There are so many things to think of when it comes to your Amazon business that keeping track of it all can make your head spin: good SEO, import and export regulations, customs rules, a top-notch product description page, and repricing regularly and consistently. There’s another area that’s not touched on so frequently, but is just as important — if not more so — than the others. If you don’t have this key ingredient in place, then you have no solid foundation in place and risk everything else tumbling down. What is this magical base that’s so crucial to the rest of your Amazon business? Your inventory, of course, and RepricerExpress is here to show you why it’s so vital.
Old Mother Hubbard Needs a Full Cupboard
Everyone knows the nursery rhyme about Old Mother Hubbard going to the cupboard to get her dog a bone, except it was empty and the dog had to go without. What she did was go off to the baker’s, undertaker’s, alehouse, tavern and more, just to feed her dog. He loved it, too, and lived like a little king of a dog.
Your customers will be just like Old Mother Hubbard, if you think of her cupboard as your empty Amazon page. Don’t have the metaphorical bread, wine and beer? Your competitors will, and your buyers will go there to stock up.
Why is Inventory So Important?
So far, we’ve covered the intangible fact that having a full inventory is key to getting buyers to come back to your store front, as opposed to hopping off for a competitor’s. That in itself is a great reason, as customer retention should always be at the top of every merchant’s list. Without your buyers, you’ve got no business.
But what about what it’s worth to you? It’s awesome to be so focused on doing everything in your power to keep buyers on your Amazon listings, but that’s not enough. There’ll be tough days when the fish just aren’t biting, and you’ll need something else to motivate you to stay out on the water.
Inventory is usually online merchants’ largest asset, comprising anywhere from 60% to 80% of their total current assets. That’s a huge number, and definitely one to get strongly motivated about when it comes to keeping it in fine shape. It then becomes a very tricky balance about keeping the right amount of inventory: have too little, and risk your customers searching for a product elsewhere; have too much, and you’re possibly stuck with product on your hands that you can’t move. And product you can’t move means no profit in sales, just money you spent on items that aren’t being sold.
Designing an Efficient Inventory System for Amazon
What you need for your Amazon business is a way to create an inventory system that keeps enough stock on hand that you won’t run out, has enough that you can deal with surprise orders quickly and efficiently, and not too much that you’re left with an unwanted collection of Beanie Babies.
When creating this system, keep these four points in mind:
- Purchase order
- Shipments
- Demand planning
- Internal/external team communication
The key, if you’re starting from scratch, is to not try and acquire an inventory that has everything you can possibly think of. While Amazon’s Fulfillment Centres will be more than happy to store your goods, it will come at a monthly “rent” cost for you. This will cut into your bottom line, and leave you behind the 8-ball before you can even get your feet off the ground. However, if you’ve already got a decent inventory in place and just need to create a new system for it, then this is an excellent opportunity to both use what you already have and pare back on what’s collecting dust.
And whether or not you’re creating a new inventory or just tweaking an existing one, here are two important things every Amazon seller should keep in mind:
- Your inventory system should allow you to make small changes as needed.
- Make sure everyone involved on your team with the inventory system has access to the same data integration. Otherwise, there’s the chance that you’ll put in double entries, which will be a huge headache to both you/your team and your suppliers.
What You’ll Get Out of a New Inventory System
Because Amazon is such a close race, you’ll need every carrot you can get in front of every stick. We’ve already talked about the importance of retaining just about enough inventory you need to be able to meet orders, but not so much or so little you’re screwing yourself. By reducing your inventory, you can increase your cash flow. It may seem contra-indicated, but just refer back to the reasons we listed above.
As well, you’ll be able to cut down on the costs associated with ordering (smaller batches means smaller costs), keep better control over your inventory, and fine-tune your inventory turns, profits, returns on assets and sales.
Final Thoughts
We briefly mentioned how repricing should be part of your game plan when it comes to an amazing Amazon business. It should never be thought of as an option, but a necessary part of your routine, and RepricerExpress can help. Try out our 15-day free trial today, and see the kind of direct impact it has on your inventory.
