Resources - Playbooks
Year-Round Amazon Inventory Management Strategies
Stay on top of the latest e-commerce and marketplace trends.
It is more important than ever to have a thorough inventory management strategy on Amazon.
Given that your entire operation is dependent on your ability to fulfill customer orders, on-hand inventory is arguably the most important — and costly — investment for your business. While low stock levels can directly lead to a decrease in sales and negatively impact your organic search rankings, having excess inventory can result in hidden expenses such as long-term storage fees, obsolescence, loan interest, and alternative costs of not investing in new products.
As a result, finding the optimal balance between not having enough inventory coverage and being overstocked on Amazon is a process that is complex, takes time to master, and can be simplified with the proper tools and expertise.
You need to leverage data and technology to extract inventory performance insights and help you monitor your inventory levels, demand fluctuations, and account health on a year-round basis. However, you should be especially sensitive to preparing your inventory position and maintaining a positive Inventory Performance Index (IPI) during key selling holidays or seasons, such as on Prime Day or during the fourth quarter.
The first quarter of the year, such as during January or February, is the best time to learn and master new inventory management capabilities while also revisiting your inventory and catalog composition to determine if any adjustments need to be made. In this all-inclusive playbook, you can find beneficial strategies to incorporate into each layer of your inventory management plan, from replenishment and liquidation to seasonal selling and ongoing optimizations.
What’s Inside the Playbook?
- Must-consider factors for your inventory forecasting and demand planning
- An overview of Amazon’s IPI metric and how you can ensure yours is in good standing
- Ongoing strategies to keep your inventory management process operating smoothly year round
- How to use advertising to drive traffic to low-performing inventory
- Best practices for effective inventory replenishment and liquidation
Your inventory health on Amazon is not an aspect of your business that should be taken lightly. At any given time, you should be able to identify your converting SKUs with and without on-hand stock, if you have any inventory storage limits with Amazon, if you have any products that are stranded or in excess, and the pricing strategy for each item in your catalog that is being stored in an Amazon fulfillment center.
A sound inventory management strategy will allow you to perform at a higher level when it comes to fulfillment and on-time delivery, in turn fostering a better overall customer experience. Additionally, inventory sits at the center of your greater supply chain and if there are leaks in your inventory — such as from a supplier delay or a product that was inaccurately categorized — this can have negative ramifications when it comes to the rest of your business.
By leveraging the tactics outlined in this playbook, you will be able to accelerate your product sell-through, have a clear understanding of the inventory that you have on hand, and pivot appropriately to accommodate for future advertising promotions or seasonal demand fluctuations.