June 2, 2022

8 Inventory Management Tips to Increase Sales on Amazon 

No matter the product you are selling on Amazon, having the right inventory levels is key to keeping your business up and running. Learn pro amazon inventory tips to boost your business.
8 Inventory Management Tips to Increase Sales on Amazon 
8 Inventory Management Tips to Increase Sales on Amazon 

Do you know that Amazon operates over 175 fulfillment centers and over 180 million square feet of space all over the world? 

No matter the product you are selling on Amazon, having the right inventory levels is key to keeping your business up and running. 

When it comes to managing inventory on the Amazon marketplace, sellers may face a few problems. 

Having little to no insight into the demand for products can lead to supply issues. On the other hand, having more supply than demand can lead to hefty storage fees with Amazon FBA

These among others are some of the inventory management issues that sellers may face. 

However, this doesn't have to be the case. 

Proper Amazon inventory management improves your brand credibility and positively impacts your relationship with customers. But how do you deal with these inconsistencies, effectively manage your inventory and increase sales on Amazon? 

Read on as we explore effective inventory management tips to increase Amazon sales. 

What is Amazon Inventory Management? 

Inventory management involves ordering products, tracking, and storing them to efficiently meet customer demands. 

On the Amazon marketplace, running out of stock can negatively impact search result rankings, customer reviews, and product listing status. 

Amazon continues to provide solutions to help sellers grow their business effectively and maximize sales. Amazon FBA is a fulfillment service that aims to help sellers manage their inventory, package their products, ship the products faster and deliver them to customers on time. If you sell with fulfillment by Amazon, all you need to do is ship your products to Amazon fulfillment centers and have Amazon handle the rest. Most importantly, you automatically get access to Amazon's inventory management system which uses variables like shipment time, cost of goods sold, and other data to forecast demand and ensure optimum inventory levels. 

Why is Amazon inventory management important? 

Inventory management is important both for your Amazon business and your customers. Here is a few reasons managing your Amazon inventory is vital:

  • Managing your inventory helps to sustain customer interest. Consistently running out of stock may put your customers off, pushing them to your competitors. 
  • With proper inventory management, you can keep an eye on every activity and manage errors, losses, or theft
  • Inventory management can help you reduce spoilage. For perishable goods, you can monitor their sell-by dates and avoid spoilage. 
  • With good inventory management, you can forecast demand and avoid overstocking inventory 

8 inventory management tips to increase sales on Amazon 

There are simple yet effective tips you can implement to push Amazon sales in the right direction. Here are inventory management tips to follow:

  1. Make use of inventory management tools on Amazon Seller Central
  2. Calculate your inventory turnover rate
  3. Know your supply chain lead times
  4. Prepare for the fluctuations in seasonal sales
  5. Match up a third-party Amazon inventory management system
  6. Slow down demand when needed
  7. Strategically plan your promotions
  8. Consider dropshipping as an alternative 

Make use of inventory management tools on Amazon Seller Central

You are more prone to error if you manually track your inventory. Automating the process makes it easier to track and ensures you have just enough inventory all year long. 

On the Amazon Seller Central dashboard, you have access to in-built tools for free. This dashboard provides useful inventory data and sales information for proper inventory management. 

What's more, the Amazon Seller Central dashboard comes with a powerful feature called the Amazon Selling Coach. With this tool, you can monitor sales trends and even get an estimated number of days for your current stock level. It will show you how much of each product you sell daily, weekly, and monthly. This will help you forecast your inventory based on actual data. 

You also get low-stock alerts via emails or the Amazon Seller app. This will help you know when you need to reorder inventory and minimize running out of stock. 

Calculate your inventory turnover rate

Your inventory turnover rate shows you how fast your products sell on Amazon.

Using the Amazon Seller Coach feature, you can find out your inventory turnover rate. With this information, you can know how much stock you need to maintain between inventory shipments. This will ensure you don't overstock inventory, leading to excess costs or understock, leading to poor customer reviews and loss of sales. 

The Amazon Selling Coach feature on your dashboard tracks your sales and recommends inventory quantities needed to restock over a specified time.

Know your supply chain lead times

Besides knowing the amount of inventory you need to meet customer demands, you also need to compare that with your supply chain. 

Your supply chain is crucial to succeeding in the Amazon marketplace. Your supply chain involves the movement of inventory from the source to your warehouse. It is important to monitor each aspect of your supply chain, from production to shipment and delivery to your warehouse. 

Your supply chain lead times refer to the amount of time it takes to stock your product after placing an order. For example, your supply chain lead times could be three weeks. This means that when you place an order, it will take 21 days before receiving your inventory. 

It is important to know your lead times so you can schedule your orders and meet customer demands effectively.

This will also help you create backup plans if things go wrong. If you experience continuous delays in shipment, you may want to consider changing your shipping company. You may also want to reserve inventory in cases of delayed inventory shipment. 

Prepare for the fluctuations in seasonal sales

Customer demand tends to reach its peak during the holiday season. This will affect your inventory and supplier turn-around times. The last thing you want to experience is being out of stock during the peak season. 

To ensure optimum inventory levels, you will need to know which products are fast-moving and which are out of season. 

This will help you forecast how much inventory you will need months in advance. You will also need to factor in your supplier's extended turnaround times. This will help you place your orders on time, considering this and other factors like the weather. 

Match up a third-party Amazon inventory management system

For more advanced inventory management features, you can turn to third-party Amazon inventory management systems. If you have multiple sales channels and want to sync your data across all platforms, you can use third-party software like Orderhive, Jungle Scout, Inventory Lab, and so on. 

Slow down demand when needed

On days when demands are soaring and you are unable to meet those demands with adequate supply, you risk losing your customers to your competitors and even facing lower ranks on Amazon. 

If you are running low on stock, consider reducing demand by temporarily increasing prices and stopping any advertising campaign until you have restocked. 

Strategically plan your promotions 

Running promotions without proper planning may backfire. While a successful promotion can increase Amazon sales, holding out too many sales can clear out inventory, lower Amazon ratings, and trigger angry customers. 

Thankfully, you can deal with this by being strategic with your promotions. You can limit the number of stocks meaning that once your stock level hits a certain number, promotions will be taken down from your listing. 

Alternatively, you can reserve products on promotion from your supplier with a future ship date. 

If your promotion runs successfully, you can contact your supplier to move up the ship date. On the other hand, if the promotion is unsuccessful, you can extend your ship date or cancel it to avoid overstocking. 

Consider dropshipping as an alternative 

Dropshipping could be an alternative to stocking inventory. The model is perfect especially if you are just starting on the Amazon marketplace with little capital. 

With dropshipping, the supplier manages inventory and ships products directly to customers on your behalf. It is less risky and doesn't involve storing inventory. This means you won't need storage space. 

However, to succeed in using the dropshipping model, you need to choose your suppliers wisely as this could affect your profitability. 

You also need to make sure your supplier is compliant with Amazon's Dropshipping policy. Any mistakes could get your Seller account shut down. 

Conclusion 

Inventory management is a crucial part of succeeding in the Amazon marketplace. As an Amazon seller, keeping optimum inventory levels can help you boost organic search rankings and increase sales on Amazon. 

You can employ the tips above to manage your inventory effectively and stay competitive. 

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