In an ideal e-commerce world, every product up for sale has an impeccably-groomed listing to match and, most importantly, make it available for purchase. However, as an FBA seller, you probably know that it’s a tall order to stay on top of inflows and outflows of inventory 24/7—not to mention Amazon’s extensive laundry list of product, packaging, and shipping compliance policies on top of it all.
So if a product sits in the Amazon warehouse, and its listing isn’t live on the Amazon marketplace, does it have the potential to sell? The answer, of course, is no—this is the dilemma of stranded inventory for Amazon FBA sellers.
In this guide, we’ll cover how to fix stranded inventory FBA-style and break down the best practices for ensuring your merchandise doesn’t get lost in the wilds of the Amazon.
What Is Stranded Inventory?
Put simply, “stranded inventory” refers to any product that occupies space in an Amazon fulfillment center without a public-facing Amazon listing to match.
This break in the supply-demand feedback loop is a liability on three accounts:
- For you, since you’re losing out on potential conversions,
- For Amazon, which is spending storage space on products customers don’t even know are available for purchase,
- And for your business’ relationship with Amazon, which is strained when you don’t meet Amazon’s standards for inventory management.
If you have stranded items, rest assured that Amazon alerts its FBA sellers expediently. You’ll have 30 days to resolve the issue before your inventory is extradited, with the option to recruit Amazon to dispense with it more swiftly if the issue isn’t due to a listing error.
Let’s break down what happens when FBA sellers have stranded inventory on their hands.
What Happens When Inventory Is Stranded?
Aside from paying your usual monthly storage fees on products that aren’t visible in your storefront, Amazon adds several other penalties for stranded inventory.
Long-Term Storage Fees
Long-term storage fees are applied when inventory has been in an Amazon facility for more than 365 days.
On the 15th of each month, Amazon scans its seller inventories for items whose storage shelf-life is past expiration and alerts the seller accordingly. Fees are issued between the 18th and 22nd of the month—$6.90 per cubic foot or 15¢ per unit, which, as you can imagine, can add up over time.1
Storage Overage Fees
Instead of the per-unit structure used with long-term storage fees, Amazon may tally your overage expenses by the number of days you’ve exceeded your storage cap.
Remember that those overage fees aren’t going anywhere, even after you’ve reconciled your inventory—you’ll continue to be charged until your average daily volume has been reduced to your limit. Expect to pay $10 per cubic foot on inventory overage.2
Diminished IPI Score
Your IPI score, or your inventory performance index, is central to your reputation and success as an Amazon seller. It describes your ability to walk the fine line between keeping enough product to meet customer demand without your inventory overstaying its welcome on Amazon’s dime.
IPI scores are markedly compromised by stranded inventory, with severe penalties and fines if not kept up to Amazon’s standards.
Reasons Why Inventory Gets Stranded
Amazon currently offers over 30 explanations for stranded inventory, so suffice to say it’s essential to keep an eye on your Seller Central homepage for any unresolved product listings so you can troubleshoot before you get slammed with fees.
Here are some common reasons sellers encounter a stranded inventory issue:
Inaccurate listings – There are many reasons why your listing may not match up with your product. You may have mispriced your item (like adding an extra few 0s to the end of your homemade snuggie listing), or paired a product with an inactive ASIN. Whatever the circumstances, listing errors like these can be easily corrected in your inventory dashboard.
Deleted listing – Sometimes, even keeping a close eye on your Amazon IPI score can bite you in the behind. Suppose you’ve shuttered a listing for merchandise you’ve sold out of and a customer returns their purchase. In that case, the product will return to an Amazon facility with no virtual representation on your storefront. This oversight will also result in stranded inventory.
Blocked or suspended listing – Amazon reserves the right to embargo a product for a host of reasons, including everything from concerns over intellectual property rights to the legality of your product. Because individual countries can be dramatically different in their trade restrictions, blocked or suspended listings become more probable as an international Amazon seller.
Damaged or defective products – When a product arrives at an Amazon facility, it undergoes inspection. Either it passes inspection and is marked “sellable” and added to your inventory of active items. If it’s damaged or defective thanks to inadequate packaging, Amazon marks it as “unsellable.” Unsellable means…well, it speaks for itself. From there, it’s up to you to submit a removal order, return order, or disposal request within 30 days of the item’s arrival. Otherwise, you’ll be charged for the FBA shipment taking up Amazon’s valuable space.
A lack of Importer Of Record (IOR) – An IOR is kind of like your representative of all things international shipping. The IOR is legally responsible for collecting and paying all the fees, taxes, and duties associated with shipping. What does this have to do with stranded inventory? If a shipment doesn’t have an IOR and it arrives with a big fat shipment bill, Amazon’s FBA centers will say, “Nope. We’re not paying that.” and refuse the shipment. End of story.
Also, note that your stranded inventory may be the result of a suspended ASIN, commonly attributed to Amazon’s quality concerns over your product.
Stranded Inventory vs Unfulfillable Inventory
Think of “unfulfillable inventory” as the yin to stranded inventory’s yang.
Where, in the case of stranded inventory, a product is waiting patiently to go home with a customer who remains none the wiser to its existence.
On the other hand, unfulfillable inventory does have a corresponding listing and has already been purchased by the customer. Still, due to issues with product quality, Amazon disqualifies it from shipment. This is usually a result of:
- Damage sustained by a product during shipment,
- Defective products,
- And expired products.
More often than not, unfulfillable inventory results from shoddy shipping practices.
Stuck Shipments In International Markets
Another major reason for stranded inventory or unfulfillable inventory is the challenge of international shipping. When shipping to an Amazon fulfillment center in a country outside your own, you’ll often run into the issue of not having an importer.
One problem: Amazon will not act as the Importer Of Record (IOR).
Shipments might get stranded (in the wrong Amazon warehouse) or wind up unfulfillable (held up in customs) without an IOR. An IOR can be contracted beforehand to avoid these issues or as a triage service to free up stuck shipments.
How To Fix Stranded Inventory On Amazon
As you develop an inventory management protocol, your priority is to eliminate the possibility for both stranded inventory and unfulfillable inventory.
So, how to fix stranded inventory Amazon FBA?
Here are three tried-and-true ways to troubleshoot stranded inventory and actionable measures you can take to avoid the issue in the future.
#1: Monitor Your Listings
Since Amazon has little interest in having stranded inventory on hand, they’ll notify you swiftly if they detect a mismatch between your inventory and your listings via email and on the Seller Central dashboard.
As an FBA seller, it’s your job to keep a watchful eye on the “Manage Inventory” section of your dashboard on a routine basis. Any flagged listing will appear in the “Fix stranded inventory” tab, where you can run through your merchandise and reconcile any minor mishaps accordingly.
#2: Preempt Shipping Mishaps
Damaged products are a major issue plaguing Amazon FBA sellers today, which may cause many sellers to question, “Is Amazon FBA worth it?”.
Many products arrive impaired or improperly packaged because of improper packaging, handling, and shipping while in transit—and this is especially true of international shipping.
This is why it’s so essential to hire an IOR. IORs will take care of:
- Meeting customs compliance standards in every facility, in multiple destination countries,
- Resolving any packaging or shipping issues before they land at Amazon fulfillment centers,
- Keeping close tabs on all shipments every step of the way, so you catch any shipping snares in real-time,
- And ensuring highly-regulated products meet the requirements of international fulfillment centers.
If you’re an FBA business, you don’t need to be trafficking in temperamental products like IT gear to experience complicated international regulation procedures—even products as innocent as children’s toys often get held up while in transit.
Whether you’re currently coping with stranded inventory or are looking to tactically revise your fulfillment practices, it’s essential to partner with a third party who’s knowledgeable in the infinite ins and outs of FBA shipment. An IOR will help you avoid stranded inventory by facilitating the agile, informed clearance of your inventory at each transit threshold—no matter the particularities of each individual fulfillment center or destination country.
#3: Streamline All Unnecessary Costs
Amid the rapid rhythms of modern e-commerce, sometimes stranded or unfulfillable inventory is an inevitability. To mitigate the associated costs, your priority should be to get ahead of any externalities that arise.
Hiring an IOR like Zee will mitigate extraneous expenses and give you the potential for significant returns, including:
- Averting any fees or shipping hold-ups due to improper packaging protocol,
- Getting ahead of customs clearance in countries in international fulfillment hubs,
- Managing duties, taxes, and shipping fees associated with national and international shipments,
- And squaring off VAT payments to lay the ground for massive reimbursements on your tax returns.
In short, hiring an IOR not only saves you the manual headaches of staying on top of shipping protocol around the world—and, materially, it can also save you and your FBA business a pretty penny in the process.
Keep Your Inventory Grounded With Zee
With over 190 million square feet of fulfillment hub space, Amazon has plenty of room for your products to get lost in the shuffle.3 To avoid both stranded and unfulfillable inventory, you’ll need to work with an IOR like Zee who can guide your inventory along its route with the care and knowledge your business is worthy of.
Zee will assist with:
- Managing the entire shipping process, including brokerage, taxes and duties, and shipping tracking,
- Reconciling stuck shipments or fulfillment hiccups as they arise,
- And simplifying the Value Added Tax process (where applicable) to help you maximize reclaim on your tax returns.
To avoid stranded inventory, your first order of business is to simplify the process. By delegating shipping to Zee, you’ll keep your inventory away from product purgatory and prevent shipping headaches (and costs) better spent investing in your first priority: your business.
Sources:
- Seller Central. Long-term storage fees. https://sellercentral.amazon.com/gp/help/external/GJQNPA23YWVA4SBD
- Seller Central. FBA inventory storage fees. https://sellercentral.amazon.com/gp/help/external/V8JEETWV9Q33CMX?language=en_US&ref=efph_V8JEETWV9Q33CMX_cont_XLRKWL8L5BMSHWB
- The New York Times. Amazon Is So Much Bricks and Mortar. https://www.nytimes.com/2020/08/12/technology/amazon-warehouses.html