Amazon FBA (Fulfillment by Amazon) facilitates sellers to obtain storage service for their products in Amazon’s fulfillment centers. Then, Amazon will handle packing, shipping, and customer service for the sellers.
The FBA system serves the logistics and makes inventory management as a critical part of the business operation to achieve a successful and profitable FBA business. This successful business will not be there by the existence of poor inventory planning which can lead to stockouts, excess storage fees, or even account suspension.
In this comprehensive guide, it represents whole information about the reality of Amazon FBA inventory management, its important role in the business, and any strategies and tools in effective inventory management.
Contents
Amazon FBA Inventory Management
FBA inventory management is the process of monitoring, planning, and optimizing inventory levels within Amazon’s fulfillment network. These aspects are to ensure that the business has enough stock available to meet customer demand without overstocking and paying unnecessary storage fees.
Amazon will conduct product storage across multiple fulfillment centers and track stock availability, sales velocity, and seasonal demand. The seller’s job is to monitor these patterns and make data-driven decisions on when and how much to restock.
Inventory management plays an important role in the business since it has some impacts on the business in several important aspects. First, it can avoid any stockouts. Such conditions will lead to lost sales, lower rankings, and dissatisfied customers.
Second, proper information on inventory management will reduce storage fees. Since Amazon gives charges on a monthly basis and long-term fees for storage, then good inventory management will not lead to overstocks which will cause higher costs for the product storage and slow moving products.
Third, efficient inventory gives impacts on improving cash flow. It means that there will be no more money tied up in stock. The money can be for product availability and for marketing or new product development.
Fourth is about maintaining the IPI Score. Amazon gives an IPI score namely Inventory Performance Index (IPI) in order to measure the inventory management of the business. It can affect the storage limits. Poor management can lead to decreased scores and restrict selling capacity.
Key Inventory Management Tasks
Amazon FBA inventory management covers some key aspects.
Inventory Forecasting
Forecasting is useful to predict future demand by considering some aspects such as past sales data, seasonal trends, and promotions. Sellers can also use tools like Amazon’s sales reports or third-party platforms (e.g., RestockPro, SoStocked) so that they can estimate how much stock you need over time.
Replenishment Planning
Sellers should have proper plans in the inventory delivery to Amazon so that there will be no stockouts and overstocking. This plan can be based on supplier production and shipping duration, Amazon check-in processing period and average daily sales.
Monitoring Inventory Effectiveness
It can be by tracking the real-time stock levels using the Inventory Dashboard in Seller Central. Sellers can pay more attention to low stock alerts, notifications on excess stock, and any stranded inventory such as unavailable products for sale due to listing or labeling issues.
Inventory Management Strategies
Just-In-Time Inventory
This method creates minimal stock and makes only necessary replenishing. Then, it can reduce storage fees. But, this work requires accurate forecasting and fast supplier lead times.
Safety Stock
It means to have enough stock for the business operations. It is also necessary to have a buffer of extra inventory to protect against sudden demand spikes or shipping delays. This safety stock can prevent missed sales and account issues.
ABC Analysis
This analysis uses ABC strategies by making categories for the products into three groups. A represents high-value and fast-selling products. It is for closely monitored products. B represents moderate value products and sales. It is for checking products regularly. C represents low value or slow-moving products which have minimal attention. This method helps sellers prioritize the inventory efforts.
Final Note
Shipazon also conducts the Amazon FBA inventory management so that it can be more than just tracking stock. Shipazon makes inventory management a vital part of ensuring customer satisfaction, maintaining profitability, and sustaining business growth.
The accurate forecasting can be by using automation tools and regular inventory performance reviews. This can lead to precise information about the demand and avoid costly mistakes. By mastering inventory management, sellers can scale the FBA business with confidence, maximize efficiency, and provide a seamless shopping experience for your customers.
Shipazon can also handle all of these goals so that sellers can achieve their desired benefits in the business operations. Since there is a complete chain of the business aspects run by Shipazon, it can absolutely help any business and sellers to achieve their maximum goals and benefits in the business.