Strategy - Removals
There are multiple ways to remove inventory from Amazon FBA, from Liquidations to Removals to Disposals and even FBA donations. This particular article focuses only on the Removal Program. However, for more context please also check out the full article to compare all methods and the pros and cons of each, here.
REMOVALS
Amazon removal orders can be set to automatic or you can create manual removal orders. With Removals, Amazon ships stock back to you, the seller to your designated address.
Pros
- Avoid excess storage fees.
- Sell on another channel.
- You can return ASIN to Amazon to sell after 90 days.
Cons
- Removal is often more expensive than the aged fees incurred.
- You need a physical address to ship to.
- You will incur labor costs in receiving, grading and reselling stock.
Recommendations
- Factor removal, labor, return shipping and additional fees when making your decision.
- For EU removals, cost varies widely between origin and destination points.
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DISPOSALS
Amazon handles getting rid of your FBA inventory.
Pros
- Avoid excess storage fees.
- You don’t have to store the inventory.
Cons
- Disposal is often more expensive than the aged fees incurred.
- Disposal in US is the same price.
- Amazon doesn’t always actually dispose of items. They may end up on your listing similar to when you liquidate. It is a lower risk than liquidation but still a risk.
Recommendations
- If product is not eligible for liquidation, disposal may be a good option.
- For EU, disposal may be less than removal due to the removal costs variation. See Removal section.
FBA Donations
There are several options for dealing with inventory that may be at FBA that a seller has elected not to sell. Removals, disposals and liquidation are usually the top options. For US sellers, donation has now become another opportunity.
The FBA Donations program allows US sellers using Fulfillment by Amazon (FBA) to donate unwanted inventory to select charities. Those who participate can then access donation certificates for tax purposes. These certificates detail the quantity and description of donated inventory.
Donation can be an option for items in several categories including returned items, refurbishment, grade and resell or liquidation.
The program supports Good360, a non-profit that distributes donated goods to charities, benefiting those in need. Amazon handles the logistics, but usual the disposal fees apply.
Sellers are automatically enrolled, but can opt out. Any returned product ineligible for resale may be automatically donated while ineligible products are recycled.
Pros
- Tax Benefits: Donation certificates may provide tax deductions, potentially making it financially advantageous. Certificates are generated annually and easily accessible on Seller Central.
- Social Impact: The program helps redistribute unused products to charitable causes, reducing waste and benefiting communities.
- Default Enrollment: Accounts are automatically enrolled.
Cons
- Decreased Profit Potential: If products can be resold elsewhere for a higher profit, FBA Donations may not make financial sense.
- Limited Eligibility: Not all products are eligible for donation.
- Disposal Fees: Usual disposal fees still apply, which can be a drawback for those looking to minimize costs.
- Opt-Out Required: You must manually opt out if they don't wish to participate, potentially leading to unintentional donations.
Recommendations
- Consider Donation: Evaluate the tax benefits of donating over liquidating unsold inventory, especially if the fair market value exceeds liquidation earnings.
- Verify Eligibility: Ensure your products meet the donation criteria and develop a backup plan for any ineligible products.
- Opt-Out Option: If not interested in the program, opt out through Seller Central settings.
- Consult Tax Advisor: Seek advice from a tax advisor to understand the specific tax incentives and benefits of the FBA Donations program.
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