Learn how to optimise your inventory management on Amazon with this comprehensive guide to avoiding stockouts and overstocking.
Jens Vittrup
Effective inventory management is crucial when selling products on Amazon. Whether you are a new seller or have been on the platform for years, the right approach to inventory management on Amazon can be the difference between profit and loss. In this guide, we cover everything from the basics to advanced techniques that can help you optimise your operational processes.
Amazon inventory management is about keeping track of your products from the moment they arrive in stock until they are shipped to customers. This includes monitoring stock levels, tracking sales velocity, and ensuring you neither overstock nor run out of inventory.
Effective inventory management helps you to:
Amazon offers several tools to help sellers manage their inventory, including Inventory Health reports, which provide insights into stranded inventory and sell-through rates. However, many sellers also find it helpful to supplement with Amazon consultants or third-party tools for a complete overview.
Amazon has developed a sophisticated system to track inventory in real time. Each item is assigned a unique barcode, which is used to identify and locate the product in Amazon’s fulfilment centres. This system allows Amazon to pick, pack, and ship millions of products every day with impressive efficiency.
As a seller, you can view your inventory levels in Seller Central. Here, you can monitor:
This enables you to make data-driven decisions about when to replenish your stock to avoid running out or overstocking.
Monitoring your inventory in Amazon Seller Central is a fundamental part of running a successful Amazon business. Here’s how to check your inventory:
You can also access more detailed information by clicking on ‘Reports’ and then selecting ‘Inventory Reports’. Here you can access reports such as Inventory Health, Manage FBA Inventory, and Manage Excess Inventory, which provide deeper insights into your stock performance.
For Vendor Central users, the process is slightly different as this interface is designed for direct suppliers to Amazon, but the main principles remain the same – you need to navigate to the inventory section in your account to get an overview of your stock.
To add inventory in Amazon Seller Central, you first need to decide whether you want to use FBA (Fulfilment by Amazon) or FBM (Fulfilment by Merchant). If you choose Amazon FBA, you will send your products to Amazon’s warehouses, where they handle storage, packing, and shipping.
Here are the steps for adding inventory for FBA sellers:
Updating inventory in bulk can save you a lot of time, especially if you have many products. Here’s how:
This is an efficient way to update prices, stock quantities, or other product details for many products at once.
Being able to download your Amazon inventory to Excel gives you the flexibility to analyse and edit your product information offline. Here’s how to download your inventory:
After downloading, you can open the file in Excel or another spreadsheet programme to analyse and edit your data. You can update various fields such as price, product descriptions, quantities, and more. When you are finished editing, you can upload the updated file to Amazon to update your inventory in bulk.
This method is especially useful when making seasonal price adjustments or updating multiple product descriptions at once to improve your Amazon SEO.
There may be several reasons to remove products from your Amazon inventory – perhaps you have decided to stop selling an item, or you are experiencing supplier issues. Whatever the reason, here’s how to remove a product:
This temporarily deactivates your listing but retains the product information so you can easily reactivate it later.
For FBA products, if you want your items returned:
Note that Amazon charges a fee for removing items from their warehouses, so it is important to plan carefully and avoid unnecessary removals to minimise costs.
Sending products to Amazon requires careful planning and preparation to ensure your items meet all Amazon’s requirements. Here’s the process:
Amazon has specific requirements for how products must be labelled and packaged. In general, you should:
When your products arrive at the Amazon fulfilment centre, they will be checked, registered in the system, and made available for sale. This process can take from a few days to over a week, depending on the season and the workload at the fulfilment centre.
To succeed with your Amazon business, it is essential to plan your shipments carefully to avoid running out of stock, as this can harm your ranking and sales performance.
Bundle products can be an effective way to differentiate your offering on Amazon and increase your average order value. A bundle is a combination of complementary products sold together as a single unit.
To sell bundle products on Amazon:
When creating bundles, be aware of Amazon’s rules:
Bundling can be particularly effective for seasonal products or as part of an Amazon marketing strategy to increase the visibility of your products.
If you want to sell products that are already listed on Amazon, you need to ‘match’ your item to the existing product listing. This is called ‘selling on an existing ASIN’ (Amazon Standard Identification Number). Here’s how:
When you add your offer to an existing listing, you compete directly with other sellers for the Buy Box. To increase your chances of winning the Buy Box, you should focus on:
Selling on an existing listing saves you the work of creating product images and descriptions, but it also means you need to find ways to stand out from competitors through pricing, service, or Amazon advertising.
Expanding your inventory on Amazon is about strategically growing your product assortment. This may involve adding variants of existing products or entirely new product lines. Here are some strategies:
If one of your products is performing well, consider adding variants such as:
Analyse your customers’ buying behaviour and consider adding products that:
Keep an eye on market trends and seasonal fluctuations to identify new opportunities:
Once you have identified new products to add, follow the same steps as above to create new listings or match existing ones. Be sure to have a strategy for how you will launch and market new products on Amazon to maximise their chance of success.
It can be confusing if you notice that Amazon itself is purchasing your products. There are several possible explanations:
If you have a Vendor Central account, you act as a wholesaler selling products directly to Amazon, which then resells them to consumers. In this case, Amazon regularly buys your inventory based on expected demand.
In rare cases, Amazon may engage in “retail arbitrage,” where they purchase products from third-party sellers to fulfill their own inventory, especially if there is high demand for the product and Amazon wants to ensure availability for customers.
If you are enrolled in Amazon’s Direct Fulfillment program, Amazon may place orders with you that you then ship directly to customers on Amazon’s behalf.
Amazon may buy products to verify authenticity or investigate potential trademark infringements, especially if complaints have been filed regarding your products.
If you notice that Amazon is purchasing your products and are unsure why, it may be a good idea to contact Seller Support for clarification, as this can have implications for your inventory planning and pricing strategy.
As your Amazon business grows, efficient inventory management becomes even more important. Here are some advanced techniques for experienced sellers:
This technique focuses on ordering goods from suppliers exactly when they are needed, based on anticipated demand. It reduces storage costs and the risk of obsolete products. To implement this, you should:
Understand the true costs of holding different products in stock:
Categorise your products by importance:
This categorisation helps you allocate resources and attention efficiently, so you can focus on optimising stock levels for your most valuable products.
Advanced inventory management often requires specialised software or expertise from an Amazon agency, especially when scaling your business to hundreds or thousands of SKUs across multiple marketplaces.
There are a range of tools, both from Amazon itself and third-party providers, that can help you optimise your inventory management:
For more advanced inventory management or to handle inventory across multiple channels, consider tools such as:
These tools can automate many aspects of inventory management, help you forecast future demand, and prevent costly mistakes such as stockouts or overstocking.
Many product categories experience significant seasonal fluctuations in demand, which creates particular challenges for inventory management. Here are strategies to deal with this:
For products with clear seasonal peaks (such as Christmas decorations, garden furniture, or school supplies):
To minimise storage costs during off-peak seasons:
Through careful planning and the use of historical data, you can balance the need to have enough inventory to meet demand during peak seasons while minimising costs in the off-season.
Even experienced Amazon sellers can make mistakes in their inventory management. Here are some common pitfalls to be aware of:
Ordering too much inventory can lead to:
On the other hand, ordering too little stock can result in:
Many sellers focus solely on product costs and ignore the full storage costs:
Finally, a common mistake is not having robust systems in place:
By being aware of these common mistakes and implementing systems to avoid them, you can improve your inventory management and ultimately increase your profitability on Amazon.
The ultimate goal of inventory management is to maximise your profitability. Here are strategies you can implement:
Inventory turnover ratio (how many times you sell through your stock in a given period) is a critical profitability metric:
Your pricing can be a powerful tool for inventory management:
Think of your inventory as an investment portfolio:
By focusing on these aspects of inventory management, you can not only avoid costly mistakes but actively improve your Amazon business’s performance and profitability.
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