Spring Cleaning: Scrub & Evaluate Your Amazon FBA Inventory

by Larissa Miralles

Springtime is here again, and Q2 is in full swing. For me, springtime is a time for renewal, a time for evaluation, and a time for “spring cleaning” so to speak, not just at home or on a personal level, but on the business level, as well.

In this three-part blog series, I’m going to share three key areas where every Amazon.com (“Amazon”) business could benefit from a little spring cleaning this season:

  1. Scrub and evaluate your Amazon FBA inventory
  2. Brush up on your skills, and cleanup your team’s responsibilities
  3. Polish up your processes and organize your days, months and years ahead

In this article, I’m going to focus on cleaning up your existing Amazon FBA inventory.

Simplifying Processes

Just a few years ago, my husband (and business partner) and I had 40,000+ products available for sale on Amazon and generated 8-figures in sales revenue at our peak. As impressive as those numbers may sound, believe me, it wasn’t all roses and rainbows. In fact, it was quite the opposite. That much inventory also meant:

  • A 20,000 square foot warehouse
  • 15 full-time employees, a call center and numerous outsourced resources
  • More products to manage and more risk for product suspensions
  • More customer service - questions, comments, and complaints
  • More tools, software and services
  • More overhead and less profits

And quite frankly, more headaches that only slowed us down from achieving the freedom and lifestyle that we knew we deserved.

So, what did we do?

We chose freedom. Then, we evaluated and scrubbed the heck out of our inventory in Seller Central. We identified the winners, the losers, those that were risky but still worth keeping, and we created a plan around how we actually envisioned our business to run and what types of business relationships we desired to have.

Today, we have 150 active products. We got rid of our warehouse, and we manage a team of three virtual assistants and a handful of specialized outsourced resources. We travel full-time for pleasure, while running our business the way we have chosen to design it. This massive “deep clean” led to:

  • Increased profits - still growing and on track to generate the same sales revenue.
  • Incredible relationships with our brands, manufacturers and suppliers.
  • Exclusivity on numerous products.
  • More control over our inventory with less to manage in all marketplaces.
  • More capable team members and fewer of them.
  • And a life and business that we love, based on what we desired and deserved.

Regardless of whether your motivation differs from ours, evaluating and cleaning up your Amazon inventory is still something that every successful Amazon merchant should do on a regular basis. Now, I’m not saying take your spring clean to an extreme deep clean, like we did over time - unless of course that’s aligned with your business goals. However, I am saying, make it a point this spring to evaluate and clean up your inventory so that you may get to know your products and profitability on a more intimate level.

Here are three things that you should do to spring clean your way through your Amazon inventory:

1. Evaluate Your Existing Inventory

As I’m sure you can imagine, having 40,000+ SKUs made it nearly impossible for us to get to know all of our products on an intimate level. Our strategy in the past was more of a shotgun approach - to dominate by targeting a variety of large audiences and capturing a high volume of “random” sales. Our strategy today allows us to focus on a smaller set of SKUs that have proven to be winners over time. When scrubbing through and evaluating your inventory, there are a few things that you’ll want to identify - the winners, the slow movers that have potential, and the plain-out losers.

The winners are obviously your keepers. Ideally, winning products are those that work for you versus you slaving over them. They are products that are replenishible, have a high sales velocity and/or profit margin, require very little management and extra resources, are not seasonal, have a solid track record and won’t be taken away from you in the long-term. If you’re familiar with the Pareto principle (aka the 80/20 Rule), these are the 20% of your products that make up 80% of your results.

The slower movers that have potential are products that you may consider continuing to sell because they are SKUs that consistently add to your bottom line. Implementing a long-tail or even seasonal strategy with these types of products could be very beneficial in sustaining and increasing your profits, as long as the SKUs have proven to convert and generate a healthy profit within your own business.

The losers, on the other hand, are the complete opposite of the winners. These are products that strip away from your freedom and your ability to focus on the more lucrative areas of your Amazon business. They are products (or even suppliers) that demand too much of you or your team’s time. They are items that are prone to one or more of the following:

  • a high volume of customer complaints and/or returns
  • Amazon policy violations
  • Minimum Advertised Price (MAP) violations
  • are sourced from a manufacturer or distributor who has no interest in developing a relationship with you and/or lacks control over their brand(s)
  • constant out of stocks and/or not sustainable over the long term

These products are best to cut. Products that possess similar qualities should, if possible, be avoided in the future, especially if you recognize the value of not only monetary profits but also of your time, which is just as important.

2. Stay on Top of Your Amazon FBA Long-Term Storage

When merchants get hit with hefty long-term storage fees, it’s a sign that there’s room for improvement, whether that be from a trending standpoint, a marketing standpoint or both. Smart sellers have solid strategies for every single SKU they sell - from sourcing to pricing to replenishing to generating sales. Because Amazon is such a dynamic marketplace, it’s critical to stay on top of the movement of your products and to master your product trends. We personally use RestockPro, and it has tremendously helped us stay on top of our replenishments and has guided us through making smart purchasing decisions.

Not replenishing enough can lead to lost profits from lost sales. Replenishing too much, on the other hand, can lead to excess storage fees month after month, especially if you don’t have a strategy around how to move the inventory you have. Storage fees for one product may not be too big of a deal, but the more they add up, the more you’re going to begin to feel it, if you haven’t felt it already.

This spring, make it a point to clean up your excess inventory. Evaluate which items have been collecting dust and costing you money. Then determine the best plan of action to start recouping some of that money back by either blowing the products out, setting up marketing campaigns to push product visibility, or simply create a removal order. Reinvest your profits and time spent into the winners you’re about to identify from Strategy #1 and the opportunities you’re about to discover in Strategy #3.

3. Identify New Opportunities to Expand Your Business with Your Existing Products

Once you’ve identified your winners and have a plan of attack for how to move your slower-moving inventory, make it a point to focus on renewal and growth strategies. Most merchants will typically jump right into finding their next new distributor and sourcing for the next profitable product in order to expand their Amazon businesses. Pro Tip: Don’t be like “most merchants.” Instead, create as many new opportunities you can from the existing products or brands you’ve chosen to keep as winners. For example, ask yourself:

  • Do I have a good relationship with the manufacturer or supplier {X}? If not, how can I add more value to this relationship?
  • Is there room for improvement for products {X, Y, and Z}? If so, what will I do to improve the listings?
  • What strategies can I implement to generate more sales for these products? Write them down.
  • Are there other products from the same brand that I can add to my inventory that meet my “winning product” criteria? If so, what are they and how will they contribute to my bottom line?
  • What will it take for me to become the exclusive seller in the Amazon marketplace for these products? Am I willing to do what it takes?
  • Is my inventory listed in other marketplaces? If not, which marketplace shows the most opportunity?

Now that I’ve got your mind churning, I challenge you to come up with some of your own questions to identify additional growth opportunities using your existing inventory. Stay focused on these opportunities until you fully exhaust your expansion and realize results of your own.

When you’re able to clean up and clearly see what’s presented right in front of you, plenty of opportunity awaits you…it’s now up to you to decide what you’re going to do with it!

Originally published on April 25, 2019, updated April 25, 2019

This post is accurate as of the date of publication. Some features and information may have changed due to product updates or Amazon policy changes.