What are the 5 essential tips for FBA sellers to optimize their inventory management?

 

As an FBA seller, it’s important to have a well-organized inventory management system.

Managing inventory can be challenging, but optimizing it is critical to the success of your FBA business.

In this article, we provide you with five essential tips that help optimize your inventory management and ensure your FBA business runs smoothly.

Key points:

• Understanding sales velocity is crucial for effective inventory management
• Setting reorder points can help you avoid stock-outs and ensure that you always have enough inventory on hand
• Tracking inventory levels regularly can help you identify any potential issues with your inventory management system
• Utilizing Amazon’s inventory management tools and outsourcing inventory management can help you optimize your inventory storage

Getting started

Effective inventory management is critical to the success of any FBA seller. By optimizing your inventory management, you can avoid stock-outs, reduce storage costs, and improve your bottom line.

1. Understand your sales velocity

Sales velocity is the rate at which your products sell. Understanding your sales velocity is crucial for effective inventory management. By analyzing your sales data, you can determine which products are selling quickly and which ones are not. This information can help you make informed decisions about when to reorder products and how much to order.

To calculate sales velocity, you need to know how many units of a product you sell per day or per week. Use this formula:

Sales Velocity = (Number of Units Sold / Time Period)

A great visualization of the sales velocity equation

For example, if you sell 100 units of a product in a month, your sales velocity would be:

Sales Velocity = (100 / 30) = 3.33 units per day

Understanding your sales velocity can help you determine which products you should reorder and when.

2. Set reorder points

Once you understand your sales velocity, you can set reorder points for each product. A reorder point is the inventory level at which you should place a new order to ensure that you have enough stock to meet customer demand. By setting reorder points, you can avoid stock-outs and ensure that you always have enough inventory on hand.

To set reorder points, you need to consider several factors, including lead time, safety stock, and demand variability. Lead time is the time it takes for a supplier to deliver an order.

Safety stock is the extra inventory you keep on hand to protect against unexpected demand fluctuations or delays in delivery. Demand variability is the degree to which customer demand fluctuates.

To calculate your reorder point, use this formula:

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

For example, if your average daily sales are 10 units, your lead time is 7 days, and your safety stock is 20 units, your reorder point would be:

Reorder Point = (10 x 7) + 20 = 90 units

By setting reorder points for each product, you ensure you always have enough inventory on hand to meet customer demand.

3. Track your inventory levels

Tracking your inventory levels is an essential aspect of effective inventory management for FBA sellers. By keeping track of your inventory levels, you can ensure there is always enough stock to meet customer demand without overstocking and incurring unnecessary storage fees.

There are several ways FBA sellers can track their inventory levels, including using inventory management software or spreadsheets. These tools can help you keep track of your inventory levels, sales velocity, and reorder points.

The best inventory management tools:

• Brightpearl: Best for the omnichannel merchant selling on Amazon
• Sellbrite: Straightforward and simple for small businesses
• Orderhive: Crazy advanced tracking for the detail-oriented entrepreneur
• QuickBooks Commerce: Solid, trusted solution for a small business

One important consideration when tracking inventory levels is the frequency at which you do it. The frequency will depend on your sales volume.

If you have a high volume of sales, you may want to track your inventory levels daily to ensure that you always have enough inventory on hand. On the other hand, if your sales volume is lower, tracking your inventory levels weekly may be sufficient.

When tracking your inventory levels, it’s also important to be aware of any trends or patterns in your sales data. For example, if you notice that a particular product sells more during a certain time of year, you may want to adjust your inventory levels accordingly.

Additionally, if you notice that a product is not selling as well as expected, consider reducing its inventory levels or promoting it to increase sales.

By tracking inventory levels regularly, you optimize your inventory storage and reduce storage costs by avoiding overstocking. It also helps you identify slow-moving or stagnant products and take action to improve sales.

Jungle Scout’s inventory management system

4. Utilize Amazon’s inventory management tools

Amazon provides FBA sellers with a variety of inventory management tools. These tools optimize your inventory storage and reduce storage fees. For example, Amazon’s FBA Inventory Age report helps identify which products have been in Amazon’s warehouse for too long. By identifying these products, you can take action to reduce their inventory levels or promote them to increase sales.

Another useful tool is the FBA Multi-Channel Fulfillment tool. It allows you to fulfill orders from other channels, such as your own website, using your FBA inventory. This tool helps reduce the need to store inventory in multiple locations.

Also, Amazon provides an Inventory Health Report. It helps identify potential inventory issues, such as stranded or excess inventory.

5. Outsource your inventory management

If managing your inventory is too time-consuming or complex, you may want to consider outsourcing it. Inventory management outsourcing frees up your time to focus on other aspects of your FBA business. Additionally, outsourcing provides access to expert inventory management services that optimize your inventory storage while reducing storage fees.

There are many companies that specialize in Amazon inventory management.

These companies can handle all aspects of your inventory management, from setting reorder points to tracking inventory levels to managing returns.

Wrapping up

Effective inventory management is critical to the success of any FBA business. By following these five essential tips, you can optimize your inventory management and ensure that your FBA business runs smoothly.

Remember to understand your sales velocity, set reorder points, track your inventory levels regularly, utilize Amazon’s inventory management tools, and outsource your inventory management if necessary.

FAQs

What is sales velocity, and why is it important for FBA sellers?

Sales velocity is the rate at which your products sell. Understanding your sales velocity is crucial for effective inventory management. By analyzing your sales data, you can determine which products are selling quickly and which ones are not. This information can help you make informed decisions about when to reorder products and how much to order.

What are reorder points, and how can they help FBA sellers?

Reorder points are the inventory level at which you should place a new order to ensure that you have enough stock to meet customer demand. By setting reorder points, you can avoid stock-outs and ensure that you always have enough inventory on hand.

How can FBA sellers track their inventory levels?

FBA sellers can track their inventory levels using inventory management software or spreadsheets. They should track their inventory levels daily or weekly, depending on the volume of their sales.

What are some of Amazon’s inventory management tools?

Amazon provides FBA sellers with a variety of inventory management tools, including the FBA Inventory Age report, the FBA Multi-Channel Fulfillment tool, and the Inventory Health Report.

Should FBA sellers consider outsourcing their inventory management?

If managing inventory is too time-consuming or complex, FBA sellers may want to consider outsourcing it. Outsourcing can free up their time to focus on other aspects of their FBA business and provide access to expert inventory management services.

Vexed by the Amazon account verification process?

 

For many sellers, Amazon account verification is vexing, dastardly and hopelessly difficult, if not impossible.

Is there is any way to successfully navigate the Amazon account verification process?

There is, but sellers can’t be in a hurry, can’t be cavalier with the details, and certainly must initiate Amazon account verification with caution. Jumping the gun and being careless with the documents and data can yield misery and madness. Keep reading for help getting everything in order. And if you’ve already tried—and failed—then it may be time for professional support.

Start smart, be thoughtful and thorough

Start by knowing that Amazon is almost militant about account verification, largely because it is herding hundreds of thousands of sellers through a complex, confusing, global and disconnected universe. Verification is the first step in Amazon’s vetting process. It is the way Amazon ensures that sellers are legitimate, genuine and “up to standards.” More importantly, Amazon sees verification as proof that its customers (yes, Amazon owns your buyers, not you) are buying safe, quality products.

If you haven’t submitted documents and initiated the process, start with a thorough read of Amazon account verification requirements. Rushing the process is the most common error made by sellers. Maintain your momentum, but be maddeningly methodical. Thoughtfully review everything Amazon is asking. Be thorough.

Clarify identity information and collect consistent documents

Start your search for required information and documents before opening Seller Central and going to the verification page. Verify and re-verify. Do an extensive compare-and-contrast of the documents.

• Amazon account verification starts with identity information – the information you type into the page fields and the documents you submit.
• Who is your primary contact? Even if Jane Smith is the one inputting the information, she’s likely not your preferred primary. Make sure your primary is someone who is identifiable on other corporate documents being submitted.
• What is the right address? Make sure you input an address that mirrors what is identified on the documents being submitted, usually your business address.
• What is your company name? Does the company name match exactly across all documents? Amazon often denies a document if one says Acme Door Knobs Inc., but another simply says Acme Doors.

Amazon wants the following :

• A government-issued photo ID, usually a driver’s license or passport. This document must match the proof of identity information selected under “identity data.”
• A bank statement or credit card statement must be submitted “as is,” meaning all pages. If your utility bill is five pages, including blank pages or with advertisements, include all pages. Also, make sure it shows at least one month of transactions. The statement must match information submitted when opening your seller account. Amazon says it will accept statements from a bank account, savings account, or loan account statement, credit card statements or account statement provided by an e-commerce payment service provider such as Payoneer, Hyperwallet, World First, and Alipay.
• A business license or equivalent document. Again, information must match with other documents such as articles of incorporation, operating agreement or official annual report.

Other must-knows?

• Amazon does not always accept P.O. boxes and bulk mailbox locations as legitimate business addresses
• Make your document scans in color, but make sure files are no larger than 50MB
• Amazon may not accept Internet service or cell phone statements as identity proof, but the company is inconsistent. It’s best to avoid these. In most cases we’ve seen, they were not accepted because information did not match other documents.
• Amazon requires the ID holder to be 18 or older
• Check for typos. Just one mistyped word across any of the information you add, or in the documents, will stall your submission.
• Financial statements submitted must be issued within the last 180 days

There are a litany of other identity document requirements, such as document size and type, languages that are approved, etc.

Read requirements and steps carefully and remember, all documents provided need to match the account information in Amazon Seller Central.

Failing verification and stuck, what’s next?

Amazon rarely specifies why verification failed, so it’s up to you to audit your information and documents. It’s usually an issue of document information not matching exactly. We’ve seen Amazon account verification fail because a bank statement said Acme Inc., yet the business license said Acme Incorporated. Yes, seriously.

We recommend only re-submitting for Amazon account verification after carefully auditing the documents with a metaphorical microscope, then compare to what was typed in when setting up your account. Frankly, this is the point in time when sellers need an objective, analytical expert to audit the process and documents. That’s our forte.

Video verification happens, too

Seeing is believing. Amazon introduced video verification as a way to further validate what a seller is saying and submitting. Less than 10 percent of sellers that have contacted us have been asked for video verification, but it can happen. During this process, an Amazon representative conducts a videoconference with the seller, so they can match up the human to the submitted IDs and other documentation.

Coping with the complexity

Keep calm. It’s possible to pass Amazon account verification, despite the complexity and, frankly, Amazon’s endless runarounds and vague responses.

Our parting advice is to seek a partner that can evaluate your process, information and documents, especially if your Amazon account verification attempts have been rejected. Verification often is bumpy and bothersome but doable.