February 24, 2021
Phillip Araujo
Inventory Management

How to Manage Amazon FBA Inventory Health 👨🏻‍⚕️

So you started your Amazon business small, sourcing from a single manufacturer, maybe buying a dozen or so SKUs. Managing your listings was a breeze back in those days while having the visibility of seeing everything at a single glance on your seller central account. Listings running low on inventory? No problem, send in an email to your supplier and replenish your stock. Listings having a hard time selling through? Run ads and optimize the listing to increase traffic.

Staying at this size would be a walk in the park, but you did not want to just stay at the hobby level. Instead, you scaled your businesses to more SKUs and more suppliers to make your Amazon business a full time endeavor. Soon enough, instead of a dozen or so SKUs, you have hundreds, if not thousands of SKUs. Now all of the small tasks that were required to manage your inventory has turned into a endless tasks.

Strategies to Manage FBA Inventory Health

Without an effective strategy to manage the health of your inventory, you might find yourself with excess inventory exposed to long term storage fees and a shortage of capital to fund new purchases. I listed some strategies on how to start analyzing your listings for problems and some suggestions on some steps to take.

Run Amazon Inventory Health Reports Often

Built right into Amazon’s seller central, there is a report to help sellers better manage inventory health. The report is appropriately named “inventory health”. The report can be found by logging into your seller central account and navigating to Reports->Fulfillment. On the left hand side of the page, under “Inventory” (might have to click “see more”), you will find the inventory health report

I suggest clicking the download tab and clicking the “Request Download” button, as there is more information in the downloadable version of the report.

Inventory Age

The first step to addressing inventory health issues is to identify listings that are aging. Once you have opened the report in excel or google sheets, you will see 5 columns that describe the age of the inventory at the fulfillment centers grouped in 90 day increments. As a retailer, having an inventory turnover rate that results in inventory stuck at the fulfillment centers for more than 90 days will lead to problems like long term storage fees and limited access to capital. Try sorting the columns in descending order to find the SKUs that have great quantities that are aging.

Units Shipped

When deciding on what action is required to improve the health of inventory, consider the units shipped columns near the inventory age columns. The units shipped columns have a trailing total and provide insightful data on how the item is selling. An item that has some units shipped in the last 24 hours or 7 days could be a sign of opportunity. For example, if you have an item that has not seen the buy box in months, but you just recently acquired the buy box, you will see units shipped in the last 7 days have a value greater than 0.

Improve Sourcing Strategies

If you find that a lot of listings are aging, revisiting your sourcing strategy may be worth a review. It might be due to a competitive listing with a lot of low offers or an item that simply does not get the customer traffic it needs to support your purchases to name a few reasons.

Ever Increasing Amazon Marketplace Competition

For sellers that have been on the marketplace for a few years, it will come as no surprise to say that competition on the Amazon marketplace has increased over time. Typically, replenishing one item continuously from a supplier is rare since an item that is selling well will eventually attract other sellers to the listing. When sellers jump onto a listing, prices fall and inventory starts to age. Continuously finding new products to source will be incredibly important going into the future.

Poor Evaluation of Demand

It is very common to hear sellers simply going based on current sales rank to estimate monthly demand for a listing, but this can lead to misinterpretation. For example, the listing may be doing well because the item is seasonal; therefore, by the time you source the item, demand may have already died down. I highly recommend using a tool such as keepa or camelcamelcamel to view a products sales rank over time to better gauge demand of a listing.

Sourcing Products at Scale

It is important more than ever to be agile when sourcing inventory, never getting too comfortable with an individual product. You need to constantly be scouting for the next opportunity and be ok with letting go of a listing when it turns sour.

The process of finding these new listings to source from manufacturers and wholesalers needs to become automated in order to be one step ahead of competition. Manually searching through supplier product lists to find a profitable product is close to impossible to do in a relatively reasonable amount of time. Scan Unlimited’s scan feature provides sellers an intuitive method to scan wholesale product lists to quickly identify items that are profitable and in high demand on Amazon. Scan Unlimited provides open access to its sourcing engine and grants users the ability to scan a supplier product list FREE every month. Learn how Scan Unlimited can help you source inventory effectively here

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