How to Track Replenish & Highly Profitable Amazon Inventory
Most Amazon sellers want better rankings, more sales, and higher profits. How you manage inventory has a huge impact on all three.
Fail to take inventory seriously, and you’re looking at:
- Unexpected stock-outs.
- Slow-moving products.
- Waste and spoilage at every turn.
All creating a poor overall experience that both your customers and Amazon won’t look kindly at.
So in this post, we cover Amazon inventory management from A-Z. You’ll learn all the systems, techniques, and automation (for a variety of product types) that go into a highly profitable Amazon inventory.
Replenishing Amazon inventory
The actual process of replenishing Amazon inventory is very different depending on whether you’re using FBA or FBM as a fulfilment method.
But the underlying principles remain the same.
- Namely, that you need to decipher:
- When to place a new purchase order (i.e. each SKU’s reorder point).
How much new inventory to purchase at one time.
Or you can use conditional formatting to highlight reorder point in your spreadsheet:
You can keep track of the status of your inventory like this using your spreadsheet, or in Amazon Seller Central.
Key Amazon inventory management techniques
At this point, we’ve discussed where you’ll be storing and fulfilling Amazon orders. And also when and how to replenish stock.
But here are a few key general techniques to make your Amazon inventory management even more effective:
1) Visibility is everything
Having a clear view of your inventory as a whole is crucial. You need to know exactly where each unit is, and what stage of the fulfilment journey it’s at.
2) Know your supplier lead times
Lead time should include time taken for inventory to be booked-in and made ready for sale at your facility. For FBA, it may also need to include time for the stock to be shipped to you for prep before forwarding to Amazon.
All this leaves you with more accurate reorder points, and therefore a reduced chance of having too much or too little stock on-hand at any one time.
3) Keep some safety stock
Safety stock is effectively backup stock you keep on-hand in case of emergency. This could be for a sudden, unexpected rise in demand or general supply chain disruptions.
It can be quite important to keep safety stock if you order from suppliers abroad (as a manufacturer in China). Long, unreliable shipping times or delays at customs are quite common, meaning you could be left without stock for long periods without a healthy backup supply.
Look back over each SKU’s sales data for the past 12 months, and decipher:
- The maximum daily sales you’ve had.
- The maximum lead time you’ve experienced.
- The average daily sales volume.
- The average lead time you’ve experienced.
4) Plan for seasonal fluctuations
It’s important to note that safety stock is there as an emergency backup. Not to cover seasonal fluctuations in demand.
This is why taking the time to properly forecast inventory is crucial.
Black Friday, Cyber Monday, Prime Day, the run-up to the holidays, and any other key retail dates. These are all peak times for Amazon sellers.
In the short term, stocking out at these times can mean losing out heavily on sales opportunities. In the long term, Amazon may be more likely to rank and recommend other sellers above you who can better maintain inventory levels.
5) Know your sell-through rate
Sell through rate is a key inventory analysis metric that shows inventory sold compared to inventory purchased over a given period. It’s usually expressed as a percentage: (No of Sales/Stock on hand) × 100
This indicates how quickly you’re selling inventory. And therefore how quickly the choice to sell that product line is paying off.
Either way, sell-through rate is a key metric to keep an eye on for individual product lines that you’re selling on Amazon (and any other channel).
Amazon inventory management may seem pretty straightforward at first. You buy inventory, list it on Amazon, and ship it to customers when sold.
But complications occur as orders grow and you start selling on other channels. Complications that can be detrimental to your success if not addressed properly.
The guidance in this post should help you take control of your inventory – for Amazon and everywhere else you sell. Apply it as best you can, and make sure to upgrade to a third-party Amazon software when the time is right.