Amazon FBA Inventory Management: 4 Tips for Amazon Seller Success
Amazon Seller Success is increasing everyday, be one of the Amazon Sellers who are following these helpful tips. The Amazon FBA program has gained tremendous popularity in recent years. Affordable storage and fulfillment costs, enhanced operational efficiency and an increased share of the Buy Box are only a few of the reasons.
However, simply being an Amazon FBA seller doesn’t solve all of your problems. In fact, without the right approach to inventory management, you could be making matters worse.
Let’s look at four ways to be a more successful Amazon FBA merchant.
Know the Lay of the Land
New merchants sometimes wrongly assume that an item’s inclusion in the FBA program will automatically generate new revenue. Granted, Amazon.com, Inc. (“Amazon”) does publicly state that participation does increase your chances of winning the Buy Box. However, this does not guarantee sales. If you only stock unpopular items, even 100% ownership of the Buy Box can yield minimal returns.
Long before you ever send your first inbound FBA shipment, do plenty of product research. Look for items that have strong profit potential but are not overly competitive. Things to check for include:
- Current sales rank
- Which category (or categories) the item is listed in
- How competitive the item is
- Pricing & your estimated profit
- Who is selling the product (including whether or not Amazon is a seller)
To expedite your research process, consider using intelligence software (such as our eComSpy tool). In doing so, you’ll save yourself hours of number crunching and probably arrive at more accurate information. Use this data to make more strategic inventory buys.
Develop Restocking Rules to Live By
Customers really dislike it when you run out of inventory. So does Amazon. Keep everyone happier by maintaining consistent levels at the FBA warehouses.
To avoid running out of stock, it’s important to build inventory rules that you can live by. When developing your inventory rules, you might consider these questions:
- How quickly do my items sell?
- Does seasonality impact the demand for my products?
- Is demand for certain products more elastic (or inelastic) than others?
- At what inventory levels do I risk running out?
- Do some products require special attention?
With answers to these questions, you’ll need to systematize your follow-up process. Build a workflow for monitoring SKUs that fall outside of your rules. Also, be sure to define accountability with your staff to ensure nothing slips through the cracks.
Optimize Your Process
As your FBA inventory expands, manual restocking becomes increasingly complex. With hundreds or thousands of ASINs to track, you’ll likely need an inventory management tool (such as our RestockPro platform). This type of software can help you quickly fix pressing issues.
For example, RestockPro remembers your restocking rules and then applies them to your current FBA inventory. The net result is a list of color-coded recommendations, sorted from most urgent to least.
Now, instead of wasting time checking each listing, your most important restocking tasks are automatically defined for you.
Monitor Trends in Amazon Market
Customer preferences can change fast. Many products quickly rise and fall from “best selling” status.
When an item’s sales ranking changes, downstream merchants feel the impact first. In the short-term, sellers are likely to see sales revenue drop. In the long-term, they may be stuck with unsellable inventory. The problem is worsened by FBA storage fees.
Be prepared to deal with changes in demand. Keep a close eye on market indicators, such as:
- Changes in average product review ratings
- SKUs with decreasing profit margins
- Social media chatter
- Recall notifications from manufacturers
- The introduction of disruptive technologies
- Emerging knock-off or counterfeit products (or generic substitutes)
As you notice market changes, carefully consider which action makes the most sense. Should you drop prices to liquidate current inventory? Or, perhaps the situation is an outlier that will eventually correct itself. Either way, to make an informed decision, you must be tracking the right pieces of information.
Realize Greater FBA Success
Amazon Seller Success as an FBA seller depends largely on discipline and process-management abilities. By understanding and monitoring the Amazon market, defining inventory rules and seeking continuous improvement, you’re one big step closer to owning the Buy Box and generating maximum returns.