Managing your inventory on Amazon is a key part of staying competitive in today’s crowded marketplace. With so many options available to customers, having an organized and efficient way to manage your stock is essential. A solid inventory system lets you anticipate demand, avoid stockouts, and minimize overstock—ultimately saving money and increasing profits.
If you’re managing inventory through Amazon Vendor Central, check out this article on mastering Vendor Central inventory management for key insights.
But managing inventory isn’t just about tracking what you have on hand. It’s about using smart strategies like demand forecasting, planning, and automation to meet customer needs without overextending your resources. Let’s dive into practical tips, common challenges, and strategies to make your Amazon inventory work better for your business.
What is Amazon Inventory Management?
Amazon inventory management involves monitoring your products and ensuring they’re properly stored in fulfillment centers so customers get what they need when they need it. Given the fierce competition on Amazon, maintaining the right stock levels is critical. If you run out of stock, you risk losing sales and damaging your reputation. On the other hand, overstocking ties up your cash and leads to unsold items.
Finding the right balance keeps your products available, meets customer demand, and ensures smooth supply chain operations.
Why is Amazon Inventory Management Important?
In the fast-paced world of eCommerce, effective inventory management is crucial. Customers expect quick, reliable deliveries. If you frequently run out of stock, customers may turn to competitors, leading to missed sales, negative reviews, and lower rankings. Many factors—supplier lead times, shipping delays, FBA storage space, and sell-through rates—affect your ability to manage inventory, making it challenging to maintain the right balance.
When launching new products, the lack of historical data can add complexity. However, by monitoring trends and adjusting as you gather data, you can fine-tune your inventory levels. The goal is to use real-time data to adapt quickly, optimize stock, and keep both customers and your bottom line happy.
Amazon’s advanced forecasting algorithm plays a critical role in predicting demand and optimizing inventory. For example, its machine learning-based models analyze historical sales patterns, seasonality, and supply chain inputs to help sellers plan more effectively. To understand more about Amazon’s forecasting innovations, you can explore this article on the history of Amazon’s forecasting algorithm.
Common Inventory Issues Amazon Sellers Face
Running Out of Inventory
Running out of popular products can push customers to competitors and hurt your rankings. Regularly check your stock in Amazon Seller Central to avoid stockouts.
Overstocking Amazon Inventory
Too much stock, especially when held for more than 90 days, can be labeled as excess inventory by Amazon, affecting your IPI score and increasing storage fees. Accurate demand forecasting helps avoid overstock.
Stranded Inventory
Stranded inventory occurs when products can’t be shipped due to fulfillment issues. This not only wastes storage space but also costs you money. Fix these issues quickly to minimize losses.
Aged Inventory Surcharge
Amazon charges extra fees for inventory stored for more than 271 days. Managing your stock properly avoids these costs and keeps storage fees manageable.
Spoilage
For perishable items like food or cosmetics, tracking expiration dates is crucial. Offering promotions or discounts can help move products before they expire.
High Storage Costs
Amazon charges based on the space your products take up. Excess or slow-moving inventory can lead to high storage fees. Efficient inventory management keeps these costs in check.
Low Stock Levels
Insufficient stock can lead to stockouts, missed sales, and unhappy customers. Maintaining adequate levels ensures you meet demand and maintain positive customer feedback.
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Tips to Effectively Manage Your Amazon Inventory
Build Strong Supplier Relationships
Your suppliers play a crucial role in your success. Clear communication and a good relationship help prevent delays and ensure smoother operations.
Maintain Around 60 Days of Supply
Keeping about 60 days’ worth of inventory strikes a balance between avoiding stockouts and overstocking. Regularly review Amazon’s inventory reports to adjust based on sales trends.
Reduce Excess Inventory
If you’re overstocked, consider running promotions, discounts, or buy-one-get-one offers to move excess items. While you may take a short-term hit, it can save you from long-term storage fees.
Plan for the Unexpected
Delays with suppliers, shipping, or customs can happen. Order backup units or use third-party fulfillment services to cover gaps and prevent stockouts.
Adjust Demand When Stock is Low
If inventory is running low, raise prices slightly or pause advertising to control demand. This helps maintain your in-stock rate and improves your IPI score.
Use Inventory Management Software
Invest in tools that help forecast demand and optimize stock levels. These tools reduce the risk of overstocking or running out of inventory.
FBA Inventory Details
Managing FBA inventory effectively involves monitoring inventory health and resolving issues promptly. Below is a detailed example of FBA inventory tracking:
Key Metrics in FBA Inventory Management
- Available Units: The quantity of inventory ready for purchase and fulfillment.
- Inbound Units: The number of units currently in transit to Amazon fulfillment centers.
- Reserved Units: Units temporarily held for processing or assigned to customer orders.
- Unfulfillable Units: Items that cannot be sold due to damage or expiration.
- Researching Units: Units that Amazon is investigating, possibly for reimbursement or resolution.
Understanding Core Concepts
- FBA Capacity Limits: Amazon enforces limits to ensure optimal use of storage space. Exceeding these limits can lead to additional fees or restrictions on inbound shipments.
- Manage Inventory Health: Use tools and reports to assess stock levels and avoid issues like excess or insufficient inventory. Maintain enough stock to cover expected sales for 30 to 60 days.
- Resolve Stranded Inventory: Stranded units occur when products lose their active listings. This status can lead to lost sales unless resolved quickly.
By leveraging Amazon’s FBA tools and regularly monitoring these KPIs, sellers can maintain healthy stock levels, prevent unnecessary costs, and improve their overall performance on the platform.
Monitoring FBA Sales Velocity
Understanding your sales velocity is key to making informed restocking decisions and avoiding issues like stockouts or overstocking. The sales velocity of your FBA items offers insights into product performance, highlighting trends in sales and customer demand. Sellers should consistently review this data to optimize inventory levels and fine-tune their restocking plans. Below is an example of sales velocity tracking:
FBA Inventory Age and Excess Analytics
Amazon’s FBA Inventory Age & Excess Analytics offers a detailed view of how aging inventory levels are trending and insights on managing excess stock. Below is an example of the FBA Analytics interface:
Filters
You can filter by date range, product (SKU), and granularity (daily, weekly, or monthly) to analyze aging and excess inventory trends more effectively.
KPI Cards
Key Performance Indicator (KPI) cards provide metrics such as:
- Total Aging Inventory: Units held long enough to incur aged inventory surcharges.
- SKUs with Estimated Excess Units: SKUs with projected excess inventory.
- Estimated Excess Units: Total number of excess units requiring action.
Inventory Age Trends Graph
This graph visualizes aging inventory in categories such as 0-180 days, 181-365 days, and beyond. You can add data like fulfilled sales or aged inventory surcharges for deeper analysis.
Insight Cards
- Excess Recommendations: Shows suggested actions to reduce excess stock, such as running promotions or creating sponsored ads.
- Aged Inventory Surcharge History: Tracks past and upcoming surcharges to help manage storage fees.
- Inventory Age Trends: Compares aging inventory year over year for strategic planning.
Inventory Details Data Table
Provides detailed SKU-level information on aging inventory, helping sellers take specific actions for particular products.
Amazon Fulfillment Reports
To access detailed inventory reports and related insights, visit the Amazon Inventory Reports page.
Downloading Reports
You can download fulfillment reports in comma-separated values (.csv) or text (.txt) format. Using .csv format allows you to open reports in a spreadsheet, though leading zeros from MSKUs, ASINs, and FNSKUs will be dropped. If you require leading zeros, download the file in .txt format.
Replenishing Inventory
Inventory-level recommendations help maintain healthy stock levels by making products available closer to customers. The Minimum Inventory Level tool categorizes on-hand inventory:
- Healthy: Optimal inventory level, neither low nor excessive.
- Low Stock: Below minimum levels; consider restocking.
- Out of Stock: No sellable on-hand inventory.
- Excess: Reduce excess stock to optimize costs and improve sell-through rates.
Amazon has started phasing out the Restock Inventory report in favor of the FBA Inventory report, which provides a consolidated view of metrics such as sales over 7, 30, 60, and 90 days, shipment statuses, and recommended restocking actions. This new report streamlines tracking and ensures you have all key information in one place.
Best practices:
- Ensure shipments reach fulfillment centers before buyable inventory drops below recommended minimum levels.
- Maintain a 28-day supply for products without restocking recommendations and plan based on estimated sales forecasts.
Reconciling Inventory
Use the Inventory Ledger report to track inventory reconciliation, starting balance, received inventory, orders, returns, adjustments, and removals:
- Starting Balance: Determined from the previous day, week, or month.
- Received Inventory: Credits for new stock.
- Customer Orders: Reduce overall inventory.
- Customer Returns: Adds items back to stock.
- Adjustments: Resolve discrepancies with detailed tracking.
- Removals: Records of removed inventory.
Key reports to use include the Inventory Health Report, Manage FBA Inventory, and Amazon Fulfilled Shipments Report.
Important FBA Inventory Tools and Processes
- Manage FBA Inventory: Use the tools on the FBA Inventory page to list and manage products.
- List Products for FBA: Create individual listings or bulk upload using a tab-delimited file.
- Resolve Stranded Inventory: Address issues that prevent products from being shipped.
- Track Shipments: Monitor your shipments as they move through various fulfillment stages.
- Remove Unfulfillable Inventory: Create removal orders for damaged or unfulfillable products.
Key Notes:
- For North America Unified Accounts, inventory must be sent to fulfillment centers in the respective country.
- Use tools like Seller Central or Amazon’s APIs to manage shipments.
- Keep an eye on storage limits and fees to avoid unnecessary costs.
Conclusion
Effectively managing your Amazon inventory can make or break your business. By working closely with suppliers, forecasting demand, and using tools like inventory management software, you can strike the right balance between supply and demand. Be proactive about planning for disruptions, move excess inventory with promotions, and adjust demand when needed. With the right strategies, you’ll minimize mistakes, boost profitability, and build a successful, reliable brand on Amazon.
Ready to Unlock Maximum Profits with Better Amazon Inventory Management?
Managing your Amazon inventory isn’t just about keeping products in stock—it’s about creating a reliable growth engine that keeps your business thriving. By implementing smart forecasting, reducing excess stock, and optimizing FBA strategies, you’re setting the foundation for sustainable profitability and long-term success.
But why do it alone when you can have experts by your side? At BellaVix, we’ve helped brands navigate the complexities of Amazon’s inventory systems, reduce storage costs, and avoid the headaches of stockouts or overstocking. Our personalized approach ensures that your strategy fits your goals—whether you’re scaling a brand or launching new products.
Here’s What You’ll Get by Partnering with Us:
- Tailored Inventory Strategy: Custom plans designed to meet your unique sales trends and supplier timelines.
- Demand Forecasting Insights: Maximize profits with real-time data and predictive analytics.
- FBA Optimization: Avoid costly fees and manage capacity limits with precision.
- Expert Guidance Every Step of the Way: We’ll tackle issues like stranded inventory and aged stock so you can focus on growth.
Let’s Work Together to Fine-Tune Your Amazon Gameplan
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