10 Experts Suggest The Need for Amazon Inventory Management in 2018

Every brand aims to boost their sale and reduce the carrying cost of inventory. With growing business demand, companies find it hard to be profitable in long-term due to sheer competition and the complexities involved in running the business. Hence it’s absolutely critical to control your costs & mitigate business risks in order to survive and grow.

Being an online seller you must be aware of expenses involved with managing stock, like

  • Overstocking of a product with less sale
  • Going out of stock with fast selling products
  • Storage space expansion with overstocking of products

Besides the increase in cost, brands also encounter challenges involved with managing Inventory:

  • Efficiently overseeing the constant flow of units in and out applying FIFO strategy.
  • Managing the purchasing process and forecasting inventory demand
  • Ensuring inventory coverage while the vendor sends the replenishment stock.
  • Relying on a manual process for stock counts, accounting, and shipment tracking
  • Tracking stocks across warehouses and making necessary transfers and adjustments to drive business volume and clear the excess inventory
  • Identifying slow moving stock and come up with some sale / promotion to clear before it becomes obsolete
  • Managing inventory inside the warehouse & keep inventory shrinkage in check

If you can relate to these issues, you must have thought about simplifying the process. Who would help you better than the experts who already have experience managing their online business?

So, we went on asking a question from few e-commerce industry experts based on critical scenario faced by many players. i.e., “Why should we consider Amazon Inventory management software”

Let us see what the experts have to say,

  • 1 Krista Fabregas

– Krista is Ecommerce Analyst at FitSmallBusiness.

Response
Amazon inventory management is more than posting accurate inventory numbers in Seller Central. Amazon sellers need to accurately forecast inventory buys based on order velocity to maintain in-stock levels without overspending on excess stock or storage.

If they don’t do this, they can find themselves being sold out repeatedly, which results in lost sales and, more importantly, negatively impacts search rankings for the product listing.

Amazon is holding third-party sellers to ever-higher standards and the competition in most categories is fierce.

Without a sound inventory management strategy that guides reorders and balances stock levels against costs, sellers will find it hard to be profitable long-term.

[bctt tweet=”Amazon inventory management is more than posting accurate inventory numbers in Seller Central. ” username=”easyecom”]

Response
Keeping track of inventory is very important on Amazon. Mistakes happen, Amazon forget to process shipments and things go missing.

As you grow its integral you know what you have in stock, how quickly that sells and use that to make your purchase plan. As you know, you can end up paying a lot of money with stock that doesn’t clear, so you need to have a clear system.

An effective value chain, knowing what you have and when to buy is quickly becoming one of the most important elements of Amazon FBA.

[bctt tweet=”Keeping track of inventory is very important on Amazon. Mistakes happen, Amazon forget to process shipments and things go missing.” username=”easyecom”]

– Jeremy is a data center industry analyst, who heads up PR for exIT Technologies.

Response
The Need for Amazon Inventory Management in 2018*

Amazon is the undisputed leader in inventory management (IM), with customer satisfying delivery times, meticulous stocking practices, and infrequent fulfillment mistakes supporting the need for the system.

Their IM prowess has set them apart from competitors, allowing them to grow steadily over the last 20 years from a $438 million IPO valuation to a now ~$500 billion dollar company.

The need for inventory management to Amazon’s standard is key to success in not only the e-commerce industry but countless others that rely on an effective supply chain for success.

One stocking mistake costs Walmart 3 billion dollars so the topic of management is an important one. For companies that want to not only survive but thrive in 2018 and beyond, effective inventory management to the Amazon standard is more important than ever.

However, outside of Amazon’s systems, there are some innovative and progressive practices being used to great effect such as Augmented Reality tech (and other robotic applications) which can greatly increase inventory management productivity and reduce errors by up to 40%.

[bctt tweet=”The need for inventory management to Amazon’s standard is key to success in not only the e-commerce industry but countless others.” username=”easyecom”]

– Jayneel Patel Founder & CEO at Orderhive.

Response
Each Seller/Reseller of goods on Amazon aims to reduce the carrying cost of inventory and improve on the number of sales they are generating. Thus arises the need of inventory management and inventory management softwares.

Inventory management helps you identify the most quick selling SKUs and helps you decode the strategy on how to build inventory of fast moving goods. On the other hand the techniques of inventory management also help you identify the slow moving SKUs and help you give a thought on how to improve the sales for them. (probably by putting them in FBA or putting up promotional offers on them).

Inventory management also helps you keep a track on identifying which channels are helping you build larger margins and at what times.

For E.g. if you are selling on your own store as well as Amazon, Inventory management helps you identify which stock should be pushed more on website and which stock should be pushed on Amazon.

Inventory management lets you keep sync of orders from different channels and also lets you improve on keeping a track of inventory sold from your own offline store as well as Amazon.

[bctt tweet=”Inventory management also helps you keep a track on identifying which channels are helping you build larger margins and at what times.” username=”easyecom”]

– Elaine, CEO of Hollywood Mirrors

Response
I have been selling on Amazon for 13 years now with great success. One of
the key differentiators in having longevity on Amazon is to have real-time
inventory management software we use brightpearl for this.

Having excellent customer feedback and seller ratings dispatching items you
have in stock and on time is imperative in winning the buy box on a product
page which gives you 80% of the sales for that page usually.

A customer is also likely to buy from you if you have a higher percentage
of feedback also. Obviously having products in stock and dispatching them
fast is key to getting good feedback. If you oversell and do not dispatch
90% of your products in time you are looking at getting suspended and it is
difficult to get your Amazon seller account reinstated.

Amazon inventory management software is essential for automation and sales
growth and a reduction in customer service queries so it saves a huge
amount of time which you can concentrate then on scaling the business.

[bctt tweet=”If you oversell and do not dispatch 90% of your products in time you are looking at getting suspended.” username=”easyecom”]

Response
Amazon inventory management is important to avoid stockouts and keep up with demand, sellers need consistent cash flow. If you’re looking to scale your business quickly on Amazon, getting paid every 14+ days often doesn’t cut it.

With constant cash flow you can speed up your supply chain, get the best deals from suppliers and spend time growing other aspects of your business

[bctt tweet=”Amazon inventory management is important to avoid stockouts and keep up with demand, sellers need consistent cash flow.” username=”easyecom”]

Response
Inventory Management is more important than ever in 2018. With Amazon’s long-term storage fees, you don’t want to send too much inventory into FBA fulfillment centers and incur additional expenses if it doesn’t move in time.

On the other hand, you don’t want to ship in too little inventory and then run out of stock on your listings, missing out on revenue for days or weeks at a time.

It’s important to keep a very close eye on your inventory levels, to have a clear understanding of how quickly your product is moving and how long it’s going to take to get new product in Amazon’s hands.

[bctt tweet=”It’s important to keep a very close eye on your inventory levels, to have a clear understanding of how quickly your product is moving.” username=”easyecom”]

– Shannon is the founder of Marketplace Seller Courses

Response
The need for Amazon inventory management is more critical now than ever.
Especially as sellers expand into channel diversification it’s essential
that all platforms, especially Amazon, have updated inventory numbers and
update automatically whenever an order is placed.

Amazon inventory management tool is our favorite, since it takes into account FBA as well as merchant fulfilled inventory, easily allows sellers to kit and bundle
products and can allocate inventory from specific warehouses to specified
channels easily, even if they have different listing SKU’s.

Without a inventory management tool in place it becomes easy to oversell which can
not only affect your seller account health but also temporarily get your.

[bctt tweet=”Amazon inventory management tool is our favorite, since it takes into account FBA as well as merchant fulfilled inventory.” username=”easyecom”]

  • 9 Brian Liebman

    – Brian is Chief Revenue Officer at goamify

Response
In the past year, Amazon has further emphasized that their fulfillment centers are just that; fulfillment centers and not warehouses. Consequently, this September, Amazon is moving from bi-annual assessments of long-term storage fees (LTSF) for an overstocked product to monthly assessments which will significantly penalize FBA sellers that do not appropriately manage their inventory or stock levels.

Additionally, last month, Amazon rolled out their Inventory Performance Index (IPI) which rates sellers on a scale of 0 to 1,000. Sellers that have a low rate of turns and consequently have a score below 350 will have their inventory space restricted at Amazon warehouses; this means those sellers may not be able to send in an additional product (for any item) into FBA thus limiting their ability to capture sales.

While it would seem logical to aim for the highest score possible, a score of 800+ likely means products are consistently out of stock and the brand is not maximizing their sales potential. According to Amazon, sellers should aim for a score of 400-800.

Lastly, investing in an inventory management/warehouse system that incorporates data points such as lead times, safety stocks, days of coverage, product seasonality, item level forecasts, product price breaks, shipping price breaks and inventory turns is the best way for a brand or FBA to maximize sales, minimize their inventory investment and mitigate Amazon enforced penalties.

[bctt tweet=”long-term storage fees (LTSF) will significantly penalize FBA sellers that do not appropriately manage their inventory or stock levels.” username=”easyecom”]

Response
The need for Amazon inventory management in 2018 has never been greater. Maximising the great potential the Amazon platform has to offer is a tricky affair. Ensuring the leanest amount of stock is available for our Amazon customers whilst monitoring sales and listing performance is critical in taking advantage of a sometimes, a rollercoaster of a platform.

Conversely, overstocking is an IED waiting to go off. Swings and roundabouts; not enough stock versus too much stock. Certainly the norm with Amazon selling but inventory management; without question, critical.

[bctt tweet=”Certainly the norm with Amazon selling but inventory management; without question, critical. ” username=”easyecom”]

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So, as you’ve read how some of the best brains in eCommerce do the inventory management, it’s time for you to follow the same.

We would like to thank all the experts who contributed. It was an absolute pleasure getting response from them. I am sure readers will be able to minimize challenges involved with managing inventory.

If you have any thoughts or unique challenges that you typically face with Amazon inventory management, please post them in the comments section.

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  1. An inventory refers to stocks that are not finished, semi-finished or even finished products. When you keep the stocks, it means involving a recurring cost. However, when you do stock management properly, it can curtail recurring costs successfully.


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