We recently posted Amazon’s news about FBA donations. The purpose of this new program is to allow donation of returned products or excess products to Amazon for those sellers who use fulfillment by Amazon. This allows sellers to get rid of unnecessary or unwanted inventory and Amazon then takes these products and returned items and transitions them to charities where possible.
Should You Use The Donations Program?
Those sellers who participate in fulfillment by Amazon previously had to pay fees to have the market place disposed of their unwanted inventory. That also included overstocked products and returns.
Amazon could dispose of that inventory by evaluating it and then pushing it out to liquidators who could re-sell it or destroy the inventory entirely. Partnerships with numerous charities mean that Amazon gets a PR boost by enabling the FBA donations program, but sellers should not assume that this is without any potential consequence for them.
Who Gets the Tax Benefits?
Many sellers were confused about who would be able, for example, to take advantage of the tax write-offs for those donations that are made through the program. No seller should make assumptions, and should instead consult directly with their accountant about whether or not it makes sense to participate in the Amazon FBA donations program.
Merchants might not be able to report both the donation and the removal of inventory. Removing items from an inventory was a write-off itself, so therefore sellers should be advised about the dangers of potentially taking both and complicating their tax situation. In the help file associated with this, Amazon clarifies that they are not able to provide any tax advice to those sellers who participate in the FBA donations program, and encourages Amazon FBA sellers to instead discuss their tax reporting obligations with their accountant.
Given that the Amazon FBA donations program has already launched on September 1st and that sellers can now disable FBA donations in their FBA settings, it might be wise to consider whether or not benefitting charitable organizations is in your best interests and comes without any strings attached. Amazon states that they will automatically make any eligible inventory items available to charitable organizations if the Amazon FBA seller has opted in to dispose of returns, unwanted products or overstock.
Any inventory that was selected for disposal manually will enable the donation option in addition through automatic disposal settings. The company states that their usual disposal fees will still apply. Make sure you understand the pros and cons of potentially going this route with your unwanted or excess inventory. If you’re thinking about selling your Amazon FBA business, contact us today for a consultation about how to leverage your policies, procedures and existing stock to become as appealing as possible to a new buyer.