In this blog post, we’ll uncover the secrets to effectively managing your Amazon FBA inventory, ensuring you never run out of stock and lose sales or rank. Follow these expert tips to optimize your stock levels and keep your business thriving.
- Reorder Size Calculation: The Perfect Balance
To determine the ideal reorder size, use this simple formula:
Average Sales Per Day x Lead Time to Re-Stock in Days
For example, if you sell 10 units a day on average over the past 30 days, and your supplier takes 60 days to produce and 30 days to ship the product, your reorder size would be:
10 units a day x 90 days restock time = 900 units.
This calculation is a good starting point, but let’s dive deeper into the nuances of inventory management.
- Smart Ordering: Save Cost and Simplify Logistics
Instead of relying solely on the above formula, consider your business’s unique needs. Aim to have enough stock to cover the next three months, arriving just in time as the previous three months’ stock sells out.
By ordering larger quantities, you can save on product and shipping costs and simplify the process by reducing the number of orders per year. But, before placing an order, take the following factors into account.
- Sales Velocity: Adjusting for Trends
Monitor your sales trends closely. Are your sales increasing or decreasing? If your sales have been growing rapidly, base your reorder size on the last 30-60 days’ sales average. For stable sales, use a longer timeframe like 90 days. Always adapt your reorder size to your product’s current performance.
- Buffer Stock: Plan for the Unexpected
Unforeseen circumstances can cause delays in shipments, inventory processing, or supplier production. To account for such events, keep an extra 2-4 weeks’ worth of stock in Amazon’s warehouse. This safety net ensures you can continue to fulfill orders, even when things go awry.
- Track Key Metrics: Stay Informed with Our Tools
Utilize tools like CashCowPro to regularly check your inventory levels. With its dashboard and inventory features, you can easily monitor your daily sales and stock depletion dates for each product. This information is invaluable for making informed decisions about reordering.
- Seasonality: Adapting to Fluctuating Demand
Account for seasonal fluctuations in demand when reordering. Avoid basing reorder sizes on peak seasons, as excess stock can tie up cash and incur additional storage fees. Adjust your reorder size according to your product’s typical sales patterns throughout the year.
- Holiday Delays: Factoring in Festivities
Stay informed about local public holidays as well as your supplier’s holidays, such as China’s Lunar New Year. Factories may close or operate slowly during these periods, so adjust your lead times accordingly when reordering.
- Lead Times: Monitoring Supplier & Shipping Dynamics
During peak seasons, both supplier and shipping lead times can increase. Check with your supplier a month before reordering to verify whether lead times have changed, and be prepared to adjust your reorder schedule if needed.
Conclusion
CashCowPro is an invaluable tool for tracking product sales and inventory forecasting. To optimize your inventory management, maintain a buffer stock in Amazon’s warehouse and stay up-to-date on sales trends, supplier lead times, and seasonality. With these expert tips in mind, you’ll be well-equipped to maintain a consistent stock level and keep your Amazon FBA sales soaring.
