Inventory management – probably not the words that internet retailers love to hear. However, staying on top of your inventory with these Amazon FBA tricks is something that every ecommerce business owner can do. These tricks are especially important for sellers who are looking for better ways to sell on Fulfillment by Amazon (FBA) where inventory problems can wreak havoc on sales revenue, customer satisfaction, and your business overall.
What is Fulfillment By Amazon?
Here’s how Amazon FBA works: when an order is placed by one of your customers, Amazon picks, packages, and ships the order to the customer from the inventory that you have already shipped to their warehouse. Then, if there is any problem with the order, Amazon is the one that will take care of customer service issues including returns.
Sounds easy, right? And it is for the most part. But, if you don’t stay on top of your inventory, you can suffer some major consequences. Here are four tips to help you avoid that situation.
1. You Can’t Rely Solely on Amazon
While Amazon FBA does provide certain tools to you for inventory management, they also assume that you have a supply of your products self-stored. However, as more sellers use Amazon FBA or other alternative fulfilment methods such as dropshippers, this is becoming less common. Even so, Amazon will only alert you to low stock a few weeks out (at the most), and that isn’t always enough time for reordering.
How can you be proactive about this? By knowing your sales speed and supply cycle. The easiest way to accomplish this is by not relying solely on the tools that Amazon provides. If you invest in an ecommerce inventory management software solution that integrates with FBA, rather than depending on the dashboard that Amazon provides, you will be able to set your own reorder alerts and stay on top of your inventory as you see fit. This will ensure that you won’t be disappointing your customers with back-orders or overselling.
2. Pay Attention to Every Product
All of your products are unique – and you need to treat them that way. It’s easy to consolidate orders, and it saves on costs and shipping. However, doing so won’t benefit you if half of your inventory sits on the shelves, not selling like your other half. That means that you must look at each product individually and order inventory accordingly. Of course, the great performers will need to be reordered more often, while your slower-moving stock should only be purchased as it moves.
It may benefit you to automate sales cycles for some of your products once you have an idea of how they perform. Just be sure that if you do that, you are also paying attention to any recent trends and where we are on the calendar – seasonal sales waves can greatly affect the amount of stock that you need to have on-hand.
3. Keep a Close Eye on Your Promotions
Promotions are a great way for you to increase sales, generate reviews, and improve your Amazon ranking, but you have to keep an eye on them.
Obviously, you want your promotions to work well. But when they work too well, you can run into some serious inventory issues. If they are too successful, it can really cut into your profit margins (much more than you expected). A worst-case scenario is unexpected stockouts. If that happens, all the work you did with the promotion to increase your ranking was for naught. You’ll not only lose potential sales, but you will decline on rankings and have an extra deficit to boot.
To combat promotions going awry you can create a protected reserve of your inventory in the “Seller Central” area on Amazon by placing a fulfillment order to yourself. You can choose to hold the inventory for up to two weeks. That way, when you see that your promotion is taking off and your inventory is running low, you can end the promotion and cancel the fulfillment order and that inventory will automatically become available for sale again.
4. If You Have Any Concern, Keep an Extra Supply
You may have heard about the just-in-time inventory management approach, where you don’t keep extra stock, only ordering as you anticipate sales. This approach is great for inventory control and for keeping costs down. However, keeping up with inventory in that manner while consistently maintaining satisfied customers is very difficult for Amazon sellers. You need to have a very close watch of your inventory and a substantial knowledge of periods of increased demand.
Because of that, it is a good idea to set aside a portion of your budget to provide an extra supply when you need it. This may be in the form of extra products that you keep on-hand, storage costs, or reserving extra space in your warehouse. Planning for the unexpected will help you be prepared when things don’t go as you planned, which is something that you need to be successful selling on Amazon.