What Is Excess and Obsolete Inventory Analysis?
Excess and obsolete inventory analysis is the process of identifying FBA units that are aging past Amazon's fee thresholds and deciding what to do with them before storage surcharges eat your margin. For Amazon FBA sellers, this isn't a quarterly accounting exercise. It's a monthly survival check.
Excess inventory is stock that exceeds your forecasted demand for the next 90 days but still has viable sales velocity. Obsolete inventory has little to no remaining demand and will likely need removal or liquidation. Both categories incur Amazon's aged inventory surcharge, but the action plan differs: excess inventory needs a sell-through acceleration strategy, while obsolete inventory needs an exit strategy.
Running an excess and obsolete inventory analysis regularly is critical because Amazon's fee structure punishes aged inventory aggressively. The aged inventory surcharge now begins at 181 days (moved from the previous 271-day threshold), giving sellers 90 fewer days to react before fees start compounding on top of regular monthly storage. This analysis directly impacts your IPI score and your inventory turnover ratio.
Amazon's Aged Inventory Surcharge Thresholds
Amazon evaluates inventory age on the 15th of each month. Here are the current surcharge tiers:
| Inventory Age | Surcharge (Standard-Size) | Surcharge (Oversize) |
|---|---|---|
| 0-180 days | No surcharge | No surcharge |
| 181-210 days | $0.50/unit or $0.10/ft³ | $0.50/unit or $0.10/ft³ |
| 211-240 days | $1.00/unit or $0.20/ft³ | $1.00/unit or $0.20/ft³ |
| 241-270 days | $1.50/unit or $0.30/ft³ | $1.50/unit or $0.30/ft³ |
| 271-300 days | $3.80/ft³ | $1.40/ft³ |
| 301-330 days | $4.20/ft³ | $1.60/ft³ |
| 331-365 days | $4.60/ft³ | $1.80/ft³ |
| 365+ days | $6.90/ft³ or $0.15/unit | $6.90/ft³ or $0.15/unit |
These surcharges stack on top of monthly storage fees. A product sitting in FBA for 370 days pays both the monthly storage fee AND the 365+ day aged surcharge every month.
Category exemptions: Shoes, clothing, bags, watches, and jewelry are exempt from aged inventory surcharges for inventory up to 270 days old.
Worked Example
You sell a phone case at a $22.99 ASP with a $6.80 landed cost. You have 400 units in FBA. Your sell-through rate on this ASIN has dropped to 0.4 units/day (12 units/month) due to a seasonal decline. Current inventory age breakdown:
| Age Bucket | Units | Monthly Surcharge |
|---|---|---|
| 0-90 days | 50 | $0 |
| 91-180 days | 120 | $0 |
| 181-270 days | 150 | $150 ($1.00/unit avg) |
| 271-365 days | 80 | Variable by tier |
At 12 units/month sell-through, it will take 33+ months to clear 400 units. The 150 units in the 181-270 day bucket are costing you $150/month in surcharges right now, and that number climbs as they age further. The 80 units over 271 days are in the penalty zone.
Action plan: Create a removal order for the 80 oldest units ($0.97/unit removal fee = $77.60). Run a 20% coupon on the listing to accelerate sell-through on the 150 units approaching 271 days. The $150/month in surcharges you're currently paying will exceed the $77.60 removal cost within two weeks.
How to Run the Analysis in Seller Central
Open the FBA Inventory Age report in Seller Central under Reports > Fulfillment > Inventory Age. This report shows units by age bucket (0-90, 91-180, 181-270, 271-365, 365+) for every ASIN.
Cross-reference with your sell-through rate for each ASIN. Any ASIN with units approaching 181 days and a sell-through rate below 1.0 needs immediate attention. Also check the Recommended Removal report for Amazon's own suggestions on what to pull.
Amazon auto-enrolled all US and Canadian sellers in the FBA Liquidations program in late 2025. If you have truly obsolete inventory, liquidation returns roughly 5-10% of the selling price but eliminates ongoing storage and surcharge costs.
Common Mistakes
1. Waiting until 181 days to act. By the time surcharges hit, your options are limited and expensive. Run your excess and obsolete inventory analysis monthly and flag any ASIN with declining velocity at the 90-day mark. That gives you 90 days to run promotions, adjust pricing, or create removal orders before surcharges begin.
2. Over-ordering based on optimistic demand forecasts. The #1 cause of excess inventory is ordering based on peak-season velocity without adjusting for post-peak normalization. If your Q4 daily sales are 20 units but your Q1 average is 8 units, ordering Q1 inventory at Q4 levels creates a guaranteed excess problem by spring.
3. Ignoring the math on removal vs. holding. Some sellers emotionally resist removing inventory because "I paid for those units." But if a unit generates $0.50/month in surcharges and only has a 20% chance of selling in the next 90 days, the expected value of keeping it is negative. Run the contribution margin math: if holding costs exceed expected profit, remove it.
Excess and Obsolete Inventory FAQ
When does Amazon start charging aged inventory surcharges?
Amazon's aged inventory surcharge begins at 181 days for most product categories. The fee escalates in tiers from 181-210 days through 365+ days, with rates increasing at each step. These surcharges stack on top of monthly storage fees.
How do I run an excess inventory analysis on Amazon?
Use the FBA Inventory Age report in Seller Central. Sort by units aged 90+ days and cross-reference with your sell-through rate. Any ASIN with units approaching 181 days and a sell-through rate below 1.0 needs an action plan: price reduction, promotion, removal, or liquidation.
What is the difference between excess and obsolete inventory?
Excess inventory is stock that exceeds your forecasted demand for the next 90 days but still has viable sales velocity. Obsolete inventory has little to no remaining demand and will likely need removal or liquidation. Both incur surcharges, but the action plan differs.
Are any categories exempt from aged inventory surcharges?
Yes. Shoes, clothing, bags, watches, and jewelry are exempt from the aged inventory surcharge for inventory up to 270 days old. After 270 days, standard surcharges apply to all categories.
Should I remove old inventory or wait for it to sell?
Run the math. If a unit's monthly storage and aged inventory surcharge exceed its expected contribution margin (probability of sale x margin per unit), remove it. For most slow-moving inventory crossing 240 days, removal or liquidation makes more financial sense than holding.