything you need to know about Amazon FBA Liquidations, including how it works, eligibility criteria, fees involved, and how to make the most of this program.

What Is Amazon FBA Liquidations?

Amazon FBA Liquidations is a program that allows sellers to recover a portion of their inventory costs by liquidating excess or customer-returned items through Amazon's network of liquidators. Instead of paying to remove or dispose of unsold inventory, you can use this service to avoid ongoing storage fees and aged-inventory surcharges while recouping some of your investment.

How Does Amazon FBA Liquidations Work?

Step 1: Submitting a Liquidation Order

To initiate the process, you create a liquidation order for your eligible inventory through Seller Central. This can be done from various inventory management pages like Manage Excess Inventory or Inventory Age.

Step 2: Amazon Evaluates Your Inventory

Amazon assesses your inventory based on factors such as:

Your sales history
Average FBA selling price
Sales history of the specific ASIN

Step 3: Liquidator Purchases Inventory

Contracted liquidators purchase your inventory, typically for 5% to 10% of the product's value.

Step 4: Receive Net Recovery Value

After deducting fees, Amazon credits the net recovery value to your account within 60 to 90 days of submitting the order.

Fees Associated with FBA Liquidations

Understanding the fees involved is crucial for evaluating whether liquidation is the right option for your inventory.

Liquidation Processing Fee

This fee is based on the size and weight of each item.

Liquidation Referral Fee

A 15% referral fee is applied to the gross recovery value.

Eligibility Criteria

Not all products are eligible for FBA Liquidations. Eligibility depends on:

Ineligible Products

Dangerous goods (hazmat)
Recalled inventory
Certain restricted items (e.g., face masks, jewelry)

Unfulfillable Inventory

Only items classified as Customer Damaged, Carrier Damaged, or Distributor Damaged are eligible.

For detailed eligibility information, visit Amazon's FBA Product Restrictions.

How to Create a Liquidation Order

Follow these steps to liquidate your inventory:

Access Seller Central: Log in to your Seller Central account.
Navigate to Inventory Planning: Go to Manage Excess Inventory or the relevant inventory page.
Select Items: Choose the ASINs you wish to liquidate.
Create Removal Order: From the Action on selected drop-down menu, select Create removal order.
Choose Liquidations: Select Liquidations as the removal method.
Enter Quantity: Specify the quantity for fulfillable or unfulfillable inventory.
Review and Confirm: Double-check your order and click Confirm.

Note: Once confirmed, liquidation orders cannot be canceled.

Tracking Your Liquidation Orders

You can track your orders through the Removal Order Detail report.

Timeline Overview

Day 0: Order submitted; storage fees stop accruing.
Days 0–30: Inventory marked as In Process Qty; status is Pending.
Day 30 (or before): Inventory ships to liquidators; status changes to Completed.
Day 60–90: Net recovery value appears in your account.

Benefits of Using FBA Liquidations

Recover Investment: Get back a portion of your inventory costs.
Reduce Storage Fees: Avoid monthly storage and aged-inventory surcharges.
Simplify Inventory Management: Eliminate the hassle of handling excess inventory.

Potential Drawbacks

Processing Time: It can take up to 90 days to receive payment.
Low Recovery Percentage: Typically only 5% to 10% of the product's value.
Ineligible Items: Not all inventory qualifies for liquidation.

Tips for Maximizing Recovery Value

Regularly Assess Inventory: Identify excess stock early.
Understand Fees: Calculate potential recovery after fees.
Stay Informed: Keep up-to-date with Amazon's policies and eligibility criteria.

Conclusion

Navigating the complexities of excess inventory can be daunting, but Amazon FBA Liquidations offers a viable solution to recover value and reduce costs. By understanding how the program works and staying informed about eligibility and fees, you can make strategic decisions that benefit your Amazon business.

If you need personalized guidance or help fine-tuning your strategies, Superfuel AI can assist. Our AI-powered assistant analyzes 36+ key Amazon metrics to identify and address the root causes of sales fluctuations, helping you optimize your storefront and boost sales. Reach out to us at [email protected].

Ben Mathew, Amazon Expert

Ben Mathew is a co-founder at Superfuel, a sales assistant for Amazon sellers. In the past, Ben and his team of e-commerce specialists and software engineers have launched 40+ new brands on Amazon, taking them from zero to bestsellers. In his free time, he is either learning from other top sellers or encouraging his 3 daughters in their love for reading. He is reachable at ben [at] superfuel.io.

FAQs

What is the Amazon FBA Liquidations program?

It's a service that allows sellers to recover a portion of their inventory cost by liquidating excess or returned items through Amazon's network of liquidators.

How much can I expect to recover from liquidated inventory?

Typically, you can recover 5% to 10% of the product's value after fees.

Are there fees associated with FBA Liquidations?

Yes, there are processing fees based on item size and weight, and a 15% referral fee on the gross recovery value.

How long does the liquidation process take?

It usually takes 60 to 90 days from order submission to receive the net recovery value.

Can I cancel a liquidation order once it's submitted?

No, liquidation orders cannot be canceled once confirmed.

Does liquidating inventory affect my IPI score?

Yes, it can positively impact your Inventory Performance Index (IPI) score by reducing excess inventory and improving sell-through rates.