As we move into 2025, there’s one mistake we want Amazon sellers to leave behind: overstocking inventory.
Whether it’s caused by poor inventory planning, inaccurate demand forecasts, unreliable suppliers, or something else, the overstocking Amazon inventory fallout can be massive—and not in a good way.
If this sounds all too familiar, or if you’re worried about falling into this trap, let’s dive into why overstocking can hurt your business and, more importantly, how to avoid it moving forward.
What Does Overstocking Mean?
Overstocking happens when you purchase more inventory than you can sell within a reasonable time frame.
You end up with excess stock that sits in a warehouse, tying up cash and resources while generating additional costs.
Amazon considers inventory overstocked if:
- An item is older than 90 days in storage.
- There is a supply worth more than 90 days for any item.
But Amazon’s definition aside, overstocking starts to become a big issue in your business when the holding costs, like storage fees and tied-up cash, outweigh the benefit of bulk ordering and potential sales.
Why is Overstocked Inventory Bad for Business?
Overstocking creates multiple challenges for Amazon sellers, affecting cash flow, profitability, and operational efficiency.
Here are the main consequences we see:
1. Cash Tied Up in Inventory
The main issue is cash flow. Overstocking ties up money that you could be using in other places: like marketing, reorders for fast-moving products, or business pivots / scaling.
It reduces liquidity and limits your ability to respond to new opportunities quickly.
2. High Storage Fees
This is another big one. Storing excess inventory costs money, especially as an Amazon FBA seller. The longer items sit in storage, the more money Amazon charges you. And during busy seasons like Q4? The storage fees will skyrocket.
If you have slow-moving products taking up space, you are likely to face storage fees in the thousands of dollars every month.
3. Risk of Inventory Aging
The longer your inventory sits without selling, the higher the risk of damage or spoilage.
This is particularly important if you have products with expiration dates, fluctuating demand, or seasonal demand.
4. Missed Opportunities and Unrealized Potential
When funds are tied up in overstocked inventory, you lose the ability to grab new opportunities as they come. Have a new trend you want to jump on? Want to grow another part of your business?
Your idle inventory is consuming resources that could’ve been used to realize new opportunities.
5. Penalties and Cash Flow Strain
Finally, Amazon imposes long-term storage fees for items that hang around too long in their warehouses. Once you add storage fees, on top of restrained cash flow, on top of long-term storage fees, the money you saved by buying in bulk really becomes irrelevant.
How to Prevent Overstocking Amazon Inventory
So, how do we avoid it? There are a few ways, but it mostly comes down to better inventory management.
Here are the first areas to address:
1. Monitor Inventory Levels Regularly
Use tools like Seller Board or Scale Insights to track average daily sales rates and identify overstocked items. Monitoring inventory weekly or even daily allows you to make timely adjustments, such as running promotions or discounts to clear excess stock.
For example, if you notice an item’s daily sales rate is much lower than expected and you have enough stock for 480 days, you can run a coupon campaign to offload the surplus.
2. Optimize Purchase Quantities
Buying in bulk to save money per unit can be tempting, but ordering too much can leave you with overstock and cash you can’t use elsewhere. It’s a balancing act—you want enough stock to meet demand but not so much that it sits around.
A good rule of thumb is to aim for 48–60 days’ worth of inventory, adjusting as you see sales trends change or demand forecasts shift.
3. Run Promotions to Move Overstocked Items
Once you identify overstocked inventory, consider offering discounts or running promotional campaigns. Even selling at a loss can be better than incurring long-term storage fees or leaving cash tied up in unsold items.
For example, offering a 20% discount on slow-moving products might help generate immediate cash flow, which can then be reinvested into faster-moving inventory.
4. Analyze Market Trends
Stay on top of seasonal and market trends to know when to stock up and when to hold back. Tools like Google Trends can help you forecast demand more accurately so you’re not left with too much inventory during slower times. Adjust your stock levels based on sales patterns, and avoid over-ordering for periods when sales are typically lower.
5. Use Fulfillment Strategies to Lower Costs
Check out programs like Amazon’s Sips (Ship In Prime Packaging), which allows you to ship products in ready-to-send packaging. This skips some of Amazon’s handling steps and reduces their fulfillment fees. It’s a smart way to cut costs and make your storage space work more efficiently.
6. Implement an Inventory Management Strategy
Use a system like Just-In-Time inventory management, where you order smaller amounts of stock more frequently. This helps you avoid overstocking while still keeping up with customer demand. It’s all about finding the sweet spot between having enough inventory and not too much.
7. Audit Inventory Regularly
Take time to review your inventory regularly to see how it’s performing. Check key metrics like turnover rates, how fast you fulfill orders and the time it takes for items to go from production to sale. These audits can help you spot overstocked items and set better reorder points, so you avoid making the same mistakes in the future.
Need More Help Managing Your Amazon Inventory?
At MuseMinded, we specialize in helping Amazon sellers like you fine-tune their margins and keep more of what you earn.
If you need more help improving your bottom line, head to our contact page or use the calendar below to book an introductory call—it’s easy and quick.
In the meantime, why not check out our Amazon Benchmark Guide? It’s a great way to see how your margins compare to your competitors and find new opportunities to grow.
We’re here when you’re ready—talk soon!
