Amazon Excess Inventory: How to Choose the Right Clearance Strategy

Dead stock is a silent margin killer. It does not just sit in the warehouse. It actively drains your cash flow through long-term storage fees and aged inventory surcharges. 

Every day you hold unsold units, your ability to invest in profitable bestsellers shrinks. You are left with a difficult choice. Do you liquidate now to stop the bleeding, or hold out for a better price? 

This guide breaks down the math of Amazon excess inventory. We compare the four primary clearance strategies to help you decide between immediate speed and maximum value recovery.

The costs affecting your Amazon margins

Amazon excess inventory quietly erodes profits and flexibility for sellers. Every unsold unit costs more than just storage, with direct and indirect costs compounding quickly.

Direct costs include:

• FBA long-term storage fees: $6.90 per cubic foot after 365 days
• Aged inventory surcharges: $0.35 per unit monthly after 15 months, increasing further over time
• Storage utilization fees: Up to $10 per cubic foot for sellers with high utilization ratios and low IPI scores

For example, holding 500 units for 90 days with high utilization surcharges can result in over $1,000 in fees plus lost sales opportunities.

Table: Accumulated storage costs over time

Indirect costs are even more damaging. Cash tied up in dead stock cannot fund new product launches. Your capacity allocation shrinks under Amazon’s performance-based system, making it harder to restock bestsellers when inventory limits max out.

Top sellers rely on real-time inventory analytics to flag costly overstock before fees spiral. Epic Mens, for example, saved over 80 hours per week by automating inventory tracking and reporting, catching aging stock before it drained their margins.

To solve the problem, you first need to know exactly what counts as excess inventory and why it happens.

What is Amazon excess inventory and why does it happen?

Amazon defines excess inventory as stock likely to incur long-term fees or remain unsold.

What qualifies as excess:

• Aged FBA stock: Inventory over 90 days without sufficient sales velocity
• Stranded inventory: Items flagged in your Inventory Health Report that cannot be sold
• Seasonal products: Items remaining past their peak selling window
• High supply days: SKUs with more than 180 days of supply based on trailing sales

Some common causes include:

• Demand misforecasting: Overestimating sales or underestimating seasonal drops
• Supply chain delays: Inventory arriving after peak demand windows
• Over-ordering: Bulk purchases that exceed actual demand
• Failed promotions: Stock expected to clear that did not move
• Seasonal misalignment: Holiday items still in stock after the season ends

To spot excess inventory, go to Seller Central, then Inventory, then Inventory Planning, and select Inventory Age. This report shows aging stock, units on hand, and estimated fees. Focus on SKUs with 90 or more days of supply, as these carry the highest risk.

Furthermore, sellers use tools like Webgility to sync inventory age and sell-through rates across all channels, making it easier to spot and act on excess stock fast.

Once you know what Amazon excess inventory you have, the next step is understanding the real risks and costs of holding it.

The true cost of holding Amazon excess inventory

Every unsold unit costs you more than just storage; it limits your growth.

FBA long-term storage fees escalate quickly:

• After 365 days: $6.90 per cubic foot or $0.15 per unit, whichever is greater
• After 15 months: Additional $0.35 per unit monthly or higher cubic foot fees
• Storage utilization surcharge: Can reach $10 per cubic foot for inefficient storage usage

For example, a seller with 1,000 units paying peak storage fees could pay over $2,000 in just 90 days. If forced to liquidate, recovery is often just 5–10% of retail value.

Opportunity costs compound the damage:

• Cash locked in dead inventory cannot fund new products
• Capacity limits prevent restocking winners
• Forced liquidation destroys up to 90% of product value

Table: The compounding cost of Amazon's excess inventory

With a dashboard showing order volume and average order size, the team gained clear channel-level and SKU-level performance visibility and could compare customer buying behavior across sales channels. The result: 8–16 hours recovered every week, without manual spreadsheets.

Webgility breaks down FBA fees and true SKU-level margins, helping sellers see the full cost picture.

Now, let us explore the main strategies to clear excess inventory, each with its own speed and recovery trade-offs.

The four main clearance strategies for Amazon excess inventory

No single clearance strategy fits every seller. Choose based on your goals and constraints. The four primary methods are:

1. Multi-channel expansion: List excess inventory on other marketplaces (e.g., Walmart, eBay, Shopify). Best for trending SKUs with cross-channel appeal.
2. Price-driven promotions: Use discounts, coupons, or deals to boost sales velocity on Amazon. Best for slow-movers with some demand.
3. Third-party warehousing: Remove inventory from FBA and store externally. Best for seasonal or long-tail SKUs you plan to relist later.
4. Liquidation/removal: Use FBA Liquidations, donations, or disposal to clear obsolete or unsellable stock fast. Best for products with no viable demand.

Automation makes multi-channel expansion and profitability tracking far less risky and time-consuming. But how do you choose the right strategy for your situation? 

That is where the speed vs. recovery framework comes in.

Suggested Read: How to Manage Amazon Inventory for Better Profits

Speed vs. recovery: Your decision framework

Your best strategy depends on timeline, recovery goals, and operational bandwidth.

Use this decision tree:

• Need cash in 7 days? → Liquidation/removal
• Can wait 14–30 days for a higher margin? → Price-driven promotions
• Can wait 30–60 days and have cross-channel demand? → Multi-channel expansion
• Have long-term or seasonal stock and external storage? → Third-party warehousing

Scoring rubric

Table: Decision scoring rubric

Add up your scores to guide your choice. Real-time SKU and channel profitability insights (from Webgility or similar tools) help you make confident, data-driven choices.

With your priorities clear, see how each strategy stacks up on speed, recovery, and effort.

Comparative matrix: Clearance strategies by speed, recovery, and effort

See how each strategy performs on speed, recovery, effort, and risk.

Table: Clearance strategy comparison matrix

Once you have chosen your strategy, here is how to execute it step by step.

Suggested Read: 7 Best Ecommerce Inventory Management Software in 2025

Step-by-step: How to implement your chosen Amazon excess inventory strategy

Follow these steps to clear excess inventory efficiently and track your results.

Liquidation/removal:

1. Go to Seller Central → Inventory
2. Create Removal Order
3. Select Liquidation or Disposal
4. Confirm and submit
5. Track payout and inventory status

Price-driven promotions:

1. Go to Seller Central → Advertising
2. Create Promotion or Coupon
3. Set discount (15–20%)
4. Run for 7–14 days
5. Monitor sales and margin impact

Multi-channel expansion:

1. Identify excess SKUs
2. List on Walmart, eBay, Shopify, or other channels
3. Set up inventory sync to avoid overselling
4. Monitor sales by channel
5. Adjust pricing and listings as needed

Third-party warehousing:

1. Create a removal order in Seller Central
2. Ship inventory to the external warehouse
3. Track inventory externally
4. Relist or reintroduce as demand returns

Set up inventory sync before expanding to new channels, and monitor SKU-level sales velocity with Webgility during promotions.

With your strategy in motion, here is how automation and analytics make every step easier.

Suggested Read: How to Configure Discount and SKU Mappings in Webgility Desktop for QuickBooks Desktop Posting

5 costly mistakes that sabotage inventory clearance

Even a solid strategy fails if the execution is flawed. Avoid these common traps to protect your remaining capital:

• Margin blindness: High sales velocity during a promotion is meaningless if you are losing money on every unit. Sellers often forget that FBA fees remain static even when prices drop. Calculate your true break-even point at the SKU level before slashing prices
  
  
• Platform tunnel vision. A product failing on Amazon might still have legs on Walmart or eBay. Liquidating inventory that has viable demand on secondary channels is a waste of recoverable assets. Always check cross-channel performance data before destroying stock
  
  
• Unsynced expansion: Manually listing excess stock on other channels creates a high risk of overselling. If you sell the same unit on Amazon and Shopify simultaneously, you face cancellation penalties and potential account suspension. Real-time sync is non-negotiable
  
  
• The cost of hesitation: Waiting "just one more week" is a silent margin killer. Long-term storage fees compound daily. You need automated age alerts to force a decision before the fees exceed the product's recovery value
  
  
• Intuition over analytics. Relying on gut feeling usually leads to holding stock too long. Top sellers replace guesswork with automated reporting that integrates FBA fees and accounting data to see the full financial picture

Webgility customers save up to 90% of reconciliation time, catching costly errors before they hit the bottom line. Integrating FBA reports and accounting data prevents hidden losses and enables rapid pivots.

Conclusion

Don't let Amazon excess inventory become a permanent drain on your business. Whether you choose to liquidate for immediate cash or expand channels for higher recovery, the key is to act now before fees compound.

Sellers who leverage real-time data and automation protect their margins and move faster than the competition. 

Ready to clear your shelves and boost your profitability with Webgility?

Book a demo to learn more. 

FAQs

What is the fastest way to clear Amazon excess inventory?

Amazon's liquidation program is the fastest, clearing inventory within 7–14 days, but recovers only 5–10% of retail value.

Can I use multiple clearance strategies at once?

Yes, you can combine strategies. For example, run a price-driven promotion first, then liquidate any remaining stock if it does not sell.

How do I track if my clearance strategy is working?

Monitor units sold, margin recovered, and time to clear using real-time dashboards or inventory tools. Compare results to what you would have achieved through liquidation to verify your strategy's effectiveness.

What should I do if my inventory is not moving after a promotion?

If a promotion fails, try adjusting the offer or pivot to liquidation or multi-channel expansion to clear remaining stock.