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Amazon inventory management is an integral part of maintaining success while selling on Amazon. With good inventory management, you can avoid losing sales by running out of stock or increasing expenses through storage fees from overstocking.
Customers are intolerant of poor FBA inventory management. They want their products delivered to them as quickly as possible. If your products are consistently out of stock, you risk losing potential customers to your competitors.
Read on as we go through some of the best strategies for proper inventory management.
Here are a few reasons managing your inventory is important:
Sellers run into different inventory problems while selling on Amazon. Being prepared to handle these issues will help you maximize sales and grow revenue with Amazon.
How many times do you feel a little frustrated when you click on a product you like and discover it is out of stock? Consistently being out of stock can ruin your chances of attracting new customers and worse still, cause you to lose out on sales. Consistently running out of stock can also reduce your organic ranking and Amazon Best Seller Rank, as Amazon only wants to push products that are available to their customers.
If you are running low on inventory, it is advisable to slow down on sales. You can stop running PPC Ads or pushing off-Amazon campaigns. This will slow down getting new customers while keeping your loyal customers.
Running out of inventory can affect your business but you also don't want to overstock inventory. Overstocking inventory can accumulate costs impacting your overall profit if you are using Amazon FBA.
If you have products stored in the Amazon Fulfillment center for over 90 days, you will be charged long-term storage fees. These fees may accumulate incurring costs that may exceed the value of unsold goods.
Thankfully, Amazon offers tools available on your Amazon Seller account to help you monitor and manage excess inventory.
Here are some tools on Amazon Seller Central that can help you manage excess inventory and avoid incurring long storage fees:
Stranded inventory can be frustrating for any seller. This happens when your inventory is not connected to an active listing on Amazon. What this means is that your product is simply hanging. Customers may see your product but can't actually purchase your product. This can happen for several reasons. It could be because of a suppressed listing, expired products, pricing error, and many other reasons. Worse still, stranded inventory still incurs monthly storage fees.
Thankfully, you can check for stranded inventory using the stranded inventory tool on your Seller Central account. Note that you may not get a notification from Amazon, so it is important to check every so often.
With proper inventory management strategies, you can attract more customers, maximize sales and stay ahead of the competition. Here are five tips to help you properly manage your inventory.
To avoid overstocking, consider maintaining about 60 days' worth of supply to cover expected sales.
By monitoring your sell-through rate, you can forecast your sales volume. Your sell-through rate is calculated by measuring the balance between your sales and inventory levels. It is the total units of goods sold over 90 days divided by the average units of FBA inventory.
A sell-through rate of 7 and above are considered to be great. This indicates that you are selling seven times more than your average inventory. A sell-through rate of less than one means you are overstocking and have held more inventory than you have sold.
To check your sell-through rate, check the “Inventory Age” tab on the inventory dashboard in your seller account.
If you run out of stock and are not able to meet customer demand, you run the risk of losing them to your competitors. You also run the risk of facing lower rankings on Amazon.
When low on inventory, you can influence demand by raising your prices temporarily and slowing down on advertisements. This will help you maintain a good in-stock rate instead of running out of stock consistently.
Once your inventory levels are back to normal, you can resume your normal pricing and advertising campaigns.
Having a little more inventory than you need happens to everyone once in a while. But how do you deal with your excess inventory?
Here are a few ways to get the excess inventory out of the way:
During seasonal holidays, customer demand is at its peak. This can affect inventory levels. It is important to figure out which product will be fast-moving during the seasonal holidays and which will be slow-movers.
You will need to anticipate which products need to be ordered in higher quantities from your suppliers and which products are out of season.
With this knowledge, you can effectively plan months before to accommodate the increased demand during the seasonal holidays. Don't forget to factor in your supplier's turnaround time to avoid unexpected delays or shipment problems.
Tracking your inventory manually could be time-consuming and daunting. Thankfully, you can automate your inventory management using inventory management software. You can monitor your inventory levels throughout the year and ensure your inventory is not too little or too much. On your Amazon Seller Central dashboard, you can access inventory management tools that can show you the items you sell on a daily, weekly, or monthly basis. This will help you keep track of your sales versus your inventory levels and make good business decisions.
Examples of other inventory management software include Orderhive, Expandly and Sellbrite, Veeqo, and so on.
With proper inventory management, you can ensure your products are always in stock. You can also prevent overstocking which increases storage costs. With the application of the tips mentioned above, you can begin to manage your inventory effectively, increase sales and grow revenue with Amazon.
You’ve probably already considered selling on Amazon but its way easier than you think.
Call Us Now