Warehouse Wins for Amazon Sellers: Common Inventory Mistakes and How to Avoid Them

Fall retail season is in full gear. Back-to-school, closet/home refreshes, and soon–holiday shopping—mean this is a critical time for Amazon sellers. And, it’s more important than ever to make sure you have a robust inventory plan, aka, one that’s streamlined, efficient, clear, and doesn’t cost you time and money. The good news? The right planning can help you sidestep common pitfalls and put you ahead of the game. Here, we’ll look at frequent inventory mistakes and share a few ways to help you avoid them.

The last thing any retailer wants is to run out of inventory when sales are just starting to ramp up. This is often a result of incomplete forecasting. Accurate sales forecasting is essential to maintaining a strong inventory position. Let’s break it down: What is sales forecasting? Analyzing sales history and trends to determine future demand for your products. Basically, you’re trying to determine how many products you’ll sell, at what price, and when. It’s not enough to simply buy more product; that comes with its own hurdles: overstocking will tie up your cash flow and you’ll pay excessive storage fees.

Many sellers—especially small, one-person shops—find themselves so busy with day-to-day operations that they neglect long-term planning. For Amazon FBA sellers, there are a few options offered to get your sales forecasting under control and help make the process easier. For many sellers, third-party inventory management software provides an additional and robust solution. Some of this software focuses solely on forecasting while other platforms provide full inventory management services.

Three questions you need to answer in order to make solid inventory management decisions:

1. What processes do you use for inventory management?
2. How is the product delivered to your storage facility?
3. Once purchased, how does it get from the warehouse to the seller?

We like to start by creating diagrams that show the flow and track each step of the process. There’s no need to get overly detailed. Keep the process steps at a high-level, and document them. You’ll find that keeping your processes within a consistent framework will go a long way in the long term. In the short term, it’s an easy way to avoid redundancies and identify opportunities for growth.

Your inventory management process is only as effective as the team that executes it. The less clear the responsibilities of each team member, the slower your fulfillment and the higher your overhead. Take the time to define and align roles and responsibilities within your warehouse; you’ll likely see an increase in efficiency, productivity, service, and even the bottom line. Start by looking at your current org chart and list out the responsibilities of each role. Next, create a second list of the roles and responsibilities your organization needs. Use that second list to spot gaps, realign and/or redefine your warehouse roles. It may surface that you need to hire for new roles in order to fill those gaps.

Should you use it? There are definite advantages (see below), but they come with costs. Whether to go with Amazon FBA warehouses will depend on the size and stage of your business. If and when you do determine Amazon FBA is right for you, (that’s a whole other article), here are the key benefits to know:

1. Amazon handles the processing of all returns and related customer support. Benefit: No hassle, lots of time saved.
2. Sellers who use Amazon FBA earn the right to list your products with the Prime badge, which equates to higher search rankings, immediate visibility, and faster delivery options, aka, happy customers.
3. Amazon FBA shipping prices are super competitive, so if you’re deciding between Amazon and a third-party delivery partner, you might want to think twice.
4. Most importantly, you don’t have to ship your own products; Amazon does it all for you.

There are, however, plenty of ways to go about developing a fulfillment plan that’s right for your business and product. Seek out seller forums, on Amazon or elsewhere, to hear how other people are making it work, or come straight to us for answers to all things online marketplace. Reach out to us below if you have any quwstions regarding your Amazon strategy.