Fulfillment by Amazon (FBA) has always been the preferred logistics solution for starting cross-border business, and it can also effectively help merchants attract more global consumers. But this year, due to the epidemic and restrictions on Amazon warehouses, it has become very difficult to operate Amazon stores. In particular, businesses often face high slow-moving inventory charges. Today we will tell you what is stranded inventory? Why does inventory retention occur and how to solve it?
(1)What is stranded inventory?
When products stored in Amazon’s fulfillment centers become unsellable, they are “stranded inventory.”
If the merchant does not regularly check the inventory products, resulting in a large amount of inventory stranded, then you may have to bear the high cost of inventory storage, including monthly inventory storage costs and FBA long-term storage costs.
And stranded inventory will also have a negative impact on your store’s “Inventory Performance Index”. This indicator is a system used by the Amazon platform to ensure that sellers regularly optimize their inventory. If you have stranded inventory, it means that it will occupy Amazon FBA space, which is something that the Amazon platform is very unwilling to see. And starting from August this year, Amazon has introduced regulations that if the store’s “inventory performance index” is lower than 500, the store’s original storage space will be limited.
(2) Reasons for stranded inventory:
1. Pricing errors
If the price of the product is set too high or too low, the Amazon platform will Block product listings.
Solution: Products are sold through range prices by setting minimum and maximum prices when managing inventory operations.
2. The product list is frozen
When the product list lacks necessary information, such as pictures, product highlights, or too many product returns, the listing will be frozen.
3. The product list is incorrect
The product list error means that the inventory does not match the existing active ASIN. For example, the product sent to the FBA warehouse does not match the listing, or the listing is deleted. .
4. Product expiration
Amazon will mark expired products as stuck inventory, so merchants need to remove the inventory of expired products in a timely manner.
5. Close or delete the product list
If the seller deletes the product list immediately after the product is sold out, the returned products will become stranded inventory.
(3) How to prevent backlog?
1. Make sure Amazon allows products to be listed, especially those sellers whose products need to be shipped by air.
2. Fill in the product category information. The advantage of this is that it helps prevent listing errors. Amazon allows sellers to upload products for the first time without adding images and product features. But when you want to send product inventory to Amazon FBA later, you must ensure that all information is complete.
3. Fill in the FBA product quantity correctly.
If the inventory received by the FBA warehouse exceeds the quantity filled in the seller’s shipping plan, or the product does not fall into Amazon’s shipping plan, the product will become stranded inventory.
4. Don’t delete your product listing immediately.
Even if your inventory is sold out and you don’t plan to replenish it, don’t delete the product right away. Because any potential inventory loss or customer returned products will become stuck inventory because there is no product listing.