HOW TO MANAGE AMAZON OPERATIONS MORE EFFECTIVELY

AMAZON FBA INVENTORY MANAGEMENT

Amazon has introduced Amazon Brand Analytics solutions specifically designed for registered brand owners, aiming to enhance their sales and cultivate customer loyalty. This tool offers an in depth perspective on various aspects:

WHAT IS INVENTORY MANAGEMENT

Inventory refers to the stock of products that a business owns and intends to sell. Inventory management is the systematic process of tracking and storing these products in order to meet customer demand in a timely and efficient manner. This practice extends to how products are sourced, stored, and prepared for sale. Viewed as an investment, inventory is a critical asset for a business. The consequences of poor inventory management might not be immediately apparent and can manifest weeks or even months later. The repercussions can be significant, ranging from spoiled or obsolete products, high storage expenses, to more severe issues like stockouts leading to unfulfilled customer orders. Moreover, storage fees and holding costs can erode a business's profitability over time. Effective inventory management is essential to prevent these issues and ensure that products are available for customers when needed, while also optimizing the associated costs.

WHY INVENTORY MANAGEMENT IS IMPORTANT

Inventory is a valuable business asset, but mismanagement can lead to various issues, especially as your business grows. Some common inventory problems include:

1. Excess Inventory: Having too much stock can tie up resources, increase storage costs, and lead to missed opportunities. Opportunity cost is the benefit missed when choosing one option over another. Holding excessive units of a low demand item may result in missed sales opportunities for more popular products. Amazon provides an excess inventory calculation alert, considering factors like product demand, age, and return on investment.
2. Low Stock Levels: Insufficient units to meet demand can harm sales and brand reputation. The optimum inventory level depends on factors like seasonality, sales history, and customer demands. Amazon offers a free Restock Tool, utilizing machine learning for efficient inventory management, with recommendations for replenishment quantities and ship dates.
3. Stranded or Dead Stock: Stranded inventory, unsellable but stored, ties up cash and incurs storage costs. Amazon's Stranded Inventory Tool helps track and address issues with stranded and dead stock.
4. Spoilage: Items with expiration dates, like food or cosmetics, can lead to losses if held past their sellby date. Systematic tracking helps avoid spoilage by identifying items at risk, allowing for promotions or discounts.
5. High Storage Costs: Inefficient storage practices can result in higher storage, removal, and liquidation costs. Utilize an inventory system to track stock levels, aging, and determine optimum inventory levels, even when using thirdparty systems like FBA.

This dashboard provides comprehensive data on customer behavior, allowing brands and sellers to refine their advertising strategy, optimize pricing, and enhance the customer shopping experience to drive more conversions.

INVENTORY MANAGEMENT TIPS

Here are some tips to efficiently manage your inventory:

1. Build and Maintain Relationships with Suppliers: Pay bills on time, treat suppliers with respect, communicate regularly, and offer constructive feedback. Positive interactions help ensure timely product delivery and anticipate manufacturing or shipment issues.
2. Monitor Your SellThrough Rate:Balance incoming and outgoing inventory to maintain a healthy sellthrough rate. Use sales forecasting methods to anticipate demand and avoid overstocking, which can increase warehousing costs.
3. Restock Popular Products Quickly: Monitor sales and strategically plan inventory levels to meet customer demand. Keep backup units to prevent running out of stock due to supply chain disruptions.
4. Run Promotions to Reduce Aging Inventory: Identify products eligible for promotions to increase sales and free up storage space. Utilize Amazon's Inventory Performance Index for custom recommendations, such as removing items or liquidating stock.
5. Keep an Eye on Your Margins:Track operating costs, including procurement, shipping, storage, and order fulfillment. Understand fees and ensure healthy sales margins to maintain business vitality.
6. Reduce Excess Inventory to Increase Profitability: Mark down products or create special deals to liquidate aging or overstocked inventory. Avoid sunk costs by preventing items from sitting on the shelf for extended periods.
7. Choose the Right Inventory Management System: Select software that syncs with your order fulfillment platform, provides demand forecasting, alerts low inventory, supports barcode scanning, and tracks relevant product information. Amazon's inventory management system in Seller Central offers custom recommendations based on unique inventory needs.
8. Maintain Four Weeks of Inventory Cover: Aim for enough inventory to meet demand on a rolling four week basis. This timeframe facilitates cost effective order fulfillment, faster delivery to customers, minimizes lost sales opportunities, and helps avoid excess inventory costs for FBA sellers.

Implementing these practices can contribute to efficient inventory management, ensuring a balance between meeting customer demand and avoiding unnecessary costs associated with overstocking or inefficiencies in the supply chain. Amazon's inventory management system helps sellers track and store their products efficiently to meet customer demands. It involves updating inventory levels in realtime, tracking products in the warehouse, and automating the replenishment process. The system uses inputs like cost of goods sold, shipment time, and Amazon data to forecast customer demand and set optimum inventory levels. Sellers with a high inventory score can enjoy benefits such as lower storage fees and additional storage capacity. Tips for effective inventory management include building relationships with suppliers, monitoring sellthrough rates, restocking popular products quickly, running promotions to reduce aging inventory, and keeping an eye on margins. Amazon's inventory management system provides a dashboard where sellers can track and manage their inventory on international marketplaces. It offers essential inventory information, alerts for low stock quantities, and recommendations for optimizing storage.

HOW OMNIVIO ENABLES SELLER:

We give real time inventory visibility using Amazon API which enables sellers to optimise their inventory planning

• Stock Planning based on order processed from warehouse and Days of Inventory
• Stock Movement for poor utilization inventory with more optimal location

FINANCIAL RECONCILIATION

FBA reconciliation is the process of comparing and matching the inventory records of a seller with the inventory records of Amazon's FBA (Fulfillment by Amazon) system. It involves running reports, such as the Inventory Reconciliation Report, to identify any discrepancies between the seller's inventory count and Amazon's inventory count. The reconciliation process helps sellers identify and resolve issues such as missing or damaged inventory, discrepancies in inbound shipments, and data entry mistakes.