April 7, 2020
What is FBA’s Manage Excess Inventory?

What is FBA’s Manage Excess Inventory?


(soft jingle) – [Instructor] Proper
management of excess inventory can help increase profits
for your Amazon business. In this video, you will learn
what excess inventory is, how managing it can help
your business, and how to use the Manage Excess Inventory
tools and reports. Amazon considers a product
to have excess inventory if it has at least one
unit aged over 90 days, has over 90 days of supply, and has an opportunity
to get a better return on your inventory investment. For example, by reducing the
price to increase sell-through. The Manage Excess Inventory
page makes it easy to review and help return your excess
inventory to healthy levels. You can access the Manage
Excess Inventory page through the Inventory Planning widget on the Seller Central homepage
by clicking on Excess Units. Or, you can select Manage Excess Inventory at the top the Inventory
Performance Index dashboard. Amazon evaluates product
demand, price elasticity, seller costs like storage
fees and removal fees, and seller inputs like cost
of purchase and recovery rate. Based on this evaluation, we
recommend actions you can take to reduce excess inventory,
such as Create Sale, Advertise Listing, or Create Removal. Shipped units that are
not yet received by Amazon or are unavailable for purchase aren’t included in the excess calculation. Updating your Inventory Product Settings helps Amazon make more
relevant recommendations to reduce excess inventory. Select Inventory Settings
in the upper right corner of Manage Excess Inventory
page to refine your settings. Cost of purchase is the
cost of your products as a percentage of their
current selling price. The default value is 50%. For even more accurate recommendations, you can enter unit cost at the SKU level in Inventory Product Settings upload. Recovery rate is the
expected recovery amount as a percentage of the cost
if you removed your inventory from Amazon and sold the
inventory on your own. If you don’t have a designated channel to liquidate inventory through, or a buy-back contract with your supplier, we recommend you set this value to zero. You can adjust the product
settings for any item at any time by expanding the action drop-down menu on that product line and
selecting Update Product Settings. Update your desired unit
cost and recovery rate, then select Save. From the Manage Excess Inventory page, you can also take action
on Amazon’s recommendations for each product individually. For example, you can
temporarily reduce the price of a product by creating a
sale to help boost demand. To see only items with
Create Sale recommendations, select Create Sale from the
Show Recommendations By section. Only items recommended for Create Sale are visible on the screen. The Create Sale Widget shows you a recommended sales price and duration. Keep, or change these parameters, and then click Create Sale. Based on the current demand of a product, your current inventory levels, and the price elasticity of the item, we may recommend a price that is less than the lowest price currently on Amazon. We estimate this price will
help increase sell-through, reduce total storage fees, and help you get a better return on
your inventory investment. Let’s take a look at the
Create Removal recommendation. Clicking Create Removal for
each product opens a widget that provides you with the recommended removal quantity needed to help bring your inventory
back to a healthy level. You can accept the amount or adjust it. We also show you the cost
savings of removing this product, which includes recovery
rate minus removal fees, compared to taking no action
and incurring storage fees. Some actions like advertise
listing, create removal, and match lowest price
can be performed in bulk. This means all products with
the same recommended action can be updated at the same time. For example, filtering
by Advertise Listing and checking the box to the left of Status at the top the list, automatically
selects all the boxes for every item with the recommended action to Advertise Listing. Expanding the drop-down
menu reveals the option to select Advertise Listing. There is additional data to
help sellers make decisions, including Estimated Storage Costs, which is the estimated
costs you would incur if you take no action to help sell-through or remove your inventory. This includes storage fees, including the Long-term Storage Fee, and the holding cost of
capital, if applicable. You can also view the
estimated number of days your inventory supply will last based on the projected
demand for your product. All of the information
supplied on the page, including the recommended actions, is available on the
Excess Inventory Report. Simply select Download Report
in the upper right corner of the Manage Excess Inventory page. You’re now prepared to
manage your excess inventory and start improving your profitability! To learn more, watch the other videos in the Fulfillment by Amazon
Inventory Planning Series.

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