Avoid These Inventory Mistakes When Evaluating Amazon FBA Acquisitions

When you’re evaluating an Amazon FBA business for acquisition, it’s easy to get caught up in revenue, reviews, and rankings. Those numbers are flashy. But behind the scenes, one issue quietly makes or breaks most deals: inventory.

Inventory isn’t just a back-office function—it’s a direct driver of profitability, growth potential, and risk. If the seller has poor inventory controls, erratic restocking, or aging dead stock, you’re not buying a business—you’re buying a liability.

Even experienced buyers underestimate how fragile FBA inventory dynamics can be. One stockout, one supply chain delay, or one bad freight quote can wipe out a month’s profit.

In this post, we’ll break down the most common inventory-related mistakes buyers make when evaluating Amazon businesses—and how to avoid them.

1. Ignoring Stockout History and Best Seller Rank (BSR) Damage

Running out of stock on Amazon doesn’t just pause your sales—it buries your product.

Every time an FBA listing goes out of stock, it loses momentum in Amazon’s algorithm. The Best Seller Rank (BSR) drops. Organic visibility tanks. And even after restocking, it can take weeks—or months—to recover.

This is why stockout history is one of the first things you should ask for in due diligence.

• Look for erratic dips in revenue.

• Ask how often each SKU went out of stock in the past 12–24 months.

• Review historical BSR trends using tools like Helium 10 or Jungle Scout.

• Most importantly: ask what the seller did to mitigate the damage.

Some stockouts are understandable during early product launches or seasonal spikes. But if you see repeated gaps in inventory on top-selling SKUs, it’s a sign of deeper operational issues.

Bottom line: A business can look great on paper—but if it’s lost momentum due to poor inventory planning, you may be inheriting a product that’s already fallen out of Amazon’s good graces.

2. Not Reviewing Lead Times and Supplier Flexibility

It’s easy to assume that a business with strong sales has everything dialed in operationally. But when it comes to inventory, long or unpredictable lead times can create major headaches post-acquisition.

Before you close the deal, dig into the production and shipping process:

• What’s the average lead time from PO to FBA delivery?

• How often do delays occur, and why?

• Are there alternate suppliers in place—or is this a single-source setup?

• Do they use sea freight, air freight, or a mix?

Lead times longer than 60–90 days raise red flags. That kind of lag can cripple your ability to respond to demand spikes or pivot during unexpected sales events (like a viral moment or unexpected stockout).

Even worse? When sellers don’t buffer lead time at all—leaving you stuck the minute something slips.

Also consider supplier relationships. A seller might have negotiated favorable terms based on long history, but you may not get the same treatment as a new buyer. You need to know how "portable" that supplier relationship is.

Bottom line: Long lead times and rigid supply chains can leave you with massive working capital needs and no margin for error. Make sure you understand the supplier dynamics before you wire the money.

3. Overlooking Inventory Aging and Dead Stock

A business might be showing strong topline revenue, but a bloated warehouse full of unsold inventory can silently kill cash flow.

That’s why it’s critical to ask for:

• Inventory aging reports

• Sell-through rates by SKU

• Write-downs or liquidations in the last 12–24 months

Look out for SKUs that haven’t moved in 6+ months. These products not only tie up cash—they may also be dragging down margins through storage fees, obsolescence, or liquidation losses.

You should also ask how the seller currently handles aging stock. Do they discount aggressively? Bundle? Donate? Or just let it rot in a 3PL somewhere?

One tactic some sellers use is bulk purchasing to get lower unit costs—but that only helps if the product moves. If you inherit 10,000 units of a product that’s past its peak, you're not getting a great deal—you’re buying a cash sink.

Bottom line: Inventory aging is one of the clearest signs of operational discipline. If a seller is holding dead stock, it’s either a forecasting issue—or a lack of willingness to cut losses.

4. Assuming FBA Is the Only Inventory System in Place

Many Amazon sellers rely exclusively on Fulfillment by Amazon (FBA), and while it simplifies logistics, it also introduces vulnerability.

Here’s what to dig into:

• Do they use any third-party logistics (3PL) partners?

• Do they warehouse backup inventory outside Amazon?

• What’s their plan when FBA enforces restock limits or storage restrictions?

If the business is entirely dependent on FBA, you’re exposed. Amazon can—and often does—change storage limits, fee structures, or receiving protocols with little notice. When that happens, having alternative inventory solutions becomes critical.

Smart sellers often use a hybrid approach:

• Keep overflow inventory at a 3PL for quick restocking

• Use FBM (Fulfilled by Merchant) as a fallback during FBA delays

• Maintain buffer stock outside of Amazon’s control

If the seller hasn’t diversified at all, you’ll need to build that infrastructure yourself—or risk costly stockouts.

Bottom line: A business that relies 100% on FBA is one Amazon policy change away from a serious operational problem. Look for sellers who’ve built flexibility into their logistics.

5. Not Factoring in Seasonality or Inventory Spikes

Seasonality can make or break your first year of ownership—especially if you don’t know what’s coming.

Some products generate 70–80% of their revenue in just a few months. If you buy the business right after its peak season, you could be sitting on months of slow sales (and high inventory costs) before things ramp up again.

Here’s what to ask for:

• Monthly revenue and unit sales by SKU over the last 2 years

• How far in advance they order for peak season

• Whether they’ve ever been caught understocked during high-demand periods

Also be aware of “inventory spikes” that can distort financials. If the seller just went all-in on a seasonal order, their trailing 12-month profit might look great—but it could be a one-time windfall, not a sustainable run rate.

You want to know:

• How much capital will be tied up in inventory for the next peak?

• What does demand forecasting look like?

• Do they have a track record of hitting the right inventory levels?

Bottom line: Seasonal inventory isn’t a dealbreaker—but you must understand how it affects cash flow, logistics, and timing. Otherwise, your first 6–12 months could feel like a rollercoaster.

6. Ignoring the Cost of Inventory Holding and Freight Changes

Many Amazon businesses look profitable until you factor in the true cost of holding and moving inventory.

Here’s what often gets overlooked:

• Amazon storage fees, which can spike during Q4

• Long-term storage penalties for aged or slow-moving items

• Freight costs, especially with overseas suppliers

• Fuel surcharges and customs duties, which fluctuate regularly

Ask for actual freight and storage invoices—not just averages. You want to see:

• How costs have changed over the last 12–18 months

• Whether the business has adjusted pricing or purchasing strategy accordingly

• If they’ve passed those increases to customers or simply absorbed them

Some sellers ignore rising costs to maintain sales volume, even if it means shrinking margins. Others overcorrect and under-stock, risking lost sales. Neither is ideal.

Also, be aware of changes in Amazon’s FBA fee structure. In 2024 alone, multiple fulfillment and inventory fees have increased—meaning what worked last year might already be less profitable today.

Bottom line: Inventory carrying costs are dynamic. If the seller hasn’t adjusted for recent cost changes, your margins might not be as strong as the P&L suggests.

Properly Vet Inventory Before You Buy

Inventory isn’t just a box-counting exercise—it’s a window into how well a business actually runs. And in Amazon FBA, where margins can evaporate overnight due to operational missteps, it's often the most important part of due diligence.

Before you buy, make sure you:

• Get SKU-level sales and aging data

• Ask detailed questions about supplier terms, lead times, and flexibility

• Understand their inventory forecasting and seasonality strategy

• Stress test their ability to handle policy changes or fee hikes

• Factor in actual freight and storage costs, not seller estimates

Done right, inventory diligence can help you avoid major landmines—and even uncover opportunities the seller hasn’t capitalized on.

Done wrong? You might inherit a product line that's slowly bleeding cash.