Amazon inventory management
Going out of stock
Effective inventory management is one of the core principles of Amazon FBA program. Neglecting it will surely cause a number of issues.
Going out of stock will make your listing disappear from search results, resulting in the loss of potential sales. Furthermore, it will have negative effect on your BSR rank. This is why timely replenishment of the goods is essential for successful amazon business.
Inventory planning should also include certain external factors, like issues during production or delays at the Customs, which is particularly relevant in the light of the recent Trade war between China and the USA.
In situations when the delay in restocking seems inevitable, there are two main ways how to slow the
sales down:
- Stop all promotional campaigns.
- Raise the prices. But be careful with this move, as it may do more harm than good. Significant price increase will make your conversion rate and sales volume go down, worsening the overall product’s performance. In case of long delays it is better to let the product go out of stock, and boost the sales with promotion campaigns once the restock arrives. Practice shows that you can restore your product rankings relatively fast.
Inventory performance index
You should also avoid having excessive amount of goods at amazon warehouses. Amazon is now using your Inventory Performance Index (IPI) to determine how many cubic feet of storage you can have in their fulfilment centers.
IPI measures inventory management over time. In case it falls below 350 at the end of a quarter, Amazon will restrict your inventory storage for the following quarter.
Storage limits are based on:
- Excess inventory percentage;
- FBA sell-through rate;
- FBA in-stock rate.
Sources: Amazon
