How does Amazon use Inventory Management?

It is very important to do inventory management. When it comes to Amazon, you will have to go the extra mile to do it because it is not an easy task to do inventory management in Amazon. It is very important to have an appropriate amount of inventory or stock in the warehouse every time. In case you run out of it, it will stop your sales cycle until you get a new stock back in the warehouse. Similarly, if you have a bulk of stock of a single product, it will just occupy shelf space and will bound your money. Therefore it is very important to maintain a balance in this regard.

However, using a reliable inventory management tool, you can efficiently manage your Amazon inventory and stock levels. Here in this article, we’ll share with you how Amazon does inventory management and the benefits of it.

Why does amazon do inventory management?

Amazon does inventory management basically to maintain the level of your inventory stock level. It also helps in managing the sales and deliveries of the orders that are made by the customers by using Amazon’s platform. Other reasons include:

• To reduce the carrying cost of the product
• Keep a check on the records and listings of the products
• To attract customers and do more sales
• To reduce product spoilage
• To reduce inventory costs and loss

Use of Inventooly Software to manage the inventory in Amazon:

As we all know that Amazon is the world’s largest e-commerce platform, with which uncountable people are engaged in terms of buying and selling virtually. But it is very important to manage and observe the inventory levels of your business continuously in order to avoid any complex situation in the future.

Inventooly is the best inventory management system that helps you in this regard. It not only manages your inventory but also centralizes your sales channel under one single unit so your inventory is optimized more efficiently. Some of the famous clients of Inventooly include; Lax, Dress America, Karma Organic, etc. which would proudly elaborate about their successful work with using this best inventory management software.

Approaches used by Amazon to do inventory management:

The whole idea of doing inventory management is to make sure that you do not run out of stock. For this purpose, Amazon makes use of many approaches to manage the inventory. The most common ones are regular monitoring of the inventory so that you are pre-ready for the crisis situation. Amazon also does forecasting to identify the need for a particular product.

-Time management:

Time management is done to oversee and calculate the amount of time required in order placement until it is delivered at your Amazon store. If you are directly purchasing from any Amazon seller then you will face no issue.

There are some sellers that buy things from AliExpress or Ali baba. For such sellers, Amazon has an approach of providing a lead time. The standard lead time to make a product available in 30 days. You can face a delay of 15 more days keeping in mind any transmission issue or product unavailability issue.

So amazon advises you to set a maximum lead time so that it is easy for you to deliver the product thereby managing your stock availability

-Use different tools to do inventory management:

Amazon allows the use of tools to manage the inventory. By using them, you can add or delete products by analyzing their availability in the warehouse. You can also change the price of the product by conducting a thorough comparison with products. You can manage the quantity by calculating the number of products present in the warehouse. By using the Amazon inventory management tools, you can check the status of the stocks sold on a daily, monthly, or yearly basis.

-Calculating the inventory turnover:

Amazon allows you to estimate your inventory turnover which will depict how quickly the product is being sold. This will allow Amazon to keep a track of the products that are star sellers and have to be kept in stock necessarily to avoid stock-outs. This will also help you to place an order for the product that is being sold popularly.

-Amazon FBA:

Amazon uses FBA which is an acronym of Fulfillment by Amazon. This is a new way of management of inventory as FBA helps you to collect the ordered product, then pack it and then dispatch it to the destination. With the passage of time, the FBA has changed a lot. It is trying to meet the needs and demands of the people so that it can remain at the top in this e-commerce world.

Advantages of using FBA

There are certain advantages of using Amazon FBA which are stated as under:

-It will take off all the work that is supposed to be done by you. It minimizes the workload from you leaving you with the responsibility of just tracking the product or item list and not worrying about the other things. Definitely, you will have to pay FBA for taking off the workload from you. Think in a bigger perspective that by paying a very nominal amount, you are able to sell your product successfully without any hindrance and issue

-Amazon FBA will allow you to enjoy discounted shipping prices to their fullest. Very low cost is spent by using FBA. This cost incurred will be less than your own cost incurred for shipping. It will also be less than the cost required to pick and pack the product in your warehouse. Ultimately you will be able to enjoy a profit ratio higher than before.

-In case of damaged goods or wrong orders, FBA takes full responsibility for this as well. Amazon FBA will handle the return of goods for replacement or refund the amount in extreme cases. So again, you have to sit back and let the FBA do all the work.

-Amazon FBA ensures very quick delivery of the products. Products get the Prime badge by which they get free shipping of the products. So you do not need to pay a single penny when it is considered to deliver the products because it is part of the service.

-Amazon FBA allows you to store inventory in bulk because it has a big space. This is because there are many warehouses on amazon all over the country

-FBA allows you to make sales at different channels. This is known as Multichannel fulfillment. The idea is that you will be able to use different platforms like BigCommerce for selling the product but the picking and packing process will be done by Amazon itself.

Disadvantages of Amazon FBA:

-Good FBA services require the expenditure of money at all levels to ensure quality and customized services. For the businesses which are at their initial stages, FBA is not a good option at all as it requires an expenditure of money. New businesses might face a shortage of money when making expenses.

-Before dispatching the products to your clients you will have to cross-check whether you have met the requirements predefined by Amazon or not. It is very crucial to meet all the requirements set by Amazon as it makes sure that the product that is delivered is qualitative in all ways.

-You will have to pay the fee to FBA on every sale that you make. You cannot transfer the payment to the probability of the next sale that will be made. If you do not pay, Amazon will deduct the fee by itself.

Conclusion:

To conclude the discussion, we will have to admit that amazon manages the inventory very efficiently. It makes sure that the inventory that is present in the warehouse is up to date and is fresh. A strong check has to be done every time as it is better to check rather than running out of stock. So you have to accept that Amazon is the most common and preferable player in the e-commerce market and no one can take its place.