August 18, 2022

Selling on Amazon: How to manage your Inventory

Selling on Amazon: How to manage your Inventory
Selling on Amazon: How to manage your Inventory

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. 

Importance of inventory management to Amazon FBA sellers 

Here are a few reasons managing your inventory is important:

  • Proper inventory management will ensure you attract customers and have enough to sustain customer orders. If you consistently run out of stock, you risk losing your customers to your competitors.
  • With proper inventory management, you can monitor inventory levels and reduce losses from expired goods or damaged goods. 
  • Proper inventory management also helps you reduce the costs of storing unsold goods
  • Proper inventory management reduces the risk of theft and losses. 

Common Amazon inventory problems 

amazon inventory

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. 

Running out of stock

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. 

Overstocking inventory 

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: 

  • Restock inventory tool: With this tool, you can know how much supply you have left. You can also know the amount needed for replenishment on FBA. 
  • Manage excess inventory tool: This shows you product listings that may have excess inventory. In addition, it also proffers solutions to help you sell them off. For example, lowering your prices or advertising. 
  • FBA (Fulfillment by Amazon) inventory age tool: This tool shows you how long your inventory has been in storage. It also shows you the units of inventory that may incur long-storage fees. In addition, it highlights opportunities for you to increase sales on slow-moving goods. 
  • Stranded inventory tool: This shows your stranded inventory. Knowing this will help you deactivate them or take them out of storage to avoid extra costs. 
  • Manage FBA returns: With this tool, you can keep an eye on all FBA returns and see metrics like customer refund date, date return was received, return date, and other metrics. 

Stranded inventory 

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. 

5 tips for proper Amazon inventory management 

helpful tips

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. 

  1. Keep enough supply to cover expected sales
  2. Reduce demand for your product when on low inventory
  3. Deal with excess inventory 
  4. Plan for seasonal sales
  5. Manage inventory with an inventory management software 

Keep enough supply to cover expected sales 

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. 

Reduce demand for your product when on low inventory

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. 

Deal with excess inventory 

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: 

  • Run deals and promotions: One way to deal with your excess inventory is to run deals and promotions. It could be a coupon code or a buy one get one deal. This will attract customers and increase your chances of making a sale quicker. If you are running Ads, you can also increase your keyword bids side by side to attract more customers. 
  • Removal order: If you have another storage facility to store your excess inventory, you can create a removal order and get your inventory sent back to you. You can create a removal order in your Seller Central and get your inventory out of Amazon fulfillment centers before the storage fees start piling up. 
  • Donate your inventory: If you are unable to sell your excess inventory, you have the option of donating excess inventory to charity organizations. This will save you the money you would otherwise spend on long-term storage fees. 

Plan for seasonal sales

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. 

Manage inventory with an inventory management software 

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. 

Conclusion 

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. 

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