- by eSellerHub
Let’s face it, Amazon inventory management is incredibly hard, and 2020 has only become more difficult since COVID-19 making Amazon lockdown a necessity. With all the usual retail holidays and Q4’s biggest holiday season around the corner, it is imperative for Amazon FBA sellers to make sure their Amazon inventory management is well-optimized.
With the new restrictions on Amazon’s FBA inventory management within their fulfillment centers, it has become important that the sellers think it through before they choose to ship items. Although this has been implemented to keep a cap on the increased traffic and demand in the marketplace, it has become yet another strategic challenge for sellers.
Challenges for FBA sellers due to Amazon’s inventory management restrictions
- Limited stocking duration that permits only for approximately three months’ worth of inventory.
- Maintaining a score of 500 as a minimum vis-à-vis their Inventory Performance Index IPI so as to avoid storage limits for the remainder of the year.
- Brands having limited inventory may struggle from supply chain issues during peak sales times.
- Brands competing for the same ASIN may face FBA shelf space problems.
- FBA Inventory processing duration may become longer than usual due to COVID-19 countermeasures.
Why Is Amazon Inventory Management Essential?
Keeping your inventory up-to-date and precise is crucial to maintain happy customers. If you go out of stock or are incapable of fulfilling orders, there is a fair chance that your customers move on to your competitors. Having insufficient inventory on hand can cost you sales. On the other hand, having lots of inventory consumes capital and increases storage costs. If there is a lag in sales, it could result in a dead stock situation.
Several high-performing marketplace sellers on Amazon make use of FBA to manage fulfillment. Amazon fulfillment services may be the best option for many, but not everyone’s cup of tea. Knowing the pros and cons of using FBA is essential.
The Pros and Cons of FBA
FBA is advantageous if you’re looking for laid-back Amazon fulfillment services. It can manage products through delivery as Amazon is among the biggest shippers globally. It helps to ship products economically with quicker delivery times.
FBA works like this:
- Send your products to Amazon
- Amazon stores it in warehouses
- When an order is received, Amazon picks, packs, and ships it to the respective customer
Amazon will also take care of the returns and refunds for you, thus making it all seem simpler, but it comes at a price. The handling fees for fulfillment can range from a few dollars to hundreds owing to the item type, weight, and size. A long-term storage fee is also applicable for products that occupy space in the warehouse shelves. There are minimum storage levels, and in order to keep them check, you need to put products there, meaning a part of your investment sits in Amazon warehouses rather than in other segments of your business.
Storage fees at Amazon are increasing. Handling inventory and fulfillment all by yourself gives total control over customer relationships directly. There are lower fees, greater margins, and you have full responsibility for fulfillment and inventory levels.
Whether you use Amazon fulfillment services or the self-fulfillment method, handling your inventory is crucial. Your inventory management system has to handle your inventory and produce the necessary for integrating into Amazon inventory management systems.
Tips on planning your Amazon FBA inventory
- Increase your inventory forecast by having the 3-month coverage window.
- The present pandemic situation may still cause processing delays, and it is important that you send your FBA inventory sooner to make sure that your ASINs are accepted.
- Make use of your Amazon data to aid in determining the ASINs that should be given high priority amidst others to increase sales during holiday or peak season.
- FBA sellers must consider having a backup plan like Fulfilled by Merchant, Seller Fulfilled Prime, or third-party logistic companies. It can save you in case the service cannot keep up with the order volume or stock getting empty quickly in Amazon’s fulfillment centers.
Are you having trouble managing your Amazon inventory management?
Inventory management is one small but very crucial task for successfully selling on Amazon. Mostly it can be a time-consuming job just to manage your Amazon account operations. Luckily, eSellerhub has got your back! We understand each and every step of being an Amazon seller, and we offer the best Amazon Inventory Management software to support your inventory handling on Amazon effectively.