Amazon Aged Inventory: What You Need to Know
Picture this: you have a warehouse full of products, but some of them just won’t sell. They sit there, piling up storage fees and eating into your profits. Frustrating, right? Fortunately, there are effective solutions to this issue.
By implementing smart inventory management techniques, you can address the problem of aged inventory, increase your sales, and boost your profitability. Let’s explore the ins and outs of aged inventory on Amazon and discover strategies to manage it effectively.
What is Inventory Aging on Amazon?
Inventory aging, once known as the long-term storage fee, presents a real headache for businesses on Amazon. This issue pops up when inventory units linger in Amazon’s fulfillment centers for 181 days or more. Every 15th of the month, Amazon hits you with an aged inventory surcharge on top of the usual storage fees.
But it’s not just about the extra charges. Aging inventory can drag down your performance metrics, including your listing’s sales rank and your Inventory Performance Index (IPI) score. Understanding which products are slow movers and knowing when to price, promote, and replenish stock can help you optimize turnover and maximize profits.
What is the Problem with Inventory Aging on Amazon?
The crux of the matter is that aged inventory is a thorn in the side for Amazon sellers. Beyond just the fees, it can lower your sales ranks and ding your IPI scores. That’s why it’s crucial to keep a tight grip on your inventory levels to avoid these pitfalls and maintain stellar sales performance on Amazon.
How Does Amazon Inventory Aging Affect IPI?
Aging inventory can tank your IPI score, a critical metric that covers aspects like maintaining proper inventory levels, resolving listing issues quickly, and keeping essential products available. There are two main ways it affects your IPI score:
1. Obsolescence: Older inventory is likely to become outdated, leading to write-offs.
2. Sales Velocity: Aging inventory increases days of supply, slowing down sales.
Amazon sets a minimum IPI score, and falling below this threshold results in storage restrictions. Managing your inventory levels to be at most two to three months’ worth in fulfillment centers can help, though it gets tricky with factors like manufacturing lead times and shipping durations.
How Can You Avoid the Aged Inventory Surcharge?
To sidestep the aged inventory surcharge, you need to be proactive. Here are some strategies:
Sell through Amazon Outlet: Offer a minimum 20% discount to clear out old stock.
Removal or Disposal Orders: Submit these before the cleanup date to avoid surcharges, even if items aren’t physically removed by then. The cutoff is 11:59 p.m. (PT) on the 14th of each month.
Amazon Aged Inventory Surcharge Fees
Amazon charges these fees monthly, typically between the 18th and 22nd. The fee structure is:
Before Feb 15, 2024:
- 181–210 days: $0.50 per cubic foot
- 211–240 days: $1.00 per cubic foot
- 241–270 days: $1.50 per cubic foot
- 271–300 days: $3.80 per cubic foot
- 301–330 days: $4.00 per cubic foot
- 331–365 days: $4.20 per cubic foot
- 365+ days: $6.90 per cubic foot or $0.15 per unit
From Feb 15, 2024:
- 181–210 days: $0.50 per cubic foot
- 211–240 days: $1.00 per cubic foot
- 241–270 days: $1.50 per cubic foot
- 271–300 days: $5.45 per cubic foot
- 301–330 days: $5.70 per cubic foot
- 331–365 days: $5.90 per cubic foot
- 365+ days: $6.90 per cubic foot or $0.15 per unit
6 Effective Strategies to Fix Inventory Aging on Amazon
Analyze Inventory Turnover Rates: High turnover means quick sales, while low turnover points to slow-moving items needing action.
Implement Strategic Inventory Planning: Focus on demand and sales patterns, consider seasonality, and balance supply with demand.
Forecast Demand: Use sales history and market trends to estimate future sales, helping you manage inventory levels better.
Use Amazon’s Inventory Age and Health Reports: Regularly review these reports to identify and address aging stock.
Optimize Product Listings and Visibility: Perfect titles, descriptions, and images, and use keyword optimization to boost visibility.
Promote Products to Increase Slow-Moving Inventory Sales: Use discounts, sales, and targeted marketing campaigns to drive demand and sales.
Conclusion
Addressing aged inventory on Amazon is essential for staying competitive and profitable. These extra fees and penalties, along with the impact on your performance metrics, make it clear that managing inventory requires a proactive approach.
Stay ahead of the game by mastering these strategies, and keep your Amazon business thriving. For more detailed insights and strategies, check out the entire blog on Amazon Aged Inventory.
