Amazon Inventory Management: Things You Need to Know

Want to know more about Amazon inventory management? Selling on Amazon is a great way to grow your business. It can be difficult, but it has many benefits including the ability to reach new customers and increase profits.

Amazon is the world’s biggest ecommerce retailer. In 2020, they reported $197.35 billion in total net revenue for their online stores.

Why would you not want to sell on Amazon? Selling on most marketplaces is different than selling on Amazon, and sellers need to make sure they are prepared.

The most important thing to understand about Amazon is that it offers a large audience, but if you are not using the right tools, you will lose your chance of success.

When you have a lot of orders coming in, it can be difficult to keep up with the demand. If you’re not using an inventory management system, catching up becomes very stressful and time-consuming.

In this article, we will explore the basics of selecting and operating an Amazon inventory management system. We’ll also go over what you need to know about it.

Why You Need an Amazon Inventory Management Solution

Amazon inventory management systems are specialized software that can be used to keep track of your Amazon sales channels and the deliveries, purchases, and orders coming from them.

To avoid dealing with inventory discrepancies, I recommend synchronizing your listings and maintaining a better balance between the amount of stock you have. Click To Tweet

Proper management is also critical for Amazon product lifecycle because it helps to reduce hassles such as excess or insufficient stocks.

Amazon inventory management systems are crucial if you’re selling using Fulfillment by Amazon (FBA). This provides sellers access to the expansive distribution network of Amazon. 

In exchange for paying shipping fees and storing your inventory in any of Amazon’s fulfillment centers, Amazon will take responsibility for shipping your customers’ orders. If you cant offer 2-day or 1-day shipping, Amazon FBA provides support to help you do it.

Amazon inventory management software makes it easy to sell on multiple channels. There are many solutions out there and you can choose one that meets your needs.

Consequences of Running out of Amazon Inventory

As a business owner, you might be asking yourself if an Amazon inventory management solution is necessary. You never know when your stock will run out and customers won’t have anything to buy from you on those days.

When Amazon sellers run out of inventory, there are many consequences. Profits decrease immediately and it becomes difficult to recover from this loss in momentum.

If you are selling your products on Amazon FBA, there is a significant risk of running out of inventory. Not only do you have to place an order with the vendor as soon as possible, but it takes even more time for them to ship your product and get processed by Amazon which can leave customers without their desired purchase. This is why Amazon stock management is necessary.

amazon inventory management

Lost Sales and Competitive Advantage

One of the biggest problems with running out of inventory is that Amazon’s search engine optimization penalizes your listing for not generating sales. If you do not have any sales, it will become inactive and stop making money. The problem becomes worse if no one buys anything from your product during this time because then its ranking goes down even more.

You can’t have preorders because you don’t know how many items to make. If they are out of stock, the customer will go elsewhere.

To make sure that your items are always in stock and you never disappoint a customer, it is important to stay on top of forecasting inventory needs.

Don’t Fall For ‘Hot Product’ Trap

When we’re selling popular or fast-selling products, it can be easy to think that there will always be demand. When this happens, sellers might feel like they don’t need to worry about trying new things.

Sellers often tell themselves, “It’s okay. The customer will wait for me to come back with the product they want.”

There are two reasons why this is a mistake:

  • A product might be hot for a while, but by the time you restock the demand is not there anymore.
  • When you’re not stocking enough inventory, your competitors are taking over. You’ve fallen behind and it might be hard to catch up.

I would also recommend against buying an excessive amount of stock because the product is selling quickly. It’s important to ask why it’s in demand- is this a seasonal item? Did the company just launch something new or get some good media coverage recently?

It is easy to get caught up in the excitement of a temporary boost and end up over-indexing on inventory. This will result in an excess supply that could lead to increased fees.

No New Product Reviews

Amazon sellers may not realize that when they don’t have inventory, this can impact their product reviews and ultimately how well they rank on Amazon.

When you run out of stock for a product, it can be difficult to make sales. Click To Tweet

This means that when your store is not making any sales, the only new reviews coming in are negative ones.

You need to keep your product reviews fresh. Online shoppers put a lot of faith in the review process, and if most of them are outdated (or older) it might discourage potential buyers from making a purchase.

You can also get higher search rankings by having product reviews. This will make it easier for customers to find your products, so they are more likely to buy from you.

Upset Customers

When you experience a stockout, it costs your store money and time. Worse still, empty inventory makes the customer feel like they cannot trust that there will be anything in the store when they return which is bad for consumer relationships. If someone can’t find what they want at one retailer then their next stop would likely be another competitor with an available product.

If you’re excited to order an item and then find out it is not in stock, I know that would be disappointing.

The Key to Preventing an Amazon Stockout

The key to avoiding an Amazon stockout is proper inventory management control. If you’re only selling on one channel, this might be possible using spreadsheets but it isn’t if you are also selling elsewhere.

amazon inventory management

Amazon is known for selling millions of products, but if you are not careful your inventory will run out. An Amazon inventory management system built with sales channel integrations and FBA tracking can help prevent this from happening by keeping track of what’s in stock.

If you are looking for a solution to help with your Amazon inventory management, there is one that will be perfect for what you need. There are many different types of solutions and they all have their own strengths.

When deciding which solution is best, there are some things to keep in mind:

Sales Channel Support

When choosing an Amazon inventory management system, it’s important to choose one that will support the sales channels you use.

When you are a multichannel seller, it is important to have an inventory management system that provides sales channel support for other online marketplaces. For example, if your store is on Shopify or BigCommerce then the inventory should also be available on those platforms.

If you are selling on multiple channels, it is essential to have a single dashboard that connects your inventory and sales. If there’s not one system for all of them, then this could lead to inconsistent inventories across the platforms.

You should also consider what you will need in the future.

You may be selling on Amazon right now, but what if you need to expand your business in the future?  You might have started out with just one marketplace, but there are other online marketplaces that you could explore.

When choosing an inventory management system, choose the one that is future-proof. Find a flexible solution so you can always be growing.

Optimizing Integrations

If you are looking for an Amazon inventory management system, then the best systems will connect directly with your sales channels.

It is crucial to manage your inventory across all of the sales channels you use. Click To Tweet

However, if you don’t synchronize it with other aspects of your business such as purchasing procedures and automations then this could put you at a disadvantage.

The way an integration solution works will vary depending on which type of system you choose. Upgrades to these types of solutions come out often because they need to be able to integrate with newer versions.

A good way to tell if a company is doing inventory management well, and that it’s taking care of its accounting needs too, is by checking whether or not the two systems are integrated. If they’re connected directly then there should be few issues with updates.

Support Multiple Business Processes

In addition to syncing your Amazon inventory with other sales channels, the best and most advanced software will also allow you to see what’s going on at any given time. For example, it can tell you how many orders are still pending.

Improve Your Optimal Order Frequency

Ordering too much or not enough can be a problem. If you order to often, you’ll have an overstock and if it’s the other way around, your inventory will go down so fast that soon there won’t be any left at all. You need to know when is best for ordering each month.

One of the most important things to do is set up automation on Amazon. This can be done with an inventory management system that optimizes when and how many units should be ordered.

Reduce Admin Time and Errors

When you integrate all of your systems, it will save time and reduce mistakes. Your business accounting system can communicate inventory and costs consistently to other channels like sales or customer service because everything is updated in real-time.

When you use a system to manage all of your customer data, it is easy for everything in the database to be updated and kept in sync. If there are any errors made when entering information into one side of the program, they will show up on both sides so that changes can be quickly reverted if necessary.

Real-Time Financial Reporting

One of the best ways to monitor your inventory is by using a system that automatically tracks information as you ship, pay and invoice orders. This will allow for real-time financial reports so that you can stay up to date on how all sales channels are performing.

One of the great things about this software is that you can make decisions more quickly than ever before. Instead of searching through your different spreadsheets, you’re able to combine and analyze all Amazon and marketplace sales at once.

Benefits of Automated Amazon Inventory Management

amazon inventory management

Automatic Updating of Inventory

With online sellers, you will not need to manually update inventory on each channel after a sale or return. You can save time and potential errors by using an automated system.

The best thing about this system is that your inventory updates in real time, so even if a customer orders at 2am on Saturday morning you will have the item they need available for them.

Track Your Products in the Warehouse

Warehouse owners often find it difficult to keep track of all the products they have on hand. An inventory management system can solve this problem by tracking your product down to specific pick locations, making the process much easier.

When you get a purchase order, pick the items and ship them to your customer-it is reflected in inventory immediately. As a result, there are more satisfied customers.

Freedom to Focus On Your Strategy

When it comes to running an ecommerce store, what is your favorite part? You might not be in love with the idea of manually managing inventory. Instead, many retailers are passionate about strategy.

You need to take the time to plan your Amazon strategy so you can make sure that it pays off. With over 90% market share in five categories, there is a lot of potential for growth on Amazon – but without proper planning this opportunity will be wasted.

If you’re looking for a way to make money on Amazon, there are plenty of ways.

When you automate your inventory management, it frees up time to focus on the aspects of your business that are most important. You can source and create more awesome products or even grow into new markets.

Integration

In the earlier part of this article, I mentioned how having your inventory management system connected to both ends of a business simplifies things for you.

The software is not just for inventory management. It can handle invoices and warehousing, which are crucial aspects of running a business.

Final Thoughts on Amazon Inventory Management

Amazon inventory management is time-consuming. It’s easier to use an automated system that will take care of all the intricacies for you, such as order frequency or risk avoidance. That way, your customers are happy with prompt delivery.

Finding a solution for inventory management is key to success in the business world. Click To Tweet

If you plan on growing your company and expanding into new markets, make sure that it provides sales channel support so you can sell everywhere.

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