Inventory Management Best Practices


Effective inventory management is one of the best ways to keep costs down for your Amazon business, especially if you fulfill orders via the FBA program. However, it can be difficult to find the right balance between being overstocked and understocked.

In this post, I’ll discuss four key inventory management strategies to consider.

Track Sales Data

Deciding how much to reorder or whether to phase out a product is challenging if you don’t have the right data on hand. Whether you manage your inventory with a spreadsheet or an integrated tool like RestockPro, you’ll want to pay close attention to sales trends and profit margins. Here are a few questions to get you started as you consider whether to restock an item:

  • How many units were sold during a particular time frame?
  • How have sales fluctuated over the past month, year, or other time frame?
  • Are your profit margins healthy?
  • Do current industry trends indicate that your product will continue to sell?

It’s also a good idea to monitor and evaluate product reviews. Are ratings for your item generally favorable? Negative ratings could indicate a product quality issue. A lack of reviews and declining sales may signal that a product is reaching the end of its life cycle.

Manage Fees

There are literally hundreds of millions of items in Amazon fulfillment centers. Storing and managing all that inventory is expensive, especially if it doesn’t sell quickly. Fulfilling items through FBA saves many sellers invaluable time from picking, packing, addressing and mailing packages to providing customer service, but the fulfillment center is not a secondary garage.

warehouse space changing

If your inventory isn’t moving, it may be in your best interest to try running a promotion or lowering the price to increase sales velocity. In some cases, it may be more cost-effective to simply remove the inventory.

Of course, this depends on your products and business goals, but be aware that the longer your inventory is at a fulfillment center, the more it will cost you. In August 2018, Amazon is introducing a minimum long-term storage fee for items that are in fulfillment centers for 365 days or more. In September 2018, long-term storage fees will be assessed monthly, rather than twice a year.

Timing is Everything

It’s important to know the lead time for every product you sell. How long does it take to manufacture your product? Is your product being sent to you from an international location, meaning you need to allow time for shipping as well as customs clearance? Are there upcoming holidays that could affect manufacturing or shipping times?

Long lead times could lead to lost revenue, preventing you from taking advantage of new opportunities by keeping your cashflow tied up. The further into the future your restocking forecast goes, the less reliable it will be.

Find a good balance that will help you avoid going out of stock on your top products without storing excessive amounts of inventory. Using an integrated system to connect your restocking and supplier lead time can help you reduce timing issues.

Communication Matters

Communicating your inventory management needs to your supplier can help you minimize effort and increase efficiency in your restocking process. It’s important to work closely with suppliers and understand how they process purchase orders.

For example, are they more responsive to PDF attachments that use a specific template? Talk to your supplier about the best way to structure your purchase orders and include clear instructions. This will improve processing time, reduce the potential for issues and strengthen your partnership with your supplier.

If your supplier is shipping your items directly to Amazon, be sure to spend a lot of time training them to understand Amazon’s inventory guidelines. Taking the time to create a smooth workflow can save you time and money every time you reorder.

Automate Data

Using an integrated inventory management tool can help you keep track of every moving part of your FBA inventory. RestockPro is a great option for many sellers, making it easy to build kits from local inventory, create purchase orders, manage shipments and much more. You can try it free for 21 days here!

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