To be a successful seller on Amazon, you need two things — orders and a solid Amazon inventory management strategy. In today’s post, we’re going to look at nine ways you can improve your current Amazon inventory management strategy. Ready? Let’s get started!
Why is Amazon inventory management important?
Inventory management is a critical part of selling online. It’s important for your two main stakeholders: Amazon and your customers.
If you’re constantly running out of stock, you’re losing sales (to your competitors). To combat this, you need to keep a close eye on your stock levels to ensure you can satisfy customer demand. What’s more, if you run out of stock too often, Amazon might push you down on the list of retailers for a product. While the company has never expressly said it, having sufficient stock is a requirement for being the top seller for a product.
On the other hand, we all know how expensive Amazon’s fees can get- having too much inventory will do you no favors. You’ll be tying your cash up in stock and if you’re an FBA seller you may have to pay long-term storage fees as well.
Ways To Improve Your Amazon Inventory Management Strategy
Use inventory management software
Manually tracking inventory can become time-consuming and unrealistic when your sales start to grow to a reasonable level. Consider outsourcing this task to inventory management software like Primaseller. It will help you gain better control of your inventory.
Within Amazon Seller Central, the Selling Coach dashboard provides sellers with key inventory data to help you monitor your inventory sales and purchasing needs. You’ll be able to see how much of each product you sell daily, weekly and monthly. Using this data, you should be able to identify trends to aid your decision-making.
However, that’s not enough as most retailers also sell through other channels, and need complete visibility of their inventory and orders across channels. This is where an Amazon inventory management software helps. If you are selling only on Amazon, you really need to reconsider since most retailers today are going omnichannel.
Use an Amazon repricer
Setting the right price for your products is a crucial element of adding to the success of an Amazon inventory management system. For each product, there will be multiple sellers, so to win sales and the Buy Box, you need to be competitively priced.
Price too low, and the stock will fly out the door before you can replenish it. But price too high, and you’ll be left with stock that doesn’t sell at all. For help setting the right prices, a solid Amazon repricer such as RepricerExpress can really benefit your business.
Understand your inventory turnover rate
Your inventory turnover rate is how fast you sell your Amazon inventory in a given period of time. Once you know how fast your products sell on Amazon, you can estimate how much stock you need in order to maintain stock levels between inventory deliveries.
This can help prevent over or under-buying.
Generally speaking, Amazon sellers expect to sell their stock within a three-month period. Amazon’s Selling Coach tracks sales against your available stock and recommends quantities needed to fill orders over a specified timeframe.
Understand your supply chain lead times
Your supply chain is the movement of inventory from source to your warehouse. The lead time is the time it takes to get to the inventory stage once it’s ordered.
In order to keep things running smoothly, you need to stay on top of your supplier’s manufacturing and delivery schedules and have contingency plans in place should something go wrong.
Seller tip: If you source your product(s) from overseas such as China, it is wise to hold some inventory in reserve to cover any unexpected supply chain delays.
Plan for seasonal sales fluctuations
It is crucial for sellers to anticipate customer demand during busy times of the year such as the holiday season.
Depending on what products you are selling, you will need to have an idea of what products will sell quickly and which ones will be slow-moving.
Forecasting should take place a few months in advance to allow you time to increase stock levels of those goods likely to be in high demand in the upcoming sales period.
Keep a close eye on promotions
When sales are slow or you’re looking to clear older stock, promotions can be a great way to give your sales a boost. However, if the demand is higher than you anticipated, it can drain your inventory levels.
This may result in backorders and lead to negative seller feedback and a decline in your Amazon sales rank. All of this over products that you were essentially trying to get rid of!
A smart way to run a promotion is to allocate a set number of your stock to that promotion and once that number is sold, remove the promotion and reprice your goods back to their normal level.
Dropshipping is becoming an increasingly popular business model. As the seller, you don’t have to store or pay for the goods in advance.
In order to be a successful drop shipper, you need a good reliable supplier that is profitable for you.
Sellers should be aware that Amazon maintains a strict dropshipping policy. If it is not closely followed, you risk having your seller account suspended.
How to deal with low stocks levels
If you’re running low on stock for a certain item, increase the price of your item in order to slow sales down until you’re restocked.
If you’re still running any promotions or advertising for these SKUs, you should stop these as well. Overall, it’s better to have a few days of slow sales than run out of stock entirely. However, you must never increase pricing arbitrarily.
Seller tip: Within RepricerExpress, sellers can do this automatically using our unique Automation functionality.
Check your Inventory Performance Index
Amazon recently introduced its Inventory Performance Index which rates sellers on their inventory performance. From 1 July 2018, if you’re an FBA seller who doesn’t meet Amazon’s expected standards, you’ll find your FBA storage being limited.
Do not make a habit of sending in inventory that doesn’t sell quickly as this is a bad Amazon inventory management strategy. Amazon will find a way to encourage you to remove that inventory from their warehouses by imposing storage limits or storage fees.
You should keep an eye on your Amazon Inventory Dashboard regularly. This helps to prevent potential lost sales and implement any of the suggestions Amazon offers you in terms of what you can do better.
Essentially, Amazon wants you to sell more and store less. It wants sellers to see it as a fulfillment center rather than a warehouse.
It takes time to earn a good seller reputation on Amazon. Don’t lose your hard earned reputation because of a poor inventory management strategy.
Instead, use the tips above to get your inventory management right and stay competitive on Amazon.
RepricerExpress helps to keep top Amazon sellers priced competitively 24/7. Plans start at £39/$55 and include a free 15-day trial for you to try out and see if it works for your business. Check out what other RepricerExpress customers are saying on Web Retailer.
As an extra bonus, sign-up today using the promo code “PRIMASELLER10”, and you can enjoy 15 days of Amazon repricing for free (no credit card required), then get a 10% discount on your first month’s subscription.