Amazon Inventory Management in 4 Easy Steps

Amazon has long been a preferred destination for online shoppers. It is one of the most dominant retailers in the world and provides consumers with an easy method to purchase items, any time of day or night. However, Amazon has faced criticism over its high prices and lack of inventory management tools.

Inventory management is the process of effectively ordering, managing, and storing things in order to satisfy demand. Inventory management is critical for any retail or eCommerce company, but it’s particularly important for Amazon sellers since being out of stock may have an effect on listing status, search result ranks, and seller ratings.

Order volume, cash flow, and sales forecasting all play a part, and sellers must understand the whole process to remain on top of Amazon’s search results and boost sales.

We’ll go through the four phases of effective Amazon inventory management in this post, as well as tools to assist you save expenses, improve sales, and spot possibilities.

1. Use Seller Central’s Amazon Inventory Management Tools.

Seller Central, the online interface used by brands and merchants to manage their Amazon items, listings, marketing activities, fulfillment, and more, provides tools for Amazon sellers to manage their inventory. It’s also available on Google Play and the Apple App Store as a mobile app.

Every Amazon seller should be aware of Seller Central’s inventory capabilities, which give very helpful sales data and stock information for tracking and managing inventory.

You may scan several critical data points for all of your Amazon listings from Seller Central and make numerous simple inventory changes manually, either per product or in batches. These are some of the actions:

• View listings that are live, inactive, or suppressed.
• Add items to your inventory.
• Edit product descriptions and images.
• Change the amount on hand
• Pricing may be altered.
• For each product, look at the seller fees.
• View the stock levels of FBA or merchant-fulfilled items.
• Follow the progress of your FBA shipments at all times.
• Produce reports
• Receive tailored opportunities and suggestions.

If you handle a high inventory volume, you may bulk upload inventory data to Seller Central or link to third-party applications to add and update inventory data. However, regardless of how you manage your Amazon inventory, your information is stored in Seller Central and is always accessible for a fast overview.

The Amazon Selling Coach is a significant tool on Seller Central. Inventory management tools in this product are strong and generally underutilized, but they may help sellers in a variety of ways. You may check sales patterns for your items in the Selling Coach, as well as Amazon’s estimate of how many days your present stock levels can last. This allows you to anticipate inventory purchases properly based on real sales data, which we’ll go over in-depth later.

Low Stock Alerts are also sent by the Amazon Selling Coach through email or the Amazon Seller App on your mobile device. Based on the lead periods you establish for each product, they tell you when to repurchase. This helps you prevent losing revenue and having a negative influence on your search results by minimizing out-of-stock status.

2. Integrate an Amazon Inventory Management System from a third-party vendor.

Amazon Seller Central provides merchants with free access to advanced Amazon inventory management tools. However, for more complex methods to manage Amazon inventory—and a variety of other tasks—many sellers resort to third-party software solutions.

Multichannel retailers that require their inventory data to sync across numerous sales channels and platforms would appreciate this option.

Third-party Amazon inventory tools, such as these, may fill in the gaps if Amazon’s inventory management solutions don’t suit all of your needs:

3. Plan Inventory Orders Using Lead Times & Forecasting

In principle, you should keep just enough inventory on hand to complete orders in the interim between stock delivery. If if it were that simple in reality! Inventory management in the real world encounters obstacles such as erratic supplier schedules, raw material shortages, sales swings, and weather occurrences, among others.

When making orders with suppliers, smart inventory buyers include these “what ifs” into their inventory purchase lead times and demand predictions. Here’s an explanation of these concepts, as well as how Amazon can assist you in making better inventory order decisions:

Lead Times for Inventory Orders

The time it takes for inventory to arrive after it has been ordered is known as lead time. When you use lead times to make educated reorders, you give yourself adequate time for shipments to arrive before your existing supply runs out. Understanding supplier lead times may assist buyers deal with two types of inventory issues:

1. Overordering — Placing an excessive order results in your money being invested in more goods than you need. Knowing lead times may help you determine how frequently and how much stock you need to purchase to cover orders over a specific period of time.
2. Ordering too late – If you don’t give yourself enough time to reorder, you risk running out of stock on Amazon before fresh supply arrives.

To prevent falling into these traps, keep track of your present inventory levels and sales volume, as well as your lead times for new inventory shipments.

The Amazon Selling Coach comes in handy in this situation. It sends you low-inventory warnings to let you know when you need to restock. The lead times you provide for each product, as well as the sales volume Amazon maintains for you, are used to generate inventory alerts. This manner, rather than speculation, your orders are based on solid facts.

Forecasting Inventory

When placing an order, you must also estimate how much inventory you will need. This is known as forecasting, and it involves basing your reorder numbers on sales patterns.

The Amazon Selling Coach, once again, is a fantastic tool for estimating your inventory reorder requirements based on your real Amazon sales and inventory levels.

When making orders based on predicted statistics, however, you must use your own sense and expertise. Seasonal demand, holidays, and trends may all have an impact on your stock requirements. You should think about all of this, as well as lead times, while making your selection.

For instance, for smart purchases, combine lead times, forecasting, and experience.

Assume you’re in the business of selling fashionable bikinis. Amazon Selling Coach alerts you to a low-inventory alert for a popular bikini in late July. In June and July, it saw an increase in sales volume.

Amazon estimates you’ll run out in mid-August based on projected sales and existing supplies. It instructs you to purchase 30 additional outfits to cover two months of orders if you run out.

However, you know that this swimsuit has a three-week reorder lead time, so your inventory order won’t arrive until mid-August. You also know that your trendy swimwear sales dip in August and don’t start up again until early March, based on prior history. Despite what Amazon suggests, you shouldn’t repurchase a seasonal item in late season in this scenario.

Data is important when it comes to stock orders, but so is your experience.

4. Make Room in Your Budget for Inventory Purchases

The above-mentioned zero-stock inventory risks are directly tied to Amazon’s compensation practices for many merchants.

Due to Amazon’s 14-day payment policy, vendors are only paid twice a month. From a cash flow standpoint, this severely limits a growing company’s capacity to maintain and manage Amazon inventory efficiently.

Amazon sellers who don’t have control over their daily cash flow may find it difficult to:

• Purchase things rapidly enough to keep them in stock.
• In real-time, act on inventory sourcing possibilities.
• Take advantage of prepayment and early-pay savings from suppliers.

Alternative Amazon financing alternatives, such as these three popular choices, may help sellers avoid being cash-strapped between installments.

The simplest approach to transform your Amazon sales into daily money is to use payability. It’s neither a loan or a credit card; instead, it’s a program that keeps track of your Amazon sales and transfers daily money into your bank account. Payability easily converts your twice-monthly Amazon payments into daily deposits, giving you complete cash flow management.

How Does Payment Work?

Payability links to your Seller Central account and transfers 80% of your daily payments to your bank account or prepaid MasterCard. The remaining 20% goes into a reserve account to handle returns and chargebacks. The 20% is given to you according to Amazon’s standard 14-day payment schedule.

The sole charge connected with Payability is a 2% flat fee on gross sales. Payability’s prepaid Visa seller card is popular among customers since it gives 2% cashback on purchases, which helps to offset Payability’s cost.

There are no setup or cancellation costs, and the only conditions are that you’ve been selling on Amazon for at least 90 days and sell an average of $2,000 each month.

Payability has the benefit of allowing you to access your money as you earn it, just like a regular eCommerce merchant. Controlling your cash flow allows you to buy and sell products more quickly on Amazon, allowing you to earn more money. You may also take advantage of supplier prepayment and early-pay discounts to reduce inventory expenses and boost profitability and purchasing power.

Another easy approach to finance your Amazon merchandise purchases in between sales rewards is to use a credit card. However, keep in mind that credit card charges have a nasty habit of piling up rapidly.

If you’re not cautious, the expense of carrying a debt for a few months might eat into your Amazon income. So, if you’re going to finance your Amazon inventory purchases using a credit card, keep an eye on your balance.

Another disadvantage of credit cards is that you may reach your credit limit at inconvenient times. Credit card restrictions may make it difficult to rapidly reorder merchandise when you need it; you’ll either have to increase your limit (which isn’t always possible) or pay down your balance to create place for the new charge.

These problems are common among Amazon sellers who use credit cards to handle their inventory. Combining credit cards with Payability, on the other hand, is a sensible way to pay off credit card balances quicker with a daily dividend.

You may use credit cards to your advantage by taking advantage of zero-interest promotions if you’re diligent. Some companies are able to finance their starting inventory entirely using credit cards, paying little or no interest. The idea is to move the debt between two credit cards that provide 0% interest on balance transfers for long periods of time. Again, this must be meticulously controlled; else, you risk accruing enormous sums and accruing interest.

Amazon sellers may also use business loans or lines of credit to support inventory acquisitions.

Although loans and lines of credit often have lower interest rates than credit cards, they may be difficult to obtain—especially for a startup. Tax records, income statements, and balance sheets will be required, but only after you’ve been selling for a time.

Another disadvantage is that loans and lines of credit are simple to get now but difficult to repay later. They’re best suited to well-established small firms with a track record of profitability.

Amazon Lending is a small business credit program that assists Amazon merchants in financing inventory purchases. You must be an established Amazon seller since the loan amounts are dependent on your current Amazon sales volume. Plus, you can only use Amazon Lending money to buy Amazon merchandise; they can’t be used for product sold elsewhere or other company expenditures.

The major drawback to this funding option is that Amazon Loans are invitation-only, and only a tiny number of merchants are eligible to apply.

What Makes Amazon Inventory Management Unique?

Being out of stock in most retail circumstances outside of Amazon—say, in-store or on your own eCommerce website—means missed sales for a specific item but nothing else.

If an Amazon seller runs out of stock, it may have a significant and long-term effect on discoverability, rankings, selling rights, and future sales. This emphasizes the need of prioritizing inventory management in your budget and process.

When you run out of stock for a highly rated, fast-selling product on Amazon, you face three significant issues.

Amazon does not enable vendors to accept orders for back ordered products, unlike other sales platforms. So, if you’re out of stock, your listing will be taken down, and sales will simply halt until you restock the item.

If Amazon customers arrive at your product page while it’s out of stock, they’ll get this disconcerting notice.

You have complete control over your own eCommerce site: You may mark an item as out of stock, indicate when it will be back in stock, take backorders, and ship when it arrives. On Amazon, you don’t have this freedom, although some sellers use a shaky workaround to escape the implications of having no stock. If your stock is due to arrive shortly, you may prolong the order processing period for that item, keeping the listing live and sales flowing in. Despite its popularity, this solution has the potential to backfire in two ways:

1. If your shipment is late, you’ll have Amazon orders that you won’t be able to fulfill, which will negatively impact your critical seller rating.
2. Amazon customers are used to receiving immediate pleasure and anticipate lightning-fast delivery. It might harm your brand image if you offer your goods with a long order processing time that causes delivery to be delayed by several days (or even weeks).

Considering all of this, implementing excellent inventory management is a significantly superior option.

Being out of stock on a regular basis or for a lengthy period of time has an impact on your Amazon search rankings.

When it comes to presenting search results to customers, Amazon considers a variety of criteria, with product availability playing a significant part in its search ranking algorithm. If you’re out of stock, your listings won’t appear in Amazon search at all. And, even if you have stock, if you’re often out of stock, your listing will be pushed down in the rankings.

If you offer a particularly unique item with limited competition, being out of stock from time to time may not have an impact on your search results. However, if your category has a lot of competition, you’ll have a hard time climbing back to the top after you’ve restocked.

When your items are out of stock, your reviews suffer as well. It’s that simple: a lack of sales leads to a lack of new seller reviews from customers.

Furthermore, former customers are unable to post fresh product reviews to listings that do not appear—which is what occurs when your Amazon inventory approaches zero.

This may seem to be a minor issue, but Amazon sellers place a premium on obtaining ratings on a regular basis. Having new, fresh ratings has a significant effect on your product’s search results, and ratings influence prospective customers, which leads to sales. Simply put, if your Amazon inventory for a product is nil, you’re losing out on fresh review and rating possibilities, and your listing will suffer as a result.

Conclusion

Managing your Amazon inventory depends on many factors—your products, business model, fulfillment method, other sales channels, and cash flow all play into your inventory management processes. Effective inventory management, on the other hand, starts with a grasp of the risks of letting Amazon inventory run out and how to avoid it.

Frequently Asked Questions

How do I manage my Amazon inventory?

Amazon is an online store that specializes in e-commerce. They sell a wide range of products, including books and movies; they also offer services like Prime shipping and music streaming. Managing your inventory on Amazon can be done by adjusting order quantities or adding/removing items from your wish list.

What is Amazon inventory system?

The Amazon inventory system is a system that helps companies to track their products and efficiently manage them.