Amazon Inventory Management: Avoid Stockouts and Overstock on Amazon

Amazon Inventory Management: Avoid Stockouts and Overstock on Amazon

Maintaining the appropriate inventory levels is a critical factor for achieving success as a seller on the Amazon marketplace. Avoiding stockouts is essential, as running out of stock can lead to lost sales opportunities and frustrated customers who are unable to purchase the desired products. Conversely, carrying excessive inventory levels can also pose challenges, as overstock can result in the incurrence of substantial storage fees and the potential need to liquidate surplus inventory at discounted prices. Striking the right balance between these two extremes is paramount for optimizing profitability and ensuring a positive customer experience on the Amazon platform.

Understanding Amazon’s Inventory Management System

Managing your inventory on Amazon starts with understanding how to use Amazon Seller Central.

Here are some essential steps on how to check inventory in Amazon Seller Central:

1. 1. Log in to Your Seller Central Account:
   2. Navigate to the “Inventory” tab.
   3. Select “Manage Inventory” to view your current stock levels.

Use the Inventory Dashboard:
The dashboard provides a snapshot of your inventory status, including active listings, pricing, and available quantities.

1. 1. Generate Amazon Inventory Reports:
   2. Navigate to “Reports” and select “Inventory Reports.”
   3. Choose the type of report you need (e.g., Active Listings Report, Inventory Health Report).
   4. Download and analyze the report to monitor stock levels and identify slow-moving items.

Using these steps regularly will help you stay on top of your inventory and prevent stockouts or overstock situations.

Avoiding Stockouts: Strategies and Best Practices

Stockouts can lead to lost sales and unhappy customers. Here’s how you can avoid them:

Utilize Amazon Inventory Reports
Amazon Inventory Reports are invaluable for monitoring stock levels and sales trends. Here’s how you can use them effectively:

• • Active Listings Report:
  • This report shows all active listings and their current stock levels. Regularly reviewing this report helps you identify which products need reordering.

Inventory Health Report:
This report provides insights into your inventory’s performance, including sales velocity and aging stock. Use it to make informed decisions about restocking and promotions.

Implement Reorder Point and Safety Stock Calculations

1. Reorder Point Calculation:
Determine the minimum stock level at which you should reorder a product. This can be calculated using the formula:

Reorder Point=(Average Daily Sales×Lead Time)+Safety StockReorder Point=(Average Daily Sales×Lead Time)+Safety Stock

2. Safety Stock Calculation:
Safety stock acts as a buffer against unforeseen demand spikes or supply delays. Calculate it based on your sales variability and lead time variability.

Set Up Automatic Restock Alerts

Amazon Seller Central allows you to set up restock alerts. Here’s how:

• • Go to “Inventory” > “Restock Inventory.”
  • Set your desired thresholds for low stock alerts.
  • Enable email notifications to get timely reminders when it’s time to reorder.
  • Preventing Overstock: Strategies and Best Practices

Overstocking can be just as harmful as stockouts, tying up your capital and increasing storage fees. Here’s how to prevent it:

Understand Amazon Low Inventory Fee

Amazon low inventory fee can significantly impact your profits if you overstock. Here’s what you need to know:

Monthly Storage Fees:
Amazon charges monthly fees based on the volume of your inventory stored in their warehouses. Overstocking increases these costs.

Long-Term Storage Fees:
Amazon imposes additional fees for items stored longer than a year. Avoid overstocking to minimize these fees.

Monitor Inventory Turnover Ratio
Your inventory turnover ratio indicates how quickly you sell your inventory. A high turnover ratio means you’re selling products quickly, while a low ratio suggests overstocking. Aim for a balance to ensure optimal stock levels.

Implement Just-In-Time (JIT) Inventory
A JIT inventory system helps you maintain minimal stock levels by ordering products just in time to meet demand. This approach reduces storage costs and minimizes the risk of overstocking. Here’s how to implement it:

Work Closely with Suppliers:
Establish strong relationships with your suppliers to ensure timely deliveries.

Use Real-Time Data:
Utilize real-time sales data to make informed purchasing decisions.

Liquidating Excess Inventory: Effective Methods

Despite your best efforts, you might still end up with excess inventory. Here’s how to liquidate Amazon inventory effectively:

Utilize Amazon Liquidate Inventory Program
Amazon offers a liquidation program that allows you to sell excess inventory at a reduced price. Here’s how to participate:

Enroll in the Program:

• • Go to “Inventory” > “Manage Inventory” and select the items you want to liquidate.
  • Choose “Create Removal Order” and select the liquidation option.

Benefits of Liquidation:

• • Free up storage space and capital.
  • Minimize long-term storage fees.

Other Liquidation Methods

Discounts and Promotions:
Offer discounts or run promotions to move excess stock quickly.

Bundling Products:
Create bundles with slow-moving items and popular products to boost sales.

Tools and Resources for Effective Inventory Management

Several tools and resources can help you manage your inventory more effectively:

Inventory Management Software
Consider using third-party inventory management software to streamline your operations. Popular options include:

• • SkuVault
  • TradeGecko
  • Stitch Labs

These tools integrate with Amazon Seller Central and provide advanced features like automated reordering, real-time inventory tracking, and detailed analytics.

Integrating Third-Party Tools
Integrating third-party tools with Amazon Seller Central can enhance your inventory management capabilities. Here’s how to do it:

API Integration:
Use Amazon’s API to connect your inventory management software with Seller Central.

Automated Workflows:
Set up automated workflows to manage reordering, restocking, and reporting.

Conclusion

Effective inventory management is crucial for success on Amazon that’s why we at DGTL Marketing are here to help you grow your Amazon business with various services that we offer. By leveraging Amazon Inventory Reports, setting up restock alerts, and implementing strategies to avoid stockouts and overstock, you can maintain optimal stock levels. Additionally, using liquidation programs and third-party tools can help you manage excess inventory efficiently.

Remember, regular monitoring and proactive management are key to keeping your inventory in check. Use the strategies and tools discussed in this blog to enhance your inventory management practices and boost your Amazon sales. 

Get Help: Need assistance with your Amazon account management? Contact us for expert help.