Amazon warehouses do not have infinite storage space. This means that dead inventory piles up sometimes, and Amazon must destroy the surplus stock. For this reason, today we are going to talk about FBA Donations and how this program seeks to help sellers and people in need.
The retail giant pushes sellers to maintain a healthy turnover rate. And although destroying excess inventory is quite unfortunate, this practice helps free up warehouse space.
But what if both Amazon and third-party sellers could make better use of unsold stock? That’s the goal of Amazon FBA Donations.
In this post, we’ll discuss what you need to know about the FBA donations program so you can make the most of it.
Let’s dive in!
What is Amazon FBA Donations?
The program allows sellers to give away unsold products to charity organizations.
This way, brands can reduce the amount of stock sent to landfills while giving back the community and the environment.
FBA Donations is a response to Amazon’s waste disposal practices. In 2019, a French TV documentary uncovered an Amazon “destruction zone.”
On this site, Amazon workers load brand-new products for transportation to landfill sites. The documentary stated that the facility disposed of 293,000 items over a nine-month period.
It also claims that Amazon France destroyed more than 3 million products in 2018. All retail stock destroys inventory, but considering Amazon’s scale, waste, and pollution issues increase exponentially.
The FBA Donations Program was created in 2019 to reduce the number of destroyed items across the US and the UK. It promotes a cheap, eco-friendly way to dispose of unsold inventory.
According to Amazon Sustainability, the program has enjoyed a great response from sellers.
The Marketplace donated the following items in 2020:
- 25 million products to its global charity partners
- 70 million meals to Feeding America
- 30 million Oz. of hand sanitizer to Feeding America
FBA donations claims to donate 50,000 items to people in need every day.
And, as of November 2020, FBA donations started operating in France.
How FBA Donations Work
As of September 2019, this program became the default option to get rid of unwanted stock.
However, sellers can opt out of the program if they want. To do so, they must pay a 15-cent fee for every donated item.
That rate is the same as if brands requested their stock to be destroyed, but it’s also less than the 50-cent fee required to request the return of unsold inventory.
In addition, Amazon handles all donation arrangements at no extra cost for sellers.
Brands can track every donation made in their Removal Shipment Detail report.
This document is available in Seller Central, and each donated item is marked as “Donation” in the “Carrier Name” field.
The FBA Donations program considers overstocked, returned, damaged, or near-expired products for eligibility.
Therefore, FBA Donations accounts for safety, regulatory guidelines, and any other concerns when selecting inventory.
The charity’s location, interest, and needs are also considered.
Non-eligible items are then marked for disposal by Amazon.
- Recalled products and counterfeits
- Prohibited, restricted, and hazardous items
- Hardware with internal memory
Amazon selects the donatable items from its logistics network. Then, the marketplace identifies the organizations that could benefit most from specific products.
Finally, and, once the selection is made, nonprofits or charities can collect the donated inventory at Amazon facilities
FBA Donations Program Partners
Amazon partnered with Good360 to improve donation efficiency across the US. This is a 35-year-old, 501(c)3 organization that works with many retailers to get food and consumer products for people in need.
Good360 takes in donations and distributes them across a vast network of nonprofits.
This way, the organization delivers donated items to a wide amount of people in the US.
In Europe, Amazon is allied to 100+ charities, such as Barnado’s, Newlife, and the Salvation Army.
These partners help Amazon donate across Italy, France, Germany, Poland, Czech Republic, and the UK.
For example, Kind Direct International helped Amazon sellers donate to 1,800 European charities in 2020.
The Climate Pledge
The FBA Donations program is one of Amazon’s many sustainability practices and is part of the Climate Pledge program.
This is an initiative co-started with Global Optimism to meet the Paris Agreement accords ahead of time.
The Climate Pledge is a vow to be net zero carbon by 2040. Amazon is also committing to operate with 100% renewable energy by 2025.
Amazon does not provide FBA Donations sellers with tax advice. But brands are encouraged to discuss the program with a tax adviser.
Regarding donations, the IRS allows tax write-offs on donations of excess or obsolete inventory to charities.
Donations should meet the following criteria:
- They shouldn’t be above the quantity required to maintain the normal course of business.
- Items donated are of value and usable by the charitable organization.
- Inventory comprises products sold in the course of business.
- Producers offer no personal benefit to the donator.
- The benefited organization is listed as 501(c)(3).
Disclaimer: Nothing in this article should be considered as tax or legal advice. Check with a certified professional to address any questions about deducting charitable donations.
Image: Amazon Smile
Users who wish to donate can do so through Amazon Smile. This is the same Amazon website everyone knows, but with a twist.
Customers can select the same products, at the same prices; the difference is that each user can select an organization that’ll benefit from each sale.
All eligible items are marked as “Eligible for AmazonSmile donation” on their listings.
Each time a shopper buys a product, Amazon will donate 0.5% of the price to the customer’s chosen charity and users can also change organizations at any time.
Charities who wish to benefit from Amazon Smile must comply with the following:
- Create an organization administrator account
- Accept the Amazon Smile Participation Agreement.
- Submit the organization’s bank account data.
- Be located in the US and listed as 501(c)(3) in the IRS.
There are many reasons why sellers destroy their inventory:
- Long-Term Storage Fees
- Returns that are no longer usable or for safety issues.
- Left in warehouses because they were returned, or certain batches of inventory contain some type of defect.
The FBA Donations program is an opportunity to help people in need, and allows you to deepen your roots with the community.
It’s also a safe way to protect your brand. Better let people in need take your product, instead of competitors to sell it as their own. You’ll also prevent counterfeits from showing up in the marketplace.
Therefore, FBA donations is certainly a worthy way to spread a bit of good fortune to the world and you’ll contribute in cutting down the amount of waste produced to zero.
Esteban is an SEO copywriter at AMZ Advisers, with several years’ experience in digital marketing and e-commerce. Esteban and the AMZ Advisers team have been able to achieve incredible growth on the Amazon platform for their clients by optimizing and managing their accounts and creating in-depth content marketing strategies.