A Guide to Managing your Inventory on Amazon
17th February 2022
If you’re selling products on Amazon, or perhaps you are considering becoming a seller on Amazon to get your products in front of a more extensive customer base. In that case, you may be wondering how to manage everything logistically. And by everything, we do mean everything – from listings and pricing to inventory and fulfilment (particularly if you are fulfilling sales yourself, rather than using Amazon’s FBA infrastructure).
It may seem overwhelming, particularly if you already sell on your website and other online marketplaces like eBay and Etsy. That’s why we’ve made this guide to managing your inventory across Amazon and other platforms, so you can be sure that your supply is keeping up with demand and that you’re not overstocking products that aren’t selling or overselling the most popular lines.
Fulfilment by Amazon (FBA) vs Merchant-fulfilment
When selling your wares on Amazon, they give you two options for fulfilment. The first is merchant fulfilment, where you will sell your products on Amazon, and each sale will set the ball rolling on picking, packing and delivering products to the doors of customers. The second option is to choose fulfilment by Amazon (known as FBA). This will see Amazon take care of the picking, packing and delivery for you.
Pros of Fulfilled By Amazon (FBA):
- Use of Amazon storage
- Automatic Prime blue tick on applicable listings
- Opportunities to sell across Europe
- Amazon customer service team handles questions, returns and refunds
Cons of Fulfilled By Amazon (FBA)
- Two fees to pay, a fulfilment fee and a storage fee. Using your own warehouse space may be preferred depending on your current infrastructure.
- Storage fees are charged by cubic foot used per month; this is something to be wary of as slow-moving stock may have higher associated storage costs. Calculate these costs thoroughly in advance of using FBA.
- If you’re not using multi-channel eCommerce software (such as StoreFeeder), it may be not easy to keep track of inventory.
If you choose to fulfil sales yourself, Amazon will charge the customer and pay you for sales earned every two weeks. For each sale, Amazon will also send you a shipping credit. The amount of shipping credit that you receive on each product sale is dependent on the product category and shipping service selected by the customer. You cannot set these shipping rates within an individual plan when selling on Amazon, so make sure you can still sell your products at a profit when considering this.
You can also use Seller Fulfilled Prime (SFP), which allows you to deliver products directly from your warehouse using the Prime badge. This gives Prime customers free, express delivery on products you fulfil and can increase sales when using the platform (remember, shoppers often filter by ‘Prime’ when browsing the marketplace!).
There is no right or wrong answer when it comes to using FBA, merchant fulfilment, SFP or a combination for your business – it’s all about doing the forecasts and calculations for the products you wish to sell on Amazon and maximising your profits.
How do you manage inventory when selling on Amazon?
Once you’ve taken the plunge to sell on Amazon, it’s essential to manage your inventory correctly. This applies whether you have chosen to fulfil sales yourself within your warehouse or whether you have chosen the FBA option.
If you have chosen FBA, you need to make sure that the amount of inventory you ship to Amazon and the frequency of those shipments are optimal year-round. Remember, when using FBA, you pay for each cubic foot you use each month. This means if your stock takes six months to sell, you have those payments to make every month, thus reducing your margins on those products. This is why the FBA model can be well-suited to high-margin products, fast-moving products or ideally, both!
Equally important to consider is the audience size on Amazon. As the world’s largest marketplace, it’s essential to believe that the level of demand for your product may differ from the market you get on your website or other marketplaces. 60% of sales on Amazon are third-party sales, and those sales are growing even faster than Amazon’s sales. This is why it’s also important not to underestimate the demand on the platform for your product. We recommend forecasting as accurately as possible, working alongside Amazon’s business support team, and scaling up slowly to avoid excess warehousing costs.
If you choose to fulfil products yourself, it is essential to forecast sales on the platform accurately. Selling out via Amazon may leave you sold out of stock on your website. Equally, this could be the case the other way around.
Use multi-channel software, such as StoreFeeder.
StoreFeeder software allows you to manage your inventory across your website, Amazon and other marketplaces such as eBay, Etsy, Not On The High Street and more. This means that you can keep track of your whole inventory across all selling channels within one platform. StoreFeeder maintains your inventory up to date, and if a product sells out, all listings will be updated to automatically reflect that level of stock. In other words, you are no more letting customers down by overselling.
Equally, by managing your inventory in one place on a single platform, you can access sales data across all of the media you choose to sell on. This means you can use this data to forecast big-picture demand accurately, understand which platforms you rely on the most and importantly, know which are the most profitable marketplaces for your business. Then, you can refine your business strategy and become even better.
As well as for managing inventory, we would highly recommend using a brilliant piece of multi-channel eCommerce software when selling on Amazon for many reasons, including:
Manage all your listings
StoreFeeder software allows you to manage all of your listings in one place. This means that when you update a product listing, it will automatically update the description across your website and chosen marketplaces (including Amazon, eBay and more!)
As well as listings management, StoreFeeder allows you to update the pricing of your products all in one place. This makes running a sale or adjusting your pricing strategy based on marketplace costs and other overheads easy.
As well as managing your inventory levels, listings and pricing, StoreFeeder software can also integrate with many of the world’s leading courier companies – including Amazon, DPD, DHL, Yodel, FedEx and many more. This means that if you choose the FBA or merchant-fulfilment model (including using FBA on Amazon and self-fulfilment on your website and eBay or any such combination!), you can manage your inventory and fulfilment using one piece of software.
Our StoreFeeder software works across marketplaces, whether you sell on your website, Amazon, eBay or a combination of the leading marketplaces. Our software can manage your inventory effectively.
If you’re considering managing your inventory more effectively by implementing best practices, then we would love to help. StoreFeeder is one of the UK’s leading multichannel software providers to retailers, and we help our customers to grow their businesses by providing software that drives efficiencies. Get in touch today for a free demonstration to tailor to your business.
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