Advantages of Managing your Amazon FBA Inventory
There are so many advantages to managing your inventory with Amazon that one might not think about on the outset, but I encourage you to consider the following advantages to managing your inventory. If you have been selling very long on Amazon you have probably experienced issues regarding your inventory and know how it impacts your business, cash flow, negotiating with suppliers, and so much more. Here are just some of the advantages to managing your inventory with Amazon:
Achieve and maintain a IPI score of 500 or greater. This has become more and more important as Amazon is now limiting stock amounts based on IPI score and in some cases even requesting that sellers remove inventory or experience unbearable storage fees. Do not let this be you, manage your inventory levels.
Avoid out of stock. This is something I have had to learn the hard way. Last Q4 I ran out of inventory 3 times and it could have all been avoided by having a solid inventory management plan and understand how to figure out when to order and how much to order at that time. If you want to know how much this cost you, just multiply your daily sales by the number of days you are out times your profit margin and you will have what it actually cost you out of your pocket. This does not account for losing your ranking on key words or loosing your BSR or the accounting for the extra money you will have to spend to get your ranking back where it was IF you even are able to.
Retain Keyword Ranking. This is so important. I have lost the ranking on key words and NEVER got them back on organic ranking because another listings took my place. Loosing ranking is not something you can even figure out the cost of such.
Stop Competitors from buying you out. You may not realize it but there are sellers that watch competitors and just buy out their inventory when it gets low because it helps them organically rank for key words you hold and more devastating is they capture the sales you would have captured.
Capitalize on competitors who run out of product. Related but almost opposite of the above is gaining sales and ranking when your competitors run out of product. There are only so many shoppers who are going to buy within a category each day and if you can keep your items in stock you can pick up sales when competitors in your category run out of product.
Plan Cash Flow better. If there was one things I wished I had known before starting this business was how to better understand and manage cash flow is critical in e-commerce business. Still to this day I manage cash flow almost daily. I have spreadsheets built to do nothing but track my forecasted sales and projected purchases in order to manage future cash flow.
As you can see managing inventory is what I would consider one of the pillars of being successful long term in e-commerce space. If you want some detail around technically knowing when to order and how much to order watch this video, it is VERY well done.
One of the best ways to manage inventory is partnering with a 3PL or Amazon Prep Center in the country you are selling and allow them to do what they do best.
This information has been provided by Amazonsellershelp.com, a logistics and warehouse company in the USA that helps Amazon FBA and FBM sellers. The company is actually owned and managed by a group who sells everyday on Amazon, Etsy, and EBAY. If interested check out their website.