For any business that sells products on Amazon, the key to success lies in maintaining a healthy inventory flow. This means ensuring that you always have the right products in stock, at the right time, and in the right quantities.

Failing to manage inventory properly can result in lost sales. And we know that lost sales could mean unhappy customers and a failing business. In this post, I’ll share some tips for ensuring that your inventory flow stays healthy so your Amazon business thrives.

Use Amazon’s Tools

Fortunately, Amazon provides many tools to help sellers manage their inventory. For example, Amazon’s FBA program offers inventory storage and fulfillment services. This can help streamline your supply chain and ensure that products are always available to customers. If you're not already using FBA, you should be.

Also, Amazon’s Inventory Planning Dashboard provides detailed information for all things inventory. It gives you information about sales velocity, lead time, and projected demand. This can help you make informed decisions about when to reorder products.

I recommend getting acquainted with this dashboard, as it provides a wealth of knowledge in regards to inventory!

Set Reorder Points

To avoid stockouts and overselling, it’s important to set reorder points for each product in your inventory. You can do this within the Inventory Planning Dashboard. Use your lead time, sales velocity, and demand projections to set your reorder points.

This helps ensure that you always have enough stock on hand to fill orders, without overstocking and tying up valuable capital. There are also inventory management tools that offer automated reorder point calculations. This makes it easy to stay on top of your inventory needs.

Track Sales Velocity and Seasonality

This is one of the most important points, and it’s sometimes difficult to master (especially if you have a seasonal product). Sales velocity refers to the rate at which products are selling, and it's a key metric for inventory management. By tracking sales velocity, you can identify which products are selling and which are lagging behind. This information can help you make informed decisions about how much of each product to order and when.

Additionally, it’s important to track seasonality trends. Certain products may sell more quickly during specific times of year. By keeping these factors in mind, you can avoid stock outs during peak selling seasons. Also, you'll prevent overstocking during slower periods.

Implement a First-In-First-Out System

To prevent waste and product spoilage, it’s important to implement a first-in-first-out (FIFO) system. This is absolutely necessary for consumable products such as food and health and personal care items.

FIFO dictates that the oldest products in your inventory are sold or used first, before newer products. By rotating your inventory in this way, you can reduce waste and ensure that your products are always fresh and in good condition.

If you ship from your own warehouse, or you have someone shipping for you, make sure they’re following this method. By doing this, you'll avoid product expiration and unhappy customers.

Keep an Eye on Returns and Exchanges

Finally, it’s important to keep an eye on returns and exchanges, as they can impact your inventory flow. Excessive returns or exchanges may show a problem with product quality or customer satisfaction (such as expired items).

By monitoring these trends, you can identify issues and take corrective action before they impact your business. Returns and exchanges can tie up inventory, since products must be inspected and processed before they can be resold.

Consider implementing a streamlined returns process (which may mean that you don’t resell returned items) and investing in quality control measures.

Although we don’t always love it, maintaining a healthy inventory flow is essential if you want to succeed in the competitive world of ecommerce. With a few simple processes, you can ensure that your inventory flow stays healthy and your customers remain satisfied.

If you’re just not into it, you can outsource inventory management to the team at Profitable Pineapple. Their Profitable Pineapple Express system is designed to help you manage all aspects of your inventory. They’ll even handle the analysis and make reorder and shipping recommendations for you.

So whether you’re just starting out or looking to scale your business, effective inventory management is key to success on Amazon. Make this a priority now!