Amazon announced on August 14, 2019, the launch of Fulfillment by Amazon (FBA) Donations, a fresh program that will donate qualified surplus FBA inventory and returned products from vendors using FBA.
Amazon would operate with Good360 in the United States, a world leader in philanthropy of products and deliberate giving. Good360 partners with distributors and consumer goods businesses to supply and distribute highly-needed products through a network of varied non-profits that help needy individuals.
Commencing this September in the U.S. and UK, Amazon will begin donating products from vendors, offering helpful items to individuals in need. Amazon would work with charity partners like Barnardo’s, Newlife, and the Salvation Army in the UK to streamline the donation process for autonomous vendors and manages logistics.
The reason behind this program
At one stage in a nine-month span, CBS News reported back in May, a single Amazon plant sent 293,000 products to a garbage dump. The problem was particularly serious in France, where a January documentary detailed the country’s product disposal methods of Amazon, which involved popcorn machines at 36 Euros, LEGO box over 100 euros, and throwing 3 million televisions alone in 2018.
However, Amazon is not alone in laying waste on its goods, with details of Burberry’s procedures coming under fire last year for burning clothes, accessories and cosmetics worth $38 million to prevent them from being sold cheaply.
Alice Shobe, the community-based director of the charitable giving arm of the company at Amazon said “We understand that bringing products into the hands of those who need them changes life and strengthens local communities, he added, “We are pleased to extend this program to vendors using our services of satisfaction.”
“This program will decrease the amount of products sent to landfills and assist those in need instead,” Amazon wrote to vendors announcing the launch in the email.
Sellers who spoke to CNBC said that donating their unwanted inventory will make the new program cheaper. Amazon costs 50 cents, much more than the 15 cents charged for disposal, to return unsold inventory to vendors. For a multitude of reasons, sellers ruin their inventory, including yields that are no longer usable or for security problems.
Amazon’s spokesman verified the launch of the new program in an email declaration to CNBC, adding that it is “working hard” to bring the number of products destroyed to zero.
Tax consequences of Amazon FBA donation program
Hearing the news of the new donation program from Amazon, some vendors were confused as to who could take the tax write-off for donations made through the new program.
Sellers should not make any assumptions-their accountant should be consulted by those with issues. As one vendor advised, removing products from inventory is a write-off, and merchants are unable to report both stock removal* and* donation.
Here’s what Amazon says in its help file: “Amazon can not provide tax advice to vendors participating in the FBA donations program. Contact your tax advisor to address your FBA donations program and tax reporting commitments.”
Note that even if vendors choose to donate their unwanted inventory to Amazon, they will continue to pay Amazon’s disposal charges.
The program begins on September 1, 2019, and while merchants can opt-out of the program at any moment by disabling FBA donations in their FBA settings. It may benefit them in that their overstock will not end up in bin shops like the one in South Carolina that lists overstock Amazon goods for between $1-$ 3, even for costly unopened goods. It also has the apparent benefit of helping charities.
Here is a citation from Amazon’s notice to FBA vendors:
“Amazon will automatically make eligible inventory accessible to charities when you choose to dispose of overstock, returns, and other unwanted products. The donation option will apply to the inventory you select for disposal manually and through automatic disposal environments.”