How to Manage Your Amazon Inventory

The Beginners Guide: How to Manage Your Amazon Inventory

In the previous blog post we spoke about the basics of inventory management and the importance of making sure you have the right amount of inventory. We also talked about why inventory management is usually left out altogether by many Amazon Sellers. Many of those sellers learn the hard way the consequences of not taking care of the Amazon inventory in time. 

Luckily, there is a way to become better at managing your products and that’s by tracking, acting, receiving feedback, and reiterating. Like everything else in life or business.

This article is going to cover how to manage your Amazon inventory, what specifically you can do in this regard, have a better BSR and IPI index, and thus improve your sales.

Let’s start by defining what an inventory management system is.

Inventory Management System

An inventory management system is a system you need to set in place where you would track your goods, from purchase to production to sales. Basically, it’s the process of tracking your entire supply chain. 

The information you will get from having set up a good system is invaluable. It will show you how much stock you have when you need to place purchase orders, when to send products to Amazon fulfillment centers, the expiry dates of your products and many more things. The accuracy of your inventory data will depend on that same system where you would track and control all raw materials, packaging materials, and finished goods.

Although they are working towards minimizing this, companies the size of Amazon, with lots of fulfillment centers and lots of inventory, can easily lose the products you’ve sent out. 

Keeping accurate inventory records at any given moment is the key to a peaceful mind and not having to worry whether you overstock or stock out. Not only that, but it also reflects on the success of the business because you will ensure that your customers receive the product as it should be, and that the product is always in stock. 

It’s a well-known fact that being out of stock not only drives your clients to your competitors, but it also hurts your BSR and IPI score which can make it very hard for you to recover from in the future.

How to Manage your Amazon Inventory?

First and foremost you need to know what your needs are. That will primarily depend on the number of SKUs you have and want to track. The next step is to figure out what you want to track about those SKUs. And lastly, think about how much time you are ready to devote to inventory management since it does not directly contribute to the growth of your sales. 

There are loads of things to do in terms of on and off-Amazon marketing such as optimizing your PPC campaigns, running influencer marketing, running ads on Facebook, Instagram or Pinterest, building a website etc.

Amazon Management Inventory Software

If you’re just starting out, Amazon inventory management can be also done with simple spreadsheets with a combination of some basic software. With the spreadsheets there is some manual work that needs to be done, either by you or someone from your team. But there are also pros of this approach, and one of the biggest ones is that you can customize them as much as you want and include metrics and KPIs that are not available in inventory management software.

To do the manual tracking you’ll need multiple sources from where you’d get all the pieces of information. Here are some of those sources:

  • Amazon inventory report 
  • Warehouse inventory report
  • Contract manufacturer reports 
  • Co-Packer reports

Collecting all of these may take a long time. To make sure that the accuracy is spot on, 

you will need to set in place a plan which will include the exact dates when you’ll update the spreadsheets. Is it going to be once a week, once in 2 weeks, once a month? 

Our recommendation is to do it at least once a week. Also, you can talk with all the parties outside of Amazon that are involved in the chain supply to send you the reports when you want them to.

Taking everything into consideration, spreadsheets are good for beginners, people who want custom reports and don’t want to pay for software.

Effectively managing inventory gets harder as your business scales. 

This is when the problems arise. The amount of inventory you will be handling increases and the weekly tracking doesn’t work anymore. It is the perfect time to move from spreadsheets to software.

Taking advantage of technology can make things easier for yourself and your team.

These days you can find countless inventory management systems, and they vary from very simple ones to highly sophisticated software which offer various features and even use AI to optimize the stock levels. 

Every inventory management software is connected to Amazon through an API (application programming interface).

Basic Amazon inventory management software are the ones where you get your information about sales, inventory levels, sales velocity, approximate date when you’ll be out of stock, and when to place orders. Some of them may have a purchase order template, work order  template to help you when placing orders.

This kind of software shows you only the inventory you have at Amazon. If you have inventory elsewhere you need to track that on a spreadsheet or keep reports in one place. 

The advanced Amazon inventory management software is the one where you’ll get more accurate information. With them, you will be able to track sales, Amazon inventory, raw materials and packaging.  You will be able to see which raw material is at low level or out of stock for a particular finished good. This way you can make purchase decisions easier and in time. In a way, the more advanced inventory management software gives you accurate information about the supplies you have and need. 

Some offer bar code scanning, lot tracking, real-time accounting etc.

Some of the basic ones for Amazon are Sellerboard and SoStocked and they cover only the final product. Alternatively, advanced software like Katana or Fiddle will cover your raw materials as well as other premium features.

All of them require a proper setup to function well. If you miss something in the set up they will provide you with the wrong information till you locate the mistake. Good thing is that you can access your data at any time. 

The Importance of Amazon Inventory Management

Having an effective Amazon inventory management set in place will lead you to fewer missed sales, better-invested cash, more accurate reports, early problem detection, satisfied customers, loss reduction, reduced cost and increased profitability.

Here at AMZ Operations, we understand the importance of supply chain management. We take care of the inventory using top-of-the-line software and manual tracking which give us the assurance that everything is running smoothly.

We want to relieve the sellers of having to spend time on tasks related to tracking, ordering, fulfilling, stocking, etc. The business owner’s time is the most important asset, and that’s what is going to propel the Brand on Amazon, not the fulfillment of the everyday, mundane, operative tasks.

If lack of time or clarity sounds like the missing piece that’s causing your business not to grow, or you simply want more time for you, your family or hobbies, please schedule a call with us to find out how we can help.