Inventory management is integral to a successful business if you’re an Amazon seller. Effective inventory management is finding the perfect balance between too little and too much inventory. With the right strategies, you can determine how often you change orders to maintain optimal inventory levels.
Why is Amazon inventory management critical?
Customers these days need more patience for poor inventory management. Their expectations for convenience and speed of delivery when shopping online are high: 68% of US consumers expect their items to arrive within zero to three days of purchase, and 47% are willing to spend more for a product with faster shipping. Online shoppers want products back in stock, and most (70%) would be upset if their order arrived late.
Many factors affect inventory management as an Amazon seller: your supplier’s production and delivery times, customs delays, storage capacity and FBA fees, and sales levels all play a role.
When you first launch a new product on Amazon, it can take time to determine how much inventory you should order based on current demand and competition. Over time, you’ll know how quickly your stock is selling, so you can place orders more accurately to avoid overstocking or selling out.
Common inventory issues Amazon sellers face
Most sellers experience inventory issues at some point. You need to be prepared to deal with inevitable problems.
Out-of-stock
Not having enough items to meet demand can affect your sales as well as the overall ranking of your ad.
Always have stock because it helps your bestseller ranking. A great way to stay in stock when you’re running out-of-stock and to wait for delivery is to slow down on demand. You can suspend marketing strategies such as out-of-channel ads or campaigns and set a higher price for your product.
The longer you are out of stock, the more damage you do to your bestseller and organic keyword rankings. Amazon wants to promote products that are always available. If yours aren’t, you’ll be penalized and may struggle to regain your lost rating.
Overstock
If your product has been in supply for over 90 days or at least one unit has lasted more than 90 days, Amazon considers its excess inventory. Remember, Amazon is not a repository but a task center. They want products in and out within 90 days – the sooner, the better.
More inventory in Amazon’s fulfillment centers will reduce your inventory limits and charge monthly and long-term storage fees. These bills sometimes exceed the value of your unsold inventory! Excess inventory affects the overall IPI (Inventory Performance Index) score.
Banned inventory
Banned inventory is a common problem. This happens when inventory held in an Amazon warehouse is no longer associated with an active listing on Amazon. It is effectively in limbo – it can be sold, but no customer can buy it.
The worst thing about stranded inventory is that even if your products aren’t listed for sale, you’ll still be charged a monthly storage fee for each unit.
Old stock surcharge
This is another thing you should avoid, as you could end up with a hefty bill from Amazon depending on how many units you keep are considered long-term.
The time for your inventory calculates from the date it arrives at FBA warehouses. Any stock held at the fulfillment center for more than 271 days is subject to an additional charge in addition to the standard monthly storage fee. Amazon will continue to charge an old inventory surcharge for units held for more than 365 days.
Stay ahead of your competitors with proper inventory management.
Tips for inventory management
Let’s look at some tips to control your inventory.
1. Maintain a close relationship with your supplier
You should try to build and maintain relationships with your suppliers – they are responsible for bringing your product ideas to life!
When you work more closely with your supplier, you’ll clearly understand order fulfillment times in your supply chain. You must know how long it takes to make, ship, and receive at Amazon.
2. Keep a supply of about 60 days
You can forecast sales by looking at Amazon’s inventory reports and tracking sales levels. Do your best always to have 60 days of inventory to cover expected sales. This will help you avoid overstocking as well as running out of stock.
3. Reduce excess inventory
If you overestimated the sales volume of one of your products, don’t worry! It happens to everyone, even big brands.
4. Plan for the unexpected
You may experience supplier delays, shipping delays, customs delays, FBA warehouse delays, and other issues. Order spare units in case something happens in your supply chain.
5. Reduce demand for your product if supplies run out
You can influence the market by raising prices and pausing promotions if you are low on inventory. This is a great way to maintain stock levels, as it helps improve your IPI.
Proper inventory management ensures that your most popular products are always in stock and also prevents excess stock of slow-moving items and hinders capital in your business.
If you need delivery to the marketplace in the US – contact PartnerTrade. We provide our customers with flexibility, continuous support, process control, and optimization of shipping estimates and processing in our warehouses, so we can provide you with warehousing services as an alternative to Amazon storage.
Go to Amazon with us – we will offer the best option for your business.