Amazon Introduces Fees on FBA Liquidations

In brief: FBA Liquidations lets you sell excess or customer-returned FBA stock to a liquidator chosen by Amazon, instead of paying to have it disposed of or sent back. From 8 September 2021, Amazon charged two fees on each liquidated item: a processing fee based on the item's size and weight, and a referral fee. Orders submitted by 7 September 2021 were free. Amazon said sellers typically recovered 5% to 20% of an item's average sales price, but didn't guarantee a recovery rate.

How Amazon FBA Liquidations fees work

Item	Direction
Liquidator's wholesale payment	Paid to you
Processing fee (size and weight)	Deducted
Referral fee (per item)	Deducted

A worked example

A seller liquidates 500 units that normally sell for £20. At a 10% recovery, the liquidator pays £1,000 (500 × £2). If processing and referral fees come to 60p per unit, £300 is deducted, leaving £700. The units cost £6 each, so £3,000 of stock leaves the books for £700 of net cash — a £2,300 loss, but better than paying for disposal.

What it means for your bookkeeping

• Record proceeds and fees separately. Liquidation income arrives net of fees in your settlement; post the gross proceeds and the fees on their own lines so each is visible.

• Write the stock off. The units' cost leaves stock when they're liquidated; the difference between cost and net proceeds is a loss.

• Compare with the alternatives. Removal or disposal fees, or continued storage, are the other costs to weigh.

• VAT: take the treatment of liquidation proceeds and fees from Amazon's documents.

• Where it shows up. Proceeds and fees both land in the settlement — see reconciling an Amazon settlement and Amazon FBA bookkeeping.

How TrueBooks helps

TrueBooks posts every line of each settlement to Xero — liquidation proceeds and the fees on them included — with the right UK VAT for the date. See the Amazon Xero integration.