Amazon inventory management is more important than you think. New sellers sometimes get so caught up in Amazon listing optimization or marketing that they forget to prioritise essential inventory management.
Granted that a new seller on Amazon needs to learn a lot of information quickly, they can still make the mistake of ignoring the basics. This is the challenge of learning a new business like E-commerce, which is a tough one to succeed in.
Accurately accomplishing product listing SEO, exploring various marketing avenues and Amazon FBA inventory management are all equally important.
One of the worst scenarios a new seller can face is running out of inventory; it’s synonymous with throwing money out the window. If you’re not careful, it can even land you with an Amazon ban if it happens too regularly!
Why is Amazon inventory management so important?
Selling on Amazon is different than selling in a brick and mortar store. In a physical store if you run out of stock you only lose the sale. Whereas on the Amazon platform if your stock is zero, you lose the sale and your product ranking goes down, and you fall behind in the SERP.
All that effort you put into optimising SEO, all the good reviews, making flash sales to climb the SERP all goes down the drain. Your product page will come up as unavailable when you don’t have stock, so it’s going to be quite challenging to grow your business like that.
Amazon FBA Inventory Management – How To
So you know the importance of managing your Amazon inventory, but what are the steps you need to take to do it effectively?
Price your product right
Deciding what to price your products plays a significant role in inventory management and your business as a whole. Pricing your product low or at a discount is a good marketing strategy, especially when launching flash sales to climb SERP rankings.
You can change the number of quantity on hand in the inventory management tab for the product that is on sale. Do that to limit how many losses you take for the sake of getting a better product ranking.
Pricing too low for anything else is not a good idea, only because that would deplete your available inventory. Pricing too high is also a losing scenario due to the fact no one wants to buy an overpriced product.
If you are an FBA seller, this could lead to your FBA inventory sitting in the warehouse too long. You’ll have to pay extra Amazon FBA storage fees if you can’t sell your products!
Calculate all the possible Amazon fees and then price your product right. Don’t be too greedy and keep the bigger picture in mind. This way everybody wins, the right price, more sales, money in your pocket, more good reviews, money in Amazon’s pocket.
Utilize Amazon Inventory management tools
The best thing a company can do to avoid running out of stock is to manage your Amazon inventory proactively. Amazon seller central has built-in tools like the Amazon selling coach to assist you with this task.
Mastering the tools that Amazon provides a seller is essential to get ahead in this business. You can sign up for third-party inventory management services later on if you want but it is a must you first get a handle on what you have in your seller central account.
Keep in mind this is the data that Amazon feels is important to their sellers, which these tools allow you to access. The manage inventory tool allows you to view data about your products. You can access this information and download reports to help you with better decision making.
The manage inventory screen allows you to do the following:
- Add products
- Change pricing
- View seller fees for each product
- Change quantity
- View the status of your listings
- Track FBA shipments
- View stock levels
All Amazon sellers know this is where you go to edit this information manually. If you need to make mass changes to your listings, then you can also use a data stream and upload the data file. That can save you a tremendous amount of time than doing things manually.
Utilize the Amazon selling coach; it is an invaluable tool readily at your disposal. In the Amazon selling coach tab, you can see inbound quantity recommendations which will give you an estimate of how many to order.
You can also set up replenishing alerts to remind you when to re-order products from your suppliers. The Amazon selling coach is a great tool which is often overlooked. It has all the data any seller needs to maintain good inventory health.
Inventory health report
Access this by logging in your seller central account then clicking on reports, fulfilment by Amazon then go to inventory health. From there you can view your total unsellable quantity and total sellable quantity of all your products.
This section has all the information on the movement of your inventory. The inventory health report also shows how many units have been sold in the last 30 days, and your weeks of cover based on your previous 30 days of sales.
You can also view the lowest competing price for each of your product listings. Track this data at home by accessing the downloadable version of the report. Having this information on hand will allow you to be able to study your current sales velocity and inventory health.
You can use this data to determine what products sell at different times of the year. You can then plan for the next calendar year.
It is best to stock up on inventory of fast moving products which have a high demand all year round. The stock for seasonal products should be kept to a minimum.
If your account has any recommendations for removals, access the recommended removal report. There is an option to have your products returned, liquidated or removed before you are charged a long-term storage fee.
If your inventory levels are high and stock isn’t selling quickly, you’ll need to work out how to increase Amazon sales quickly to avoid this fee.
Instead of having your products sent back to you or liquidated to avoid the long-term storage fee, consider holding a sale. This takes care of any possible charges and is a great way to get more Amazon reviews.
Make sure you have a good inventory, all that entails is to have sufficient stock to cover the demand for your product. Having inventory listed as zero will cause your product ranking to go down.
Plan inventory orders
Set inventory minimums to avoid stockouts and order from your suppliers ASAP when you hit your set minimums. This will act as a safety net which will give you enough time to contact your suppliers and order more products before you run out.
If you created your own Amazon fba private label product, and you have deals set up with various suppliers, you need to anticipate their sales levels too.
Another way to manage your inventory is to calculate your inventory lead time. Lead time is the duration it takes for your products to travel from your supplier to you or the Amazon warehouse.
Lead times depend on how you are having your products shipped. Air is more expensive but is much faster than having it shipped via freighter.
Check your current inventory, review your sales volume and balance them out with your lead times. If you are ordering a seasonal product, the data from last year is usually a reliable indicator for sales forecasts.
Utilize the Amazon sales coach as an indispensable tool for this purpose. It can help you forecast your sales, and it even gives recommendations on when and how many to order for any given timeframe.
Of course, you can order as much as you want provided that your product is flying off the shelves. Then, the more, the better! All you need to do is make sure it is indeed selling and when your inventory minimum comes up order more.
Be an Amazon inventory management pro!
Managing your product inventory might be the most vital piece of the e-commerce puzzle. Don’t make the mistake of ignoring your inventory health. Price your products right, just enough to get a reasonable profit margin.
Rack up your sales and utilise your Amazon sales coach in inventory forecasting. Set inventory minimums and use product lead times to make sure you don’t stock out. Master the tools Amazon gave you and build your business from there.
1 thought on “Amazon Inventory Management: A Guide For New Sellers”
Amazon is one of the biggest company and they must have the best inventory management system.
I appreciate your amazing information. Good news is, many starts up are now concern enough about their business and inventory management systems.
Thank you for this post, love.