Amazon FBA Liquidation Program Explained: How Sellers Turn Excess Stock into Cash

The Amazon FBA Liquidation Program is designed for sellers to recover cash from unsold inventory. Sellers are able to avoid potential losses from extra disposal costs. Instead, sellers can send unused or returned inventory to Amazon so that it can be liquidated. Amazon liquidates the inventory by selling it to wholesale purchasers and liquidation companies at a reduced price.

It benefits sellers because they recover a portion of their losses, and resellers and local bin stores gain reasonably priced inventory. It efficiently turns unsold inventory into cash flow while still making a profit for the sellers and purchasers. 

It is a service that helps sellers recover money from unsold, returned, or excess inventory stored in Amazon warehouses. Instead of disposing of these products, sellers can choose to liquidate them through Amazon’s trusted network of buyers. Liquidators, wholesalers, or resale stores pay a discounted price for the inventory. This prevents the business from long term storage fees for unsold products.

• Disposal: This involves Amazon either destroying or recycling products. Sellers do not receive any of the costs back, and the inventory cost is entirely lost. This also contributes to waste and is not eco-friendly.
• Liquidation: Instead of destroying the items, Amazon sells them to liquidators, wholesalers, or resale stores at discounted prices. Sellers recover part of their costs, free up warehouse space, and reduce waste.

Why Amazon Started This Program?

Amazon launched the FBA Liquidation Program to cut down warehouse waste and reduce storage costs. Every year, thousands of unsold items take up valuable space or are thrown away. Amazon created a sustainable system where sellers can recover value, and resale businesses gain affordable stock keeping products in use instead of in landfills.

This process is easy and helps sellers quickly remove leftover inventory and get some money back. Below are the steps for working of this system:

1. Submitting a liquidation request: When a seller has extra, slow-moving, or returned inventory, they submit a liquidation request through their Amazon Seller Central account. This tells Amazon that the items should be resold instead of destroyed or returned.
2. Amazon evaluates and sets recovery value: Amazon checks the product’s category, condition, and demand in the liquidation market. They set a recovery value. It is the amount the seller can expect to get once the products are sold.
3. Seller accepts offer and inventory is processed: After reviewing the recovery value, the seller can accept or decline the offer. After the offer acceptance, Amazon takes control of the inventory. They handle everything from logistics to finding liquidation buyers.
4. How and when sellers get paid: Once the liquidated stock is sold and processed, Amazon credits the recovery amount directly to the seller’s account. Payment usually happens within a few weeks, which depends on the completion of the liquidation process.

The Amazon FBA Liquidation Program offers several advantages for sellers who want to manage extra or returned inventory more efficiently. Here are the main benefits:

• Recover lost value: Instead of writing off unsold products, sellers can recover a percentage of their original cost through liquidation sales.
• Save on storage fees: Liquidating excess inventory frees up warehouse space and helps sellers avoid long-term storage or removal fees charged by Amazon.
• Reduce waste: This program supports sustainability by keeping usable products out of landfills and giving them a second life through resale.
• No extra effort required: Amazon takes care of all the liquidation hassle so sellers can concentrate on their business.
• Supports the resale market: Items sold through liquidation often end up with wholesalers, pallet buyers, and local bin stores. It keeps the resale ecosystem active and profitable for everyone involved.

While the Amazon FBA Liquidation Program is helpful, there are some drawbacks that sellers should consider:

1. Reduced recovery value (not full retail): Because of the liquidation processes, sellers keep only a small percentage of the retail value of a product. Liquidated items are sold below the discounted rate, so the recovery value is always below full retail.
2. Not suitable for all product categories: Fragile electronics, expired goods, and seasonal products typically do not do well in liquidation.
3. Limited control once inventory is submitted: Sellers have little control over who buys the stock, how it is sold, or the final sale price after inventory submission. This lack of control can be a concern for sellers with specific resale strategies.

The Amazon FBA Liquidation Program and bulk liquidations both help move excess inventory, but they serve different purposes and audiences. 

Seller-side liquidation vs buyer-side liquidation

In the case of the FBA Liquidation Program, the seller is the one who actually initiates the process of getting value out of unsold inventory. On the other hand, when it comes to bulk liquidation, companies will gain large volumes directly and sidestep the seller when it comes to making decisions about price and distribution. 

Key difference in purpose: recover vs resell

The FBA program aims to help sellers recover some cash from excess inventory. Bulk liquidations, on the other hand, primarily focus on resale and selling inventory to the end buyers and resale businesses at a lower price.

Where does the liquidated stock end up?

Liquidated products often reach local bin stores, pallet buyers, and liquidation auctions. This ensures the items get a second life in the resale market. It benefits both small businesses and budget-conscious buyers while keeping inventory out of landfills.

Bin stores and resale businesses benefit greatly from the Amazon FBA Liquidation Program. These stores are able to purchase liquidated stock in bundles, which lets them avoid retail pricing, and also lets them sell a larger variety of stock. When bin stores buy stock from liquidation auctions, they are able to buy amazon overstock, return, and overstock items which are in good condition. This allows them to sell a larger variety of items to local customers for a reasonable price.

Participating in this resale ecosystem helps bin stores expand their product range, attract more shoppers, and increase profits. It promotes sustainable practices by keeping products in circulation instead of going to waste.

This program is best suited for sellers who want to recover some value from extra or slow-moving inventory instead of discarding it. It is ideal for those looking to manage inventory efficiently, reduce losses, and improve cash flow. 

Sellers should consider using this program if they:

• Have excess inventory: Overstocked items that may have long-term storage fees.
• Deal with unfulfillable items: Products that are customer-damaged, defective, or carrier/delivery damaged.
• Want to free up warehouse space and capital: Liquidating inventory turns stock into cash and clears storage space.
• Face poor sales performance: Slow-selling items can be moved without waiting for full-price sales.
• Want to avoid disposal fees: Instead of paying to destroy inventory, sellers can recover a small percentage of the product’s value.

or more details, you can visit the official Amazon Seller Central help page to learn about Amazon’s liquidation policies and program guidelines.

Bin stores buy liquidated stock at lower prices. It gives them access to affordable products to resell locally.

The FBA liquidation program offered by Amazon helps sellers lose less money on returned, excess, or slow-moving inventory. Sellers get to liquidate items and receive a portion of their money back. This program also helps to reduce warehouse waste by keeping products in circulation rather than throwing them away.

Additionally, it supports the resale market, as bin stores, pallet buyers, and local resellers can purchase liquidated stock at lower prices. Overall, the program improves cash flow, frees up space, and creates a win-win system for sellers and the resale community.