6 Inventory Management Tips for Amazon Sellers

6 Inventory Management Tips for Amazon Sellers

Inventory management is integral to the success of any Amazon company. It reduces the chances of two key profit killers: losing sales due to stock shortages and paying costly storage expenses due to overstocking.

Customers are impatient with poor inventory management. When buying online, they have high expectations for convenience and delivery speed. According to Jungle Scout's Consumer Trends Report, 68% of Americans anticipate their purchases to arrive within zero to three days of purchase, and 47% are willing to pay more for a product with faster shipping. Online shoppers don't want to wait for items to restock, and the majority of them (70%) would be disappointed if their order arrived late.

Finding the ideal balance between too little and too much inventory is the key to excellent inventory management. With a good strategy and the correct procedures in place, you'll be able to figure out how often you need to reorder to maintain ideal inventory levels. We'll go over some of the top inventory management techniques and strategies in this article. So, without further ado, let's get started.

1. Determine Your Inventory Turnover Rate

Your inventory turnover rate refers to how quickly you managed to sell all your Amazon goods. To calculate your inventory turnover rate, first, you must determine how quickly your goods sell on average on Amazon. You can predict how much merchandise you'll need to demand based on this data to maintain merchandise levels in between inventory shipments. When reordering stock, it also assists you in avoiding overbuying or underbuying.

One of the best options for Amazon sellers that import goods is to aim for a 3-month inventory turnover rate. This means you should plan to sell everything in each order of merchandise in three months. Using a forecasting tool will trace your items' daily sales patterns to help predict your inventory turnover rate and reorder demands.

2. Determine the Lead Times in Your Supply Chain

Your inventory path from original sourcing to getting into your warehouse is referred to as your supply chain. The time it's needed for products to arrive after it has been ordered is known as lead time. You can determine the where, what, who, and when involved in receiving, sourcing, and keeping your Amazon merchandise by understanding your supply chain and lead times.

One of the best options is to keep track of your suppliers' manufacturing and delivery dates and plan for worst-case scenarios to keep your supply chain moving smoothly. This is especially crucial if you work with international vendors, as shipping hold-ups can take a lot of time to resolve. If you're sourcing goods to another country, make sure to have extra inventory on hand to handle any unforeseen delays in the supply chain.

3. Use Inventory Management Software

Inventory management software is one of the best options to automate inventory management operations and ensure that you have enough inventory, but not too much, throughout the year. Pair it with the best repricing tool, and you have a whole workflow covered. When retailers employ inventory management software, they generally notice a nearly 40% boost in inventory efficiency.

Amazon inventory management tools can show you how much of each item you sell on Amazon on a daily, weekly, and monthly basis by tracking your sales and inventory patterns. Then you can plot patterns to figure out how much inventory you'll need for different products over time. This in-depth analysis of your sales and inventory trends is essential for making informed purchase decisions.

4. Try Dropshipping

When you use dropshipping, your product producer keeps track of inventories and sends products directly to clients instead of you. Dropshipping holds less risk because you don't have to invest in inventory that could or might not sell. Furthermore, drop shipping eliminates unnecessary paying for storage space.

It's crucial that you pick your dropshipping providers carefully so that you can make the end profit. Many levy additional fees, resulting in a higher cost of items than a standard retail markup. Furthermore, make sure that the dropshipping source you choose complies with Amazon's requirements. They have to deliver on time and report inventory levels so you don't sell out-of-stock items.

Amazon has a strict dropshipping policy because dropship orders are out of merchants' direct control. If it is not strictly adhered to, your seller account may be suspended.

5. Be Prepared for Seasonal Sales Changes

Because of increases in customer demand and increased supplier turn-times, seasonal demand and holiday shopping have an impact on inventories. It's critical to know which products are fast-moving and which are slow-moving at different periods of the year.

It's crucial to plan your inventory levels at least a few months ahead of time. During peak sales cycles, you'll want to boost ordered quantities of high-demand commodities while decreasing orders on out-of-season items.

It's also vital to think about the long lead times that suppliers have for merchandise ordered during peak season. This allows you to arrange orders with enough time to account for seasonal demand and other considerations like the weather.

6. Sometimes, You Need to Slow Down Demand

A successful Amazon campaign can cause your products to sell out really fast, which is fantastic. However, if you can't match buyer demand with sufficient supply, you are risking losing clients to competitors and facing lower Amazon rankings too.

If you discover that you're in short supply in the middle of a promotion or at any other time, one of the best options to decrease demand is to raise your rates and discontinue any promotional activities. These methods may temporarily reduce sales, but that sacrifice will help you restock on time and avoid disappointing your customers.

In Closing

As a seller on Amazon, building a strong reputation takes time. You can't afford to risk your reputation or hard-earned rankings by mismanaging your inventory. Use these guidelines as a roadmap to keep your inventory under control and remain competitive on Amazon.

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