Key takeaways:

1. Common Amazon inventory management issues include running out of stock, overstocking, and stranded inventory. 

2. Proper Amazon inventory management will ensure you attract customers and have enough to sustain customer orders.

3. To properly manage your inventory, ensure you build and maintain relationships with your suppliers, keep enough supply to cover expected sales, reduce demand when on low inventory, and invest in inventory management software. 
4. Some Amazon inventory management software you can invest in includes Cin7, Veeqo, SoStocked, Extensiv, and Zoho Inventory.

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Amazon inventory management is a vital part of success while selling on Amazon. 

In today’s fast-paced world, 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. 

With good Amazon inventory management, you can avoid losing sales by running out of stock or increasing expenses through storage fees from overstocking. 

Read on as we go through some of the best strategies you can implement for proper inventory management on Amazon. 

Why is inventory management important for Amazon FBA sellers? 

Here are a few reasons why managing your inventory is important:

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• Effective Amazon 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.
• By having the right products in stock, you can build trust with your customers and increase the likelihood of positive reviews and repeat purchases.
• Proper inventory management ensures that products are readily available for shipping, allowing you to meet Amazon's expectations for quick and efficient order processing.
• 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. Amazon charges additional fees for products that remain in their fulfillment centers for an extended period. With effective inventory management, you can avoid these long-term storage fees.
• Proper inventory management reduces the risk of theft and losses. 
• Another important part of Inventory management is forecasting demand and planning for future sales trends. Accurate predictions will help you adjust your inventory levels proactively to ensure that you are well-prepared for peak seasons or unexpected changes in demand.

Common Amazon inventory problems

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. 

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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. 

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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. 

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Thankfully, Amazon offers tools available on your Amazon Seller account to help you monitor and manage excess inventory. 

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Here are some tools on Amazon Seller Central that can help you manage excess inventory and avoid incurring long storage fees: 

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• 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 of 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 errors, and many other reasons. Worse still, stranded inventory still incurs monthly storage fees. 

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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. 

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Top 7 Amazon inventory management strategies

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With proper Amazon inventory management strategies, you can attract more customers, maximize sales, and stay ahead of the competition. Here are seven tips to help you properly manage your inventory. 

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1. Build and maintain relationships with suppliers.
2. Keep enough supply to cover expected sales
3. Reduce demand for your product when on low inventory
4. Deal with excess inventory 
5. Plan for seasonal sales
6. Forecast demand accurately 
7. Manage inventory with inventory management software 

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Build and maintain relationships with suppliers.

Perhaps one of the most crucial parts of inventory management is maintaining a strong relationship with suppliers. They are the backbone of your business, providing the products you sell. A good relationship can reduce the risk of delays and stockouts, ensuring your orders are prioritized. Regularly update them on your inventory needs, sales forecasts, and any changes in your business that may impact your orders. Be transparent about your expectations, timelines, and any challenges your business may face. Demonstrate reliability by paying invoices on time and fulfilling your commitments.

Keep enough supply to cover expected sales. 

To avoid overstocking, consider maintaining about 60 days' worth of supply to cover expected sales. 

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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. 

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A sell-through rate of 7 and above is 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. 

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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. 

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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? 

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Here are a few ways to get the excess inventory out of the way: 

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• 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 products will be fast-moving during the seasonal holidays and which will be slow-moving. 

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You will need to anticipate which products need to be ordered in higher quantities from your suppliers and which products are out of season.  

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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. 

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Forecast demand accurately 

One of the foundational elements of effective inventory management on Amazon is accurate demand forecasting. You want to utilize historical sales data, market trends, and seasonal patterns to predict future demand for your products. By predicting future demand accurately, you can ensure you have enough inventory to meet customer orders without experiencing stockouts or tying up excess stock. You can leverage tools and software that offer forecasting capabilities to make informed decisions about stocking levels.

Manage inventory with 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. 

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5 Amazon inventory management software 

Several inventory management software solutions can help Amazon FBA sellers streamline their operations, optimize inventory levels, and enhance overall efficiency. Here are a few Amazon inventory management software options you can choose from: 

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1. Cin7
2. Veeqo
3. SoStocked
4. Skubana
5. Zoho Inventory 

Cin7

Cin7 is a multichannel inventory management software that syncs inventory levels across Amazon and other online and offline sales channels. It offers features like automated order sync, inventory tracking with SKUs, and international selling across Amazon. Orderhive supports integration with over 40 storefronts and marketplaces, enabling sellers to manage their inventory, orders, and shipping across all their sales channels in one place. It provides real-time synchronization of orders and shipping information, ensuring that sellers have up-to-date information on their inventory, orders, and shipping statuses across all platforms.

Orderhive offers a free subscription plan, allowing sellers to try the software before committing to a paid plan. The price starts from $125 per month for a subscription.

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Veeqo

Veeqo is a comprehensive tool that handles multiple sales channels, including Amazon. It offers Amazon order management, FBM shipping, FBA integration, and returns management. It's suitable for businesses looking for a single platform to control their inventory across multiple Amazon stores, sales channels, and warehouses. Veeqo supports integration with a wide range of stores and carriers, enabling active inventory management, demand forecasting, and more. The platform offers automation features that can save you time on tedious and repetitive tasks. This includes tagging orders, printing templated order forms, and adding internal notes and shipping carrier preferences. 

Veeqo is completely free to use. There are no hidden fees, no charges for extra users, and no limits on the number of orders or shipments you can handle.

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SoStocked

SoStocked is a customizable Amazon inventory management and forecasting software that predicts inventory needs accurately by cross-analyzing multiple factors. It's designed to prevent overselling and stock-outs, offering a personalized KPI dashboard and one-to-one onboarding. SoStocked provides advanced inventory tracking and forecasting capabilities, helping sellers eliminate inventory problems. The software supports Multi-Channel Fulfillment (MCF) as long as you fulfill your MCF sales via Amazon. In other words, it can monitor your inventory and total sales velocity across platforms like Shopify and others, providing accurate forecasting even if you're fulfilling orders through Amazon FBA. 

SoStocked includes features for managing safety stock and setting restock limits, ensuring that you maintain optimal inventory levels. 

The platform offers a customized pricing plan that caters to agencies managing multiple brands with different account owners.

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Extensiv

Extensiv offers a comprehensive solution for ecommerce businesses, including businesses selling on Amazon. It provides a unified platform for managing orders, inventory, and shipping across multiple sales channels, including Amazon, Shopify, BigCommerce, and more. The platform offers advanced inventory management capabilities, including real-time updates across all sales channels and warehouses, enabling businesses to maintain optimal stock levels. Skubana can be integrated with Amazon Seller Central using Zapier, allowing for the automation of various workflows. 

Zoho Inventory

Zoho Inventory is designed to help businesses manage their inventory, orders, and fulfillment across multiple sales channels, including Amazon. The platform provides tools for managing inventory levels, tracking stock movements, and ensuring that you have the right products in the right quantities. It offers features for managing orders, including sales orders, purchase orders, and invoices. Zoho Inventory integrates with various online marketplaces, including Amazon, eBay, Etsy, and Shopify, allowing you to manage your inventory and orders across these platforms from a single dashboard. Zoho offers a range of pricing plans with different levels of features and support.

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Apart from these third-party tools, Amazon offers its suite of inventory management tools through Seller Central, including the Inventory Performance Index, Inventory Age Report, and FBA Restock Tool. With these tools, you can manage stock efficiently, receive alerts for excess inventory, and streamline the whole process of inventory management. 

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Final thoughts

Proper inventory management can ensure your products are always in stock and prevent overstocking, which increases storage costs. By applying the tips mentioned above, you can begin to manage your inventory effectively, increase sales, and grow revenue with Amazon. 

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Frequently Asked Questions (FAQs)

What are the key strategies of inventory management?

Some key strategies for inventory management include: 

• ABC analysis: This is a technique that identifies top-performing products based on revenue and volume. With this analysis, you can find out where the majority of your revenue comes from and work towards making those products more available. The classification will look like this: A - Products with low volume but high value, B - Products with mid-volume and mid-value, and C - Products with high volume and low value. 

• First-in, first-out (FIFO): First in First out (FIFO) is a common inventory strategy, especially used for perishable products. So, with this strategy, when goods come into the warehouse first, they are added to the back of the shelf and picked last during fulfillment. This means that goods that have been in the warehouse the longest get sold first. The technique ensures that goods are properly rotated to avoid spoilage. 
• Economic Order Quantity (EOQ): Economic Order Quantity (EOQ) is an inventory management strategy that aims to find out the optimum inventory level to order and how often to order it. With this strategy, you can order the right amount of inventory at the right time. You can reduce costs and avoid spending money on inventory you can’t sell. 
• Sales forecasting: With sales forecasting, you can look into the future and predict how you will sell your products. This is done by analyzing how you sold your stock the previous year, month, week, and more. You can easily do this using inventory management software. 
• Just-In-Time (JIT): Just-In-Time (JIT) is an inventory replenishment strategy that allows you to order inventory when it is needed to reduce costs and wastage. 

What are the 3 major types of inventory strategies?

The three major types of inventory strategies commonly used across industries are:

1. Push Strategy 

With the Push strategy, inventory is controlled by moving items from the manufacturer to the warehouse, where customers then buy them. With this strategy, inventory is produced or purchased based on forecasted demand and then pushed to the market. This Push strategy is great for products with predictable demand, e.g, FMCG, and seasonal items.

2. Pull Strategy

With the Pull strategy, inventory is replenished based on actual customer demand. So, products are made or ordered only when needed. This strategy is best for custom, high-value, or low-demand products.

3. Just-in-Time (JIT) Strategy

With the JIT strategy, inventory is kept to a minimum and replenished just before it’s needed in the production or sales process. This helps to minimize waste and excess inventory. This strategy is great if you have a stable production environment with reliable suppliers.

Each of these strategies comes with its strengths and drawbacks. Most companies prefer to use the hybrid approach, combining all strategies to meet customer needs. 

How does Amazon keep so much inventory?

Amazon is able to manage a vast amount of inventory using a well-optimized logistics network from hundreds of fulfillment centers around the world, to AI and machine learning, fulfillment by Amazon, Amazon robotics and automation, and global supply chain integration. All these components work together for effective management of inventory on Amazon. 

How to sell products faster on Amazon?

To sell your products faster on Amazon, ensure you: 

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• Use high-volume keywords in the title, bullets, and backend search terms.
  
  
• Use clear, benefit-driven bullet points and product descriptions.
  
  
• Use high-quality product images, including lifestyle photos, infographics, and videos.
  
  
• Use Sponsored Ads to boost visibility. You want to start small and focus on long-tail keywords with low competition and high buying intent.
• Deliver an excellent customer experience to avoid negative reviews. You can enroll in the Vine Program (if you qualify) to get initial reviews and build social proof.
  
  
• Maintain competitive pricing, fast shipping, high seller rating, and product availability to win the Amazon Buy Box.
  
  
• Use social media or Google Ads to send external traffic to your Amazon listings.
  
  
• Leverage promotions and deals like Lightning deals and coupons to drive urgency and improve click-through and conversion rates.
  
  

How to increase profitability on Amazon?

Here are our strategies to help you increase profitability on Amazon:

• Optimize your product pricing by monitoring your competitors and testing prices based on your findings. Use repricer tools like BQool and RepricerExpress to adjust and maintain competitive prices. 
• Remove slow-moving or aging FBA stock to avoid long-term storage fees. 
• Improve your ad efficiency by focusing on high-converting keywords. Use negative keywords to cut waste and pause low-performing ads.  
• Boost organic ranking and sales by investing in SEO, including SEO-optimized titles, bullet points, and product descriptions. 
• Improve product quality and listing accuracy to minimize returns.