Tips to manage your warehouse for Amazon FBA
The fact is, most of Amazon's sales come from third parties, but did you know that by 2020, almost half came from third parties and not directly from Amazon? Furthermore, about 2/3 of these sellers are using the Amazon FBA platform, which is a great opportunity for them. Most people are unaware that anyone has the ability to sell something on Amazon, provided that they know where and how to go about it.
In current times, there are more than two million people doing it worldwide, and it is now your decision whether it is the right course for your business. Additionally, FBA does not work only in the United States but offers services to many other countries across the globe.
As part of FBA, Amazon offers its customers warehousing capabilities. The only thing you have to do is ensure that your inventory is in the right place at the right time. This could be as simple as how much stock should be ordered? When should it be ordered? If there is excess stock, how do we handle it? Amazon, however, charges for storing that stock in the warehouses of their companies on a monthly basis. This guide will cover some useful tips for Amazon warehouse management.
What is Amazon FBA?
Third-party sellers using Fulfillment by Amazon can automate their order fulfillment and shipping services in order to simplify the process of selling products on Amazon. Amazon ships products on behalf of sellers.
The Amazon FBA program allows participants to let Amazon take care of all shipment tasks, including returns and refunds. It entails product warehousing in the Amazon warehouse system, picking and packing, in addition to other activities.
Amazon stores all the products that sellers send, and then the company processes all the orders that are being sent in before they are shipped out. So long as you are handling the sales and ensuring that Amazon is always stocked with your products, the rest will be taken care of for you. You will, however, be charged by Amazon for this service. But what will you get in return?
- Customer service is available 24/7 on Amazon
- Picking, packing, and shipping service Included in fulfillment and shipping costs
- You will be able to access one of the most dynamic fulfillment networks in the world.
Tips and Tricks for Improving Amazon Inventory Management
Amazon provides you with a variety of tools to assist you as an Amazon seller. Following are some tips for improving your Amazon inventory management, increasing sales, maintaining customer satisfaction, and growing your business.
- Developing a strong relationship with suppliers
In order to become a successful Amazon FBA seller, you must research and establish reliable supplier relationships. Consider credentials, credibility, and cost when selecting the supplier with whom you will be working. Suppliers who provide quality products timely and consistently are considered good suppliers.
Keep a strong relationship on track once you find a supplier that meets these requirements by paying on time, treating them with respect, and communicating frequently. Scheduling supplier shipments for a steady flow will support customer demand without leaving overstocked inventories.
- Track Sell-Through Rate
Selling from a store compares to receiving inventory. The sell-through rate is the difference between selling from the store and receiving inventory. Monitoring this metric is critical in order to effectively manage Amazon’s inventory and anticipate the needs of customers.
Consider reviewing your sell-through rate annually and ensuring you have adequate stock for certain months based on spikes in sales. In addition, knowing your typical monthly or quarterly sales allows you to forecast your inventory for the following year, preventing overstocking or understocking. It is possible to maintain the highest possible margins by having accurate inventory forecasts.
- Regularly replenish popular items.
You would need to establish when you will restock items for every item you sell, as some items may sell out more rapidly than others. Utilize your inventory data to determine when it is appropriate to replenish items every month and order products you are unlikely to need right now.
Whenever your store displays an "out of stock" message, there is a potential loss of income. The occurrence of this condition can discourage customers from purchasing from your store again or result in them researching brands that are more reliable. Conversely, too much inventory negatively impacts profit margins and can result in excess storage costs if the products are stored for an extended period.
- Dispose of the aging inventory
Loss of profits can also result from overstocked items that are not selling. Furthermore, you incur additional storage charges due to the items that take up space in your warehouse. Rather than allowing the inventory to age, consider running a promotional campaign to dispose of excess inventory.
In Seller Central, there is a Restock Inventory section, where you will find the Amazon FBA Restock Tool. In addition to increasing conversions and sales, it also increases the availability of same-day and next-day delivery options. This will also help keep inventory from going stale and protect your Seller rank, which will be another factor that will determine how visible you are across the site.
Sales history, demand forecasts, seasonality, as well as store-specific inputs are used to determine when more inventory should be sent. The application will also provide an estimation of shipment days and resupply quantities. If you have this information, then you will be able to determine which products to sell and which ones to eliminate.
- Optimization of Amazon Inventory Management Tools
Additionally to the Amazon FBA Restock Tool, there are a number of other very useful tools and reports that can be found here:
- Inventory Performance Index (IPI). Your Amazon Inventory Performance Dashboard provides you with this rating of factors that influence your company's inventory management. It is most likely that excess inventory fees and shipping limitations will apply to individuals with a lower IPI rating.
- Report on the age of inventory. Based on this information, you can determine whether your inventory is properly balanced with the number of units sold. To summarize, this report provides an insight into how long items in your inventory spend in fulfillment centers before they are sold. Knowing this information will enable you to determine your restock rate, as well as determine how much you are paying in storage fees by maintaining the inventory.
- Reports on surplus inventory. According to Amazon tools, excess inventory that has been in the warehouse for more than 90 days should be lowered in price to maximize inventory ROI. An excess inventory may be sold in three ways: through a sale, through advertisement, or by removing the listing.
Utilizing an inventory management service will help you prevent spoiled or aged products by automating the process. There are many third-party providers such as FBA and Amazon that can assist you with the management of your inventory. By doing so, you can save on costs and offer your customers promotions and incentives, such as free shipping or special discounts.
- Integrate Amazon Inventory Management Tools from Third-Party Providers
Sellers are able to track inventory and manage it using Amazon's platform, but often, they use third-party tools. So whatever your inventory management software is, make sure it does these things:
- Easy to integrate with all your online sales channels
- Recommends replenishing stock
- Ensures that product types and quantities are tracked and reported
- Keeps track of how long items have been stored in the warehouse
In order to gain a competitive advantage online, Amazon has built its presence on a single premise--the satisfaction of its customers. It would be impossible to achieve this result without proper Amazon Inventory management. In order to achieve high levels of profitability in your Amazon business, it is essential to implement a comprehensive inventory management system. The system you implement must provide cost-cutting features and help in maximizing profits.
We have written this article to help new FBA sellers generate sales provide excellent customer service by managing their warehouse inventory easily without any hassle.