July 21, 2022 4 min read
What, Exactly, Are Amazon Liquidations?
Traditionally, liquidations occur when businesses are preparing to close their doors. At that point, the company may have its leftover merchandise, fixtures, and other assets sold at a discounted price. In turn, they’re able to transform those items into usable income rather than simply accepting losses on them. That’s the basic definition of liquidation.
In the case of Fulfillment By Amazon liquidations, vendors don’t necessarily have to be leaving the e-commerce sector to sell their unmoved goods. They can simply select items that aren’t selling or that have been returned and add them to a pallet for a bundled sale. From there, Amazon will calculate the partial value of the pallet based on the average selling prices of the included products and other factors.
Liquidation pallets are then shipped to liquidators who sell the items to their own customers. Amazon adds a portion of the value of the liquidated merchandise to vendors’ accounts within two to three months after the order has been submitted. This is known as the net recovery value. Processing and liquidation referral fees are deducted from the recovery value of each item. Despite the discounts and fees, merchants are still able to make at least a little of their money back on the items they can’t sell through their online stores.
More than 9 million sellers grace the Amazon website according to the latest reports from this world-renowned e-commerce giant. They cater to the online shopping needs of more than 213 million consumers in the United States as well as millions of others abroad. Based on the latest figures, Amazon merchants and fulfillment centers process more than 65,000 orders per hour with over 1.5 million packages being delivered to waiting customers each day.
Even with the sheer volume of orders coming in and being fulfilled, Amazon sellers may not be able to move all their merchandise. Seasonal sales slowdowns, changes in purchasing trends, and other factors often leave sellers with a surplus of merchandise that ultimately lingers on warehouse shelves. On top of that, average customer return rates range anywhere from 5 to 40 percent depending on the types of products in question, placing even more weight on vendors’ shoulders.
Combating Sellers’ Losses with Amazon Liquidations
Returns and unsold merchandise can put a damper on sellers’ profits. In an effort to help them recoup some of those losses, Amazon offers the option of liquidating their merchandise. This allows merchants to sell some of their excess products. While they may not be able to reap the full selling price for those products, liquidations can certainly help bridge the gap and thwart additional fees for storage and other aspects.
Which Items Can Amazon Sellers Liquidate?
Most items are eligible for liquidation from electronics and toys to clothing and jewelry. Some exceptions would be products that were damaged by customers, delivery drivers, and warehouse personnel. Products that could be hazardous or have been recalled by the manufacturer aren’t suitable for liquidation. Expired items, like food, cosmetics, and medications, can’t be liquidated, either, according to the portion of the Amazon website that’s dedicated to vendors.
Why Would Vendors Liquidate Perfectly Good Inventory through FBA?
Liquidating unsold and returned inventory through Fulfillment By Amazon offers several benefits for merchants. For one, it helps to eliminate unnecessary warehousing fees for items that just aren’t selling and frees up space for new inventory. With warehouse space becoming increasingly sparse and storage costs constantly growing, getting rid of unwanted items is certainly helpful for vendors.
Secondly, as mentioned earlier, liquidating merchandise allows sellers to recover some of the costs of those items rather than simply disposing of them and losing all the money they have tied up in their inventory. At the same time, eliminating old merchandise allows sellers to avoid aged-inventory surcharges and other fees from Amazon. In short, liquidating is the less costly way to go.
Can Amazon Customers Purchase Liquidation Pallets?
Amazon has strong working relationships with a variety of liquidators. Those buyers purchase liquidation pallets at discounted prices. Then, they can stock the items in their own online or brick-and-mortar stores if they wish. They also have the advantage of passing their liquidation discounts along to their own customers.
Certain small-scale liquidation pallets are available to the general public through the Amazon website. For the most part, though, the ones with the largest selections of merchandise are only available to the liquidators Amazon has chosen to do business with. To take full advantage of Amazon liquidations, consumers can turn to the liquidators.
What Are the Advantages of Buying Amazon Liquidation Pallets?
Purchasing Amazon liquidation pallets brings several advantages to the table. As noted, those pallets are filled with steeply discounted items. Some of them can be purchased for half their actual retail value or less. That allows liquidators to maintain low prices when they resell their wares. Considering the variety of products that could be included in a liquidation pallet, it also gives liquidators’ customers a vast selection of items to choose from.
Making the Most of Amazon Liquidations from Every Perspective
Amazon vendors have ample opportunities to sell their products and earn profits. When items fail to sell, though, they may face significant losses. Amazon liquidations allow them to avoid unnecessary warehousing fees and other expenses while making up for some of the money they’ve invested in their unsold merchandise.
By extension, liquidators have an opportunity to purchase those Amazon-worthy products at a fraction of the costs they’d pay at full retail price. They can use those items to stock their stores and make their customers happy. Though liquidation pallets could be considered massive grab bags, they certainly contain a range of interesting and exciting merchandise for pennies on the dollar. You might say everyone is a winner with Amazon liquidations.
If you are interested in learning more about Amazon liquidations, contact Pennies for Gold today!
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