The View from England

Using Amazon to wind down a retail business

There are many blogs on how to improve sales on Amazon. In this post, I’ll address the opposite: how to wind down and stop selling on Amazon entirely.

It is becoming clear for some retailers that selling on Amazon does not provide enough margins to continue. It is never easy to close a revenue stream. But commercial realities must take precedent. For such businesses it is straightforward: just delete your inventory and walk away.

However, there are other reasons to stop selling on Amazon, such as closing down the business entirely, not just on Amazon. This could be due to retirement or business problems. In these cases, you want to sell off all outstanding stock for as much money as possible in as short a time as necessary.

Going out of business

For merchants with a physical store, the first thing to do is a have a going-out-of-business sale. Banner adverts in the window and massive price markdowns are common. That’s because they work. There comes a time, however, when a closing-down sale stops working. Either the local consumers do not want the items, or the merchant does not want to lower the prices further.

This is when you return to online selling channels to finish the liquidation.

Concentrate your efforts to just one or two sites. For most retailers, Amazon would be one of them. What follows are my suggestions to maximize your liquidation profits on Amazon.

Liquidating on Amazon

Like all business activities, it helps to plan. You have a finite stock. You will not be purchasing new stock. You are not planning any growth. Therefore the first thing to consider is how long to take to sell the stock. If it costs money to store the inventory, make sure that the sales proceeds exceed this expense. It’s a good idea to stick to a schedule and not let the liquidation process drift. Otherwise, it becomes a hobby and not a business.

Plan the actual sale. Count the number of items you have. Then order precisely the required amount of boxes and packing material. By buying it all at once, you may get it cheaper.

I would delete all the existing inventory on Amazon. After years of business, it is probable that your inventory counts an Amazon are not accurate. Some items will be missing. Some will be out of stock entirely. Many have the wrong price given your current liquidation goals.

Next, manually re-enter your stock. Once you sell out of something, you will not be reordering. Thus the only requirement is to get it exactly right — now. You can populate the minimum price that you will sell the item for. In a liquidation, this price could barely exceed the postage and packaging cost and Amazon’s commission.

There is no room for mistakes. Your order volumes will inevitably drop as you sell out. You will be vulnerable to negative feedback and A-Z claims. If there is a customer complaint regarding a delivery or product description, it may be best simply to refund immediately. There is no long-term reputation to worry about.

What is vital is that you not get suspended on Amazon due to a customer complaint on a small-value sale. Since this a liquidation, every sale is profit. So any suspension or hiccup will affect you far more than normal.

Given the lower order volumes, the lack of reordering stock, and the dwindling inventory, you may find that the expensive order management system is no longer needed. Then as sales start to drop, and the deadline for the final closure approaches, drop the prices towards your absolute minimum.

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