How to Streamline Inventory Purchasing, Planning and Handling for Amazon E-commerce Businesses: A Comprehensive Guide

We don’t need to tell you: no matter what size your e-commerce business, selling through Amazon can be a game-changer when it comes to scaling. It’s the largest e-commerce platform in the world, and a major competition to the huge retail giants such as Walmart – so it’s no surprise that an estimated two million retailers sell with Amazon to reach a global audience of 2.4 billion.

When you sell with Amazon, sales are bound to pick up – and keeping tabs on inventory becomes ever more crucial. Customer feedback is the lifeblood of Amazon, and can make or break your business success, so having goods available as and when expected to keep customers satisfied is as paramount as ever.

So what are the challenges of handling inventory when selling on Amazon, and what can sellers use to supercharge their inventory processes and find success? Read on for our top advice for inventory purchasing, planning and handling as an Amazon seller, so that your small-to-medium size e-commerce business can reach ever-increasing levels of growth.

The challenges of keeping inventory as an Amazon retailer

Starting to sell on Amazon is technically easy, but keeping up with fluctuating demand produces unique inventory challenges, especially if you’re a small-to-medium sized business who has just added Amazon as a sales channel.

  • Predicting sales amid demand volatility 

Predicting demand is a challenge even with one Shopify webstore, but when adding a traffic-heavy platform such as Amazon into the mix, forecasting becomes even more complex. How Amazon pushes its third-party products can be somewhat out of your hands, and without the right inventory technology to produce accurate, data-led forecasts, you’ll be somewhat selling blind.

This can result in late or incorrect repurchasing, meaning stockouts are more likely and your Amazon customers end up frustrated with your business. As mentioned, customer feedback is essential to being successful on Amazon – so keeping your best-sellers in stock is fundamental. 

  • Efficiently using limited storage space

Amazon’s fulfillment centers have specific storage limitations, and if you’re a smaller business, you may have restricted access to warehouse space. This constraint makes it crucial to keep inventory levels slick and streamlined, as an excess of unnecessary items (out-of-date products or ‘safety stock’, for example) could take up vital warehouse space, block cash flow and tie up precious funds. 

  • Keeping pricing competitive, yet profitable 

If there’s a platform for which competitive pricing is the USP, it’s Amazon. Arguably, there’s nowhere more important to get pricing perfectly balanced – low enough to attract customers and stand up against competition, yet high enough to reflect the quality of your product (yes – lowest isn’t always best) and of course, to reap the profits.

Without the means to keep an optimized inventory, pricing correctly can be difficult to achieve. Whereas when inventory is streamlined and profitable, you’ll know exactly where the sweet spot is when it comes to pricing, in order to move towards a boost in revenue. 

  • Keeping up with Amazon’s swift order fulfillment and shipping speed

Amazon is renowned for its super-fast delivery options – sometimes even offering deliveries the same day the order is placed. Is your inventory optimized to facilitate these ultra convenient options? Though same day deliveries aren’t always feasible (and most customers tend to not expect it), retailers who want to succeed on Amazon do need to efficiently process orders, ensure the products they’re advertising are always in stock, and work in harmony with Amazon’s logistical processes so that customers get their items in super-swift turnaround.

  • Having full inventory visibility and control

Finally, though a single channel inventory is one concept to manage – having an optimally-stocked inventory for multiple channels is a whole other ball game. To adequately keep inventory for your Amazon sales and warehouses, you’ll need full inventory visibility – that includes insights into variants such as models, sizes and locations – and the means to control whatever products are stored where.

Having lots of stock in your main warehouse, for example, but letting the ball drop for the stock in your Amazon fulfillment center is a sure route to failing as an Amazon seller. With full inventory visibility, you’ll ideally be able to move stock between warehouses and locations so that demand for different channels is always met.

Get ahead as an Amazon seller with the right technological foundation…

With progressive inventory planning software such as Inventory Planner, the above issues are solved without spending hours on complex manual calculations, or going crazy trying to consolidate a mass of disparate spreadsheets and external systems.

  • The right inventory technology will streamline all purchasing, planning and handling of inventory so that efficiency and profitability is boosted, human error is reduced and staff time is better spent. Not to mention, customer satisfaction will indefinitely surge. 
  • If you’re scaling with Amazon, a decent inventory planning tool should sync with the other apps you use to run your business, so there are no data gaps between platforms and insights are always up-to-date. This will make it much easier and more feasible to grow your business without hassle.
  • Data-led forecasting capabilities also ensure you’re always ordering the exact right amount of products at the right time for spikes and lulls in demand. Inventory Planner’s forecasting functionality, for instance, takes factors such as seasonality, market trends and promotional periods into account, for laser-sharp sales predictions. This means costly stockouts and excess inventory are significantly reduced, as guesswork is taken out of the picture.
  • Inventory Planner’s replenishment recommendations can be set to come into your inbox automatically, not only enabling swift repurchasing, but warning you of potential stockouts and revenue loss if for some reason you don’t purchase in time. With this tool in your back pocket, customers who come to you via your Amazon shop front will always find what they’re looking for.
  • Your next moves as an Amazon seller – whether you cut out specific variants of your products, introduce a new product or move stock between warehouses – should be made with solid evidence to back up your choices. With in-depth reporting, custom metrics and granular inventory visibility right down to warehouse location, color, style and size, you’ll be able to make smart decisions for growth that are meticulously informed. You’ll also have the ability to distinguish Amazon demand against your other channels, and differentiate whether your best-sellers on Amazon aren’t the same as your Etsy store, for instance.
  • Finally, with full inventory visibility and hundreds of key data points, you can work towards your own targeted business KPIs, and keep a slick, profitable inventory for your Amazon sales that keeps cash flow moving and revenue soaring.

Jewelry retailer MaxColor had been selling on Amazon in the US for five years and was one of the marketplace’s top 1000 brands. After struggling with spreadsheet-based forecasting that resulted in an excess of unsold items in their Amazon storage facilities, the merchant implemented Inventory Planner to slim down their items and make accurate purchasing decisions.

“Inventory Planner has helped us dramatically reduce the age of our inventory.

“Previously, we had items that had been with Amazon for 365 days or more. Now, Inventory Planner shows us how long stock has been in each warehouse. Our maximum stock age is now 180 days and we’re working towards 90 days, with Inventory Planner’s help.

“Because we can easily compare warehouses, we’re able to respond almost in real-time to trends on Amazon and adjust the inventory we send accordingly. It means instead of sending tens of thousands of items to Amazon each month, we’re sending 2,000 a week – but they are the right items and they’re being sold quickly.”

Every resilient retailer knows – the strength of your inventory can make or break a business. With the right inventory planning tool supporting your purchasing, planning and handling decisions for Amazon and any other channels you use, you’ll have the foundations for keeping a multichannel inventory that works for you, not against you.

For more about how Inventory Planner’s data-led forecasting and informed purchasing can transform your inventory planning processes, book a demo with us today.