Why inventory management is important when using Amazon FBA

Keeping better control of your stock levels is vital when selling via Amazon FBA.

The process of ordering, tracking stock levels and storing your products is collectively known as inventory management.

When you’re selling on Amazon, it’s vitally important that you have a solid inventory management strategy: this is especially true if you’re using Amazon FBA (Fulfillment by Amazon) to fulfill orders.

Why? Because, like on other channels, if your inventory runs out, you lose potential sales and frustrate your customers.

However it’s a bit of a double whammy with Amazon FBA due to the fact that if you lose track of your stock levels and end up having too much FBA inventory on hand, you could end up paying unexpected storage fees to Amazon, which can really eat into your profit margins.

The Inventory Solution for DTC Amazon Sellers.

Try Craftybase - the inventory and manufacturing solution for DTC sellers. Track raw materials and product stock levels, lot and batch tracking, COGS, shop floor assignment and much more.
It's your new production central.

Start your 14 day free trial

What are Amazon FBA storage fees?

Let’s firstly take a look at what the FBA fees are. Amazon is not the most forthcoming company when it comes to sharing details on their storage fees. However, after a bit of digging, we were able to find some information on their website. According to Amazon, they charge $0.69 per cubic foot for inventory that is stored in their fulfillment center for more than 365 days. So, if you have a lot of inventory that you’re not selling, it could start to get expensive.

Of course, other factors can affect your storage fees, such as the type of product you’re selling and the seasonality of your sales. But at the end of the day, Amazon will charge you based on the amount of space your inventory takes up in their fulfillment center.

So if you’re interested in keeping your storage fees down, it’s important to know exactly what products you have in your FBA warehouse and if and when they are likely to sell. This requires knowing your current order volumes, and also being able to predict your future sales (otherwise known as “forecasting”).

So, how can you keep track of your inventory when using Amazon FBA?

There are a few different methods you can use to keep better tabs on your stock levels, including:

1. Use Amazon’s Seller Central Tools

Amazon’s Seller Central is a powerful platform that gives sellers the ability to manage their inventory, track sales, and fulfill orders. Amazon has a number of tools to help sellers manage their inventory. It’s also available as a mobile app on Google Play and the Apple App Store so you can manage on the go.

If you’re selling on Amazon, you’ll want to make sure you’re using all the tools at your disposal to manage your inventory. Amazon’s Seller Central platform provides a number of powerful tools for tracking your stock levels, managing your orders, and more.

Via Amazon’s Seller Central you can:

  • View your active, inactive listings
  • Add more products to your inventory
  • View your FBA stock levels
  • Track your FBA shipments through to delivery
  • Generate customized reporting
  • Modify your current quantity available on hand
  • Change your pricing
  • Generate your seller fees for each product
  • Edit your product listings and photos

You should also make use of the ‘Reports’ section in Seller Central. Here, you can generate reports on your sales, inventory levels, customer orders, and more. This data can be hugely helpful in spotting trends and making sure you’re always stocked up on the right products.

Then, you can use the Amazon Inventory Management Tools to track your inventory levels, monitor sales trends, and set reorder points. With these tools, you can take control of your inventory and ensure that you always have the products your customers want in stock.

One of the most useful features on Amazon is their Selling Coach. This tool has powerful inventory management functions that help sellers manage and forecast what they need for sales, all while tracking trends in real time with accurate data about how long products will last at different levels before being sold out or damaged. The Selling Coach also sends out handy Low Stock Alerts via email or your Amazon Seller app - helping you know when to reorder materials or remake key products in your line.

2. Use a Third-Party Inventory Management System

There are a few different software options you can use to track your Amazon FBA inventory. One popular option is InventoryLab, which offers a more comprehensive suite of tools for managing your Amazon business. If you’re looking for a free option, try FBA Inventory Tracker, which offers basic tracking features.

Options such as Craftybase and Stocky also offer integrations with other providers. These systems can thus be used to track your inventory levels across multiple channels, including Amazon.

Craftybase, in particular, is designed specially for in-house small manufacturers (that’s you, handmade seller!) and also offers a feature where imported sales can be automatically assigned to a specific location. This you can always be aware of exactly how much of each product you have not only in your own home inventory, but also in each Amazon FBA warehouse and consignment situation.

3. Use Manual Tracking Methods

If you don’t want to use a digital system to track your inventory, you can also use manual methods to track your Amazon FBA ins-and-outs, such as Excel spreadsheets.

Simply create a new spreadsheet and list all of your products in one column to get started. Then, in the next column, add the current stock level for each item that you have on hand. Finally, add in a column to represent the amount of stock you have in your Amazon FBA warehouse. When you receive a sale that will be fulfilled via Amazon FBA, deduct the quantity purchased from both your stock level and FBA columns. When your FBA column dips below a threshold, you’ll know you need to replenish your stock asap.

Why should you use Amazon FBA as a handmade seller?

As a handmade seller, you already have a lot to juggle. In addition to creating your products, you also have to be the one to promote your business, manage inventory, and process orders.

Fulfilling orders can be particularly time-consuming, especially if sellers are shipping products internationally.

Amazon FBA can take some of the pressure off handmade sellers by handling storage, packaging, and shipping. With FBA, handmade sellers can again focus on what they’re good at - creating beautiful products - and leave the fulfillment to Amazon. Additionally, FBA can help handmade sellers reach a wider audience.

Products that Amazon fulfills are also eligible for Prime shipping, which means they can be delivered to customers in just two days. And because customers trust Amazon to deliver their orders quickly and efficiently, they’re more likely to purchase products that Amazon fulfills. So not only does FBA save handmade sellers time, it also helps them reach more customers and grow their business.

Whichever method you choose, a key part of being successful with your Amazon FBA strategy is to make sure you’re tracking your inventory levels regularly. This way, you can avoid any surprises regarding stock levels and expensive FBA storage fees.

See also: How to fulfil Etsy orders via Amazon FBA

Nicole Pascoe Nicole Pascoe - Profile

Written by Nicole Pascoe

Nicole is the co-founder of Craftybase, inventory and manufacturing software designed for small manufacturers. She has been working with, and writing articles for, small manufacturing businesses for the last 12 years. Her passion is to help makers to become more successful with their online endeavors by empowering them with the knowledge they need to take their business to the next level.