Benefits of using Amazon inventory system

Mar 9

Managing your inventory can be one of the most challenging aspects of growing your online business. As your order volume increases and you expand to more markets, you will actually increase your sales volume. It is for this reason that managing your operations manually becomes a near impossibility.

Currently, does listing your products and processing your orders require that you log in and out of your different selling channels? Would you like to know if you have to manually update your inventory levels on each platform each time a sale occurs?

The problem with these obstacles is that they are not only barriers to business growth, but they often result in human errors, such as overselling, which can damage your reputation at best and jeopardize your presence in the marketplace at worst. Having said that, while this point in itself demonstrates the importance of the Amazon inventory management system, it's not the only reason we should consider it for our business interests. Let's discuss why having an inventory management system for Amazon can be quite useful.

How does Amazon Inventory Management work?

Amazon offers two inventory options for its customers. The Fulfillment by Amazon (FBA) or Do-It-Yourself (DIY) options can be employed to fulfill your order. In essence, what FBA does is handle the transaction, indicate where the product should be shipped, and then assist with the distribution of the product through its fulfillment locations. There is also an option to fulfill the order yourself, in which event you are managing the distribution chain and supply chain.

If you’re only selling through Amazon, using the inventory forecasting software can work well to manage your online inventory. In terms of managing your warehouse, your multichannel selling operations, or how you handle your supply chain, however, it won't be able to perform so well.

What is the significance of Amazon inventory management?

To keep your customers satisfied, it is critical to keep your inventory current and accurate on any sales platform. You may find that most of your customers will turn right to your competitors if you run out of stock or if you are unable to fulfill orders.

You lose sales when you have insufficient inventory on hand. It is not only tying up capital but also adding to storage costs when there is too much inventory. There is always the risk that you could end up with dead inventory, or you may have to take a markdown to get rid of those items. FBA is the fulfillment service that is used by the majority of Amazon's top marketplace sellers. FBA is the right choice for many, but it isn't for everyone.

Advantages of having an Amazon inventory management system

Streamlined inventory management.

Inventory management software is one of the most helpful things you can invest in for your business because it makes the process of managing your inventory a lot easier. Basically, it can save you a great deal of time, money, and, let's be honest, your sanity too.

During the various seasons of the year, supply and demand changes are continuously occurring, and as a result, your stock levels fluctuate. By automating your main business processes, inventory management software helps you to eliminate the risk of human error within your organization.

Overselling risk is reduced.

Online sellers face the challenge of overselling, which can lead to loss of control, unhappy customers, and in rare cases, criminal charges. Sellers may also lose their access to marketplaces such as Amazon and eBay as a result of overselling.

In spite of this, it is an issue that can be avoided. Exactly how? Your orders and inventory will be synchronized between every retailer and marketplace you use, so you can streamline your business operations. You can do this by making sure that every time a sale is made, the stock levels are automatically adjusted.

Increased cost savings

If you can streamline the processes that manage the Amazon inventory, you not only stand to save money by eliminating the errors that are related to inventory management. Furthermore, further cost savings can also be enjoyed by streamlining the processes.

Having said that, what are these strategies for reducing inventory costs? As a first step, it can improve your chances of reducing lead times due to better relationship management with suppliers. By establishing your par levels and calculating your safety stock, it is also possible to reduce excess and obsolete stock, as well as subsequent costs incurred.

There is more to it, however. Automating processes may result in the greatest cost savings. Due to mistakes made during inventory management, such as stock-outs and overstocks, organizations can suffer significant revenue losses. Automation pretty much takes care of it.

Keeping excess stock and stock shortages to a minimum.

Maintaining the right balance of your inventory can be a challenge when it comes to managing your inventory. The consequence of too little inventory is unsatisfied customers, reduced sales, and a potential stock-out.

Furthermore, excess inventory can occupy valuable warehouse space and result in additional costs. No matter how you look at it, whatever you do, it will cost you money in the long run.

By utilizing an inventory management program, you can track low inventory levels and identify when each product should be reordered, thereby reducing the likelihood of stock-outs. It'll use a reorder point formula to calculate these reorder points - called par level to reorder points.

Improved business negotiation skills

The utilization of an Amazon inventory management system with batch tracking functionalities will enable you to have a much better understanding of where your products are. In turn, you will have access to valuable information that may allow you to negotiate with suppliers in the future.

It is through this analysis that you will be able to determine which suppliers are proving to be of the greatest benefit to your business and which need to be improved. When you have detailed information about the performance of your suppliers, you can negotiate more favorable terms of trade.

Improved visibility of recalled products.

Recalls of products are sometimes unavoidable. Without batch tracking functionality, finding the affected products can be a time and effort-consuming task.

There will be countless hours and headaches involved. Without complete product traceability and the possibility of easily finding required batches, resolving the issue with your supplier can be challenging. Not an ideal situation when you are trying to conduct business.

Making business decisions that are more profitable

In addition to providing invaluable sales information, inventory management software can help businesses make decisions based on data rather than gut instincts. You may be able, for example, to more accurately predict sales trends with a better understanding of supply and demand.

Inventory management systems provide access to reporting features and inventory metrics, allowing them to assist in strategic decision-making.

In addition, you can also reduce the amount of inventory you are holding in your warehouse by calculating your inventory turnover rate. It will also lower the cost of carrying inventory for you.

Conclusion

Stock management properly makes or breaks a business, and understanding your stock at all times is essential. Effective inventory management can reduce expenses for decision-makers with the right tools.

The solution keeps track of inventory in multiple locations, determines to reorder points, and manages stock and cycle counts. Utilize the demand planning and distribution requirements planning features to maintain an optimal balance between demand and supply across your entire organization.