Inventory Management for Amazon FBA Sellers

Inventory Management

Inventory Management for Amazon FBA Sellers

Inventory is the fuel for an eCommerce business, As an Amazon seller, maintaining correct balance of stock is important for maximum profitability. One can neither have lost revenue due to out of stock products nor can you keep excessive inventory resulting in higher FBA storage fees. Amazon has completely changed the online retail marketing game for online sellers, though for any successful FBA business execution, you need two things at peak efficiency. The first one is getting the orders, and the second one is a robust inventory management strategy.

According to a report by Statista, almost half of the sales come from third-party vendors. Selling on Amazon brings plenty of benefits, but it is not an easy job, especially for the sellers who are starting a wholesale business. It is necessary that as your orders grow your inventory should also be increased to meet the customers’ requirements. It is a thumb rule in Amazon business that you should have an inventory management system to become successful because maintaining full inventory is the most crucial factor that contributes to take you to the top.

What is Inventory Management on Amazon?

The inventory management system is the monitoring of the inventory and products on Amazon. It is a part of the supply chain management and monitors the flow of goods from sellers to buyers. One of the most important functions of the inventory management system is to keep a detailed record of each new or returned product after entering or leaving the fulfillment centers.

Amazon allows its sellers to manage their inventory by utilizing the in house Amazon Inventory Management System. Each product can be sorted into four categories, and Amazon inventory management system will display the inventory status as:

Available: The product is available and is ready to be sent to the customer.

Inbound: The inventory which is in some sort of process such as transportation, but will be available soon.

Unfulfillable: The inventory that is available in the warehouse but cannot be sold due to quarantine, damage, or any other legal reason.

Reserved: The inventory is expected to reach the fulfillment center with the current order, or in transit to another distribution center.

Tips to Improve Inventory Management on Amazon:

There are many ways that sellers can adapt to improve their inventory management strategy on Amazon. Some of the significant and most effective methods are:

  • Inventory Management Software
  • Supply Chain Lead Times
  • Amazon Repricer
  • Seasonal Sales Fluctuations
  • Inventory Turnover Rate
  • Dropshipping

Use the Inventory Management Software:

Millions of people shop on Amazon every day, and manually tracing, in this case, will be time-consuming and unrealistic. Consider transferring this work to an inventory management software because this will help you gain better control over your inventory. The Selling Coach dashboard within the Amazon Seller Central provides vital inventory data to help retailers to monitor purchasing and sales needs. Sellers can see the selling probability of each product on a daily, weekly, and monthly basis. This data will help you to make decisions and strategies according to the new trends and buyers’ requirements. The central part where Inventory management Software helps is when the sellers tend to sell inventory through other channels and require full inventory exposure and orders from all channels.  

Understand the Supply Chain Lead Times:

The movement of the inventory from initial purchase to arrival at the fulfillment centers refers to the inventory supply chain, and the time it takes to reach your warehouse after placing the order is known as lead times. Understanding these two things will help you to order the missing inventory at the right time helping you to maintain your stock.

Use and Amazon Repricer:

Determining the right price for your product is an essential factor in increasing the success of Amazon’s inventory management system. Amazon is the house of millions of sellers, and multiple sellers are selling the same products, so to win the sales, your prices must be competitive.  If your prices are lower than your competitors, your products will sell out rapidly, but if you set high prices, you will be left behind with your inventory in the warehouse. A reliable Amazon Repricer will help your products to get the right price and will boost your sales.

Plan Strategy for Seasonal Sales Fluctuations:

For better inventory management, you will have to estimate which product will sell faster and which product will slow down due to the changing seasons. Predictions should be made several weeks before the next season that will allow increasing the inventory level of the products that are likely to be high in demand.

Understand the Inventory Turnover Rate:

The amount of products sold in a given time period is known as the inventory turnover rate. Once you get to know about how fast your products are selling on Amazon, you will be able to estimate the inventory level you need to keep pace with your orders. Understanding the inventory turnover rate will help you from over or under purchases. The period is usually three months, and you should know the exact amount of inventory you need.

Consider Dropshipping:

In the dropshipping process, the product manufacturers will have the inventory in their warehouse, and they will deliver the items on your behalf. The primary benefit of this technique is that you don’t have to maintain the inventory yourself rather You will only purchase the items when you receive an order. 

Conclusion:

Keep this fact in mind that Amazon built its presence in the enormous online market entirely on customer satisfaction and ensuring timely delivery. Without a proper Amazon Inventory Management, this would not be possible. Amazon uses the best existing mechanisms to deliver its products and services, and as an Amazon seller, you must also have the best practices in the Amazon Inventory processes.

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