What are the best inventory management practices for Amazon sellers?

2 Automate your inventory updates

If you sell on multiple platforms or channels, you need to sync your inventory across all of them to avoid overselling or underselling. You can use third-party software or services that can automatically update your inventory levels on Amazon and other marketplaces, such as Shopify, eBay, or WooCommerce. This way, you can save time, reduce errors, and ensure that your customers get accurate information about your product availability.

3 Optimize your reorder points

Reorder points are the minimum inventory levels that trigger you to reorder more stock from your suppliers. You need to calculate your reorder points based on your lead time, your average sales velocity, and your safety stock. Lead time is the time it takes for your suppliers to deliver your products. Sales velocity is the average number of units you sell per day. Safety stock is the extra inventory you keep to account for unexpected demand or supply fluctuations. You can use a simple formula to calculate your reorder points: (Lead time x Sales velocity) + Safety stock.

4 Manage your inventory turnover

Inventory turnover is the ratio of how many times you sell and replace your inventory in a given period, usually a year. It measures how efficiently you use your capital and space to generate sales. A high inventory turnover means that you sell your inventory quickly and avoid holding costs, such as storage fees, depreciation, or obsolescence. A low inventory turnover means that you have excess or stale inventory that ties up your cash flow and reduces your profitability. You can calculate your inventory turnover by dividing your cost of goods sold by your average inventory value.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?