What is Amazon Inventory Management?

All the activities that involve your product and activities around them come under the domain of  Amazon inventory management. Availability of a product, tracking the shipment to fulfillment of Amazon center all lies in the inventory management system. It plays a vital role in running the smooth operations of the business.

Amazon’s inventory management is all about vigilantly monitoring stock levels. This is an important step if you are selling products. One has to monitor the quantity of product in inventory to avoid stockouts.

This helps to improvise customer service and avoid any loss in sales opportunities. In simple words, we can define Amazon Inventory Management as

• Forecasting demand and placing orders with suppliers
• Storing and distributing products efficiently.

Why Do I Need Amazon Inventory Management?

The reason you need Amazon Inventory Management because it helps you to

• Fulfills customer expectations
• Maintain stock from running out or overstocking
• Makes smooth cash flow.

It’s an ongoing process that requires constant adjustment based on real-time data and market trends.

Where stockout is frustrating for the customer at the same time, overstocking can be risky. It has the risk of stucking up your money and results in obsolete inventory. The right balance between supply and demand is needed.

An entrepreneur needs to effectively manage the inventory. It helps you to align with product availability, meet customer requirements, and enhance your overall operations smoothly.

How Amazon Inventory Management works?

If you aim to choose to use Amazon’s FBA (Fulfillment by Amazon) service, you gain access to their automated inventory management system. There are various factors it is based on 

•  Cost of goods sold
•  Shipment time
•  Amazon’s data

The information extracted from these areas will help to fulfill customer demand and determine the most optimal inventory levels for each product you offer.

The Inventory Performance Index (IPI) score evaluates the performance in managing inventory effectively. Your IPI score is influenced by factors like popular products available, maintaining healthy inventory levels, identifying listing issues, and improving your score to minimize storage costs.

Challenges While Managing Amazon Inventory Management

Amazon Inventory Management is quite beneficial for the entrepreneurs, as it gives the clear vision of business insides along with making the logistics process smooth. However, there are common issues for which one has to be vigilant. They are as follow:

Running out of Inventory

Running out of inventory will have a deep impact on your sales along with the overall ranking of the listing. Slow down your marketing strategies as you are only able to fulfill the demands of existing customers. There’s no point in attracting new ones. Avoid staying out of stock for a longer period of time, as it will affect Best Sellers Rank and organic keyword ranking. Amazon usually promotes products that are consistently available.

Overstocking Amazon Inventory

Amazon provides a  fulfillment facility. If your products are lying over 90 days, Amazon wants products to move in and out within a 90-day span. The consecutive transaction  is encouraged. Excess inventory impacts your overall IPI (inventory performance index) score.

Amazon’s fulfillment centers will reduce inventory capacity limits if there is an excess amount of stock lying. They will charge monthly and long-term storage fees. Sometimes the entrepreneurs have to pay a huge amount of bills which has greater value than unsold inventory.

In Amazon FBA, Seller Central has the FBA Inventory performance tool that determines the excess inventory, along with addressing stranded inventory and long-term seller fees. In Dropshipping that comes under FBM (fulfillment by Merchant), the money is tied up in slow-moving inventory. Third-party fulfillment centers are challenging when one has to pay an accumulating storage fee.

Stranded Inventory

Stranded inventory is quite challenging and many entrepreneurs do not even know about the solution. The connection between Amazon’s inventory is disconnected with active listing on Amazon. It is available to sell, but customers cannot purchase.

Still the amount is charged monthly storage fees for each unit.Amazon has the stranded inventory tool that will help to track the inventory. This requires close monitoring.

Aged Inventory Surcharge

As discussed earlier, excess inventory in an Amazon fulfillment center will cost you a lot. Amazon has access to the fulfillment network to calculate the age of each seller’s stored inventory. The age of your inventory is calculated from the day it arrives at FBA warehouses.

Any inventory that is kept in the warehouse for more than 271 days is considered an aged inventory surcharge. Hence, Amazon will charge monthly storage fees. The charges will also be applied on the aged inventory surcharge for units stored for longer than 365 days.

Tips for Managing Amazon Inventory Management

Amazon facilitates by providing a platform from where the entrepreneurs can start up their business operation. There are few challenges that have to be kept in mind while proceeding with the Inventory management. However, there are tips to be followed that will be fruitful to carry out the operations smoothly.

Nurture Relationship with your Supplier

It is important to have a healthy relationship with your supplier. As he might favor you over other customers.

Maintain Stock Wisely

It is better to have stock for around 60 days of supply. As over-stocking will be heavy on the pocket.

Keep Appropriate Inventory

Low stock can be difficult for the entrepreneur so it is better to manage supply smartly.

Plan For Unforeseen Circumstances

Be prepared with any unforeseen circumstances. There can be a lot of challenges one has to face being an enterprenur. A smart and active person will make his ways.

Stay Dynamic with Marketing Strategy 

Monitor your marketing strategies closely. If the stock is low, prioritize the existing customers and mold your strategy accordingly. 

Establishing your operations on Amazon is quite tricky. If you are new to this platform, it is better to seek professional help that will enable you to achieve your business’s determined goals. Worth IT Solutions is a leading digital agency. 

We are providing all Amazon services that include Amazon Seller Consultation, Amazon PPC, Amazon Private Label and Amazon EBC and Storefront. Our team is skilled with adequate knowledge and experience that will help you to attain objectives of your business.

Takeaway

If you are an Amazon seller, your expertise in amazon inventory management  will help you to stay ahead of your competitors. The inventory plays a vital role in the operations of the Amazon marketplace. The proper management will help you to meet customer expectations along with smooth operations.

Frequently Asked Question

What are the benefits for Amazon Inventory Management?

Here are the benefits of Amazon inventory management:

• Saves the budget of warehouse storage.
• No space for storage is needed
• Improves cash flow
• Predicts sales trends.
• Smooth operations of logistics.

Which are Amazon Inventory Management Softwares?

Here are the popular Amazon inventory management softwares:

• Linnworks
• SoStocked
• Sellbrite
• Veeqo

What is Amazon FBA Reserved Inventory?

Amazon FBA Reserved Inventory refers to the inventory units that Amazon holds back or reserves to fulfill customer demand as per prediction. The inventory is reserved to ensure that Amazon is able to fulfill customers orders. Even when the shipments are delayed or due to any other issue.