For Inventory in FBA:
Amazon Offers a Sweet Deal

By Joe Waynick
May 8, 2016

When using FBA Amazon can make it quite difficult to manage multiple ASIN's that trigger long-term storage fees. This is especially true when you begin accumulating a large FBA inventory.

It's inevitable.

Keeping too many copies of any one ASIN stored in one of Amazon's distribution centers subjects you to premium fees charged against your account for the privilege.

Therefore, you want to exercise sound inventory control best practices to minimize inventory carrying costs, taxes and excessive storage fees when you sell books on Amazon.

If you can manage to accomplish those lofty goals, then the fulfillment by Amazon (FBA) program can be very profitable for you.

Avoid Excessive Fees

When you store more than one ASIN in an Amazon warehouse, whatever number of ASIN's you have after the first one is subject to long-term storage fees.

Fortunately, there are a few ways to avoid the fees. Your choices include:

• Control your inventory
• Destroy excess inventory
• Manually remove excess inventory
• Automatically remove excess inventory

The more effective you are at leveraging the inventory control techniques at your disposal, the more profitable your operation will be. And for FBA Amazon wants you to adopt best practices.

And that means taking full advantage of the four bulleted techniques above. You'll save hard and soft dollars for your business that go directly to the bottom line.

With FBA Amazon Is Very Strict

The best way to control your inventory is to limit the number of ASIN's that you sent into a distribution center. This technique can introduce inefficiencies in the lower sales rankings.

That's because, theoretically, you should be able to sell multiple copies of any given item within six months in the lower sales ranks.

For example, if you have an item with an Amazon sales rank of less than 100,000, then you should be able to sell that item before penalties kick in.

The theory only works if you price competitively, or more draconian still, aggressively.

By that I mean you try to always be the low-price leader. Of course, that could very will trigger the dreaded race to the bottom that all Amazon sellers should avoid.

If you choose not to base your business model on price alone and forgo aggressive pricing, then your best option is to price profitably and only maintain one SKU of each ASIN At a distribution center. When the ASIN cells, you can immediately ship a replacement item (if available). The time it takes for the shift item to reach another distribution center will be a lost opportunity sale to your business.

Destroy Excess Inventory

Option 2 is disheartening to say the least. The idea of destroying what you once believed was perfectly salable inventory after taking the time to find it, print it, list and then ship it to FBA so Amazon destroy it is counterintuitive.

However, as unappealing as the prospect may be, destroying stale inventory is still a viable course of action. Especially if the price of the stale inventory has fallen to unprofitable levels.

All you have to do is log onto your Amazon Seller Account, create a removal order, but instead of having the merchandise returned to you, specify that Amazon destroy it.

There is considerable debate among booksellers over whether or not Amazon actually destroys all that inventory. The cynics among us claim that instead of destroying the items as requested, Amazon actually keeps it and sells it as one of its "Amazon Warehouse Deals".

Honestly, I can't tell you one way or the other if the rumors are true. But I believe Amazon has stated in its policy documentation that the material is in fact destroyed. You'll just have to make up your own mind.

Manually Remove Inventory

You next option is to reacquire your stale inventory by following the same login steps outlined above, except this time instead of asking Amazon to destroy your merchandise, ask Amazon to return it to you.

At the time of this writing, Amazon charged $.50 for each item that is returned. That's not the end of the world, especially if the item being returned still has significant value. But if you're removing a large amount of inventory, than can get real expensive in a hurry.

In addition, allowing Amazon to ding you with warning eMails whenever long-term storage fees are looming and then having to manually request that each ASIN be returned to you can be a real pain. As you can see, with FBA Amazon can hurt or help you.

Automatically Remove Inventory

Your final option, and my personal favorite, is to go into your Amazon Seller Account and request that any inventory subject to long-term storage fees be automatically returned to you.

Having this option set relieve you of the burden of having to track which items are subject to fees in which ones are not. Amazon does that for you. In addition, if you're diligently exercising best inventory control practices then you're not sending very much excess inventory to Amazon in the first place. Therefore, when inventory is returned to you it won't be a big financial hit. And that's a good thing when you start learning how to sell used books online.

There's one significant risk with this approach, and that is the possibility of missing out on one of Amazon's "amnesty" promotions where they allow you to remove excess FBA inventory for free. That would be a shame, so keep your eyes peeled and always take advantage of those types of promotions.

Joe Waynick is author of several eCommerce books covering the bookselling and publishing industry. His books are available on Amazon.com.You can also follow him on Twitter @JoeWaynick.

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