Got Excess Inventory? Manage It with The Amazon Outlet Program

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Nowadays, everybody spends a ton of time on Amazon, hunting for the best deals. Bargain shopping is the number one hobby for most online shoppers, and if you are a Professional seller with excess inventory, this program could not only be the solution to your overstock problems but it could also help you engage new customers by offering great deals!

We’ll show you how to manage your excess inventory while making the most of it – without dying in the effort – with the Amazon Outlet Program.

What Is the Amazon Outlet Program?

Unlike Amazon Warehouse Deals, where buyers shop for deals on returns and refurbished items, Amazon Outlet is designed to offer newly discounted products. This program can help you increase sells, improve cash flow, optimize inventory levels, and reduce total storage fees. 

Amazon selects which offers are featured on the Amazon Outlet page.

There are two types of offers:

Outlet deals.  These are promotional offers submitted via Create an Outlet deal. Selected deals are featured on Outlet for a period fixed by Amazon, usually two weeks.

Outlet sales. These types of sales are the price reductions submitted via Create a sale. Selected sales are featured on Outlet based on factors that include customer demand and product star rating.

Currently, this program is free. Standard fulfillment fees and referral fees apply.

Amazon Outlet Program: Seller and Product Eligibility

To be eligible for Outlet, you must be a Professional seller with an overall rating of at least 3.5 stars.

Although not all items are eligible to be sold through Outlet, and they change from week to week, FBA (Fulfillment By Amazon) sellers welcome the option of selling their slow-moving items that have been stored in the FBA warehouse shelves for a while.

Amazon offers you recommendations on which of your products in stock are eligible for the program through the Manage Excess Inventory tool.

This tool is intended to provide you with information to help manage your inventory levels. However, Amazon suggests that the use of this tool should not be a substitute for your own judgment about demand for your products. 

This is how they do it:

  1. Amazon evaluates ASIN eligibility regularly (so, a recommendation you see today may not be there another day).
  2. Products featured as Outlet deals will not become eligible for Outlet again for 90 days after the deal ends. 

Therefore, make sure you update your product settings to get better recommendations.

To be eligible for the Amazon Outlet Program, a product must:

  • Be in new condition.
  • Comply with Amazon’s customer product reviews policies and price policies.
  • Be currently available for sale and in Amazon fulfillment centers.
  • Have a sales history and at least a three-star product rating on Amazon.
  • Not be enrolled in Subscribe and Save.

Source: Amazon

How Does Amazon Calculate Excess Inventory?

Amazon calculates excess inventory based on the following criteria:

  • Economic inputs – Unit cost and recovery rate
  • Sales data – Demand forecasts and price elasticity

But, how is the Estimated Excess quantity calculated?

This is the number of units for which the cost of holding your inventory would likely be MORE than the cost of taking action (such as reducing prices to increase sell through or removing excess units).

This value is based on product demand and your costs (including fees, unit costs, and cost of capital inputs), and estimates the level of inventory that could give you the highest return on your inventory investment.

If the following conditions are met, Amazon will identify your items in stock as excess inventory:

  • At least one unit of inventory is more than 90 days old,
  • The product has over 90 days of supply, and
  • The cost of holding your inventory without taking any action is more than the cost of taking action (such as reducing prices to increase sell through or removing excess units)

When Will You Be Charged with Storage Fees?

Keep in mind that, in order to maximize in-stock performance and avoid unnecessary costs, you must maintain between 30 to 60 days of inventory.

You will be charged with FBA storage fees – and your holding cost of capital – if no action is taken to help sell through or remove your inventory.

These fees may include the Long-Term Storage Fee and are based on your current sales rate.

This estimation is calculated over a 3-year horizon.

Note: Inventory quantities are based on a daily snapshot and may differ from your actual inventory quantities.

How to Create an Amazon Outlet Deal

To create an Outlet deal, follow these steps:

  1. Go to Seller Central.
  2. From the Inventory drop-down menu, select Inventory Planning
  3. Click the Manage Excess Inventory tab.
  4. From the drop-down menu to the right of the eligible item, select Create Outlet deal.
  5. In the pop-up window, enter your Outlet deal price in the box next to the Max. Outlet deal price.

**Your price must be less than or equal to that maximum price.

Amazon specifies:

“The maximum deal price takes into consideration the lowest price charged by sellers offering the product in new condition.

The maximum deal price may fluctuate if the product’s current sale price changes before the deal starts. After the deal begins, Amazon may cancel it without notice if the product’s sale price rises above the maximum deal price.”

  • Review the Start and End dates of your Outlet deal.
  • Finally, click Submit.

Amazon Outlet Deals Report: Check the Status of Your Deal Submissions

Keeping track of your Outlet deals is pretty easy. With the Outlet Deals report you’ll be able to check:

  • Deal submission results,
  • Deal begin and end time, and
  • Deal status

Just follow these steps:

  1. From the Reports drop-down menu in Seller Central, select Fulfillment.
  2. Under Sales on the left-side navigation, select Outlet Deals.

You can also access the report from the Manage Excess Inventory page by clicking on Check status in Outlet Deals report under each submitted ASIN’s current price.

Changing Your Mind on a Deal Submission? This is How You Can Cancel an Outlet Deal

If you want to cancel an Outlet deal that has already started, first check the status of your deal on your Outlet Deals report and then contact Seller Support.

Otherwise, this is how you can cancel an Outlet deal submission, BEFORE Amazon completes its review.

  1. From the Inventory drop-down menu in Seller Central, select Inventory Planning and click the Manage Excess Inventory tab.
  2. From the drop-down menu to the right of the eligible item, select Create Outlet deal.
  3. Change the price and click Update.
  4. Click Cancel Outlet deal.

As we mentioned at the beginning of this blog post, it is recommended that you keep track of your inventory on a regular basis to avoid any Long-Term Storage fees.

However, Amazon has the best solution to help you clear up those FBA warehouse shelves while making the most of it. 

So, what’s not to like?

This is a win-win situation that will help you keep your loyal customer base happy while avoiding unnecessary overstock fees.

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Esteban Muñoz

Esteban Muñoz

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