A guide on Amazon inventory management for your export business

Inventory management involves the process of tracking and storing your products to meet customer demands efficiently. Here’s a complete guide on Amazon inventory management system and how it helps Indian exporters.
Amazon inventory management
Expanding your business to international marketplaces will open up opportunities for your brand, leading to more product listing views and purchases. As you grow your local business and take it to the world, your orders increase, thus, creating a need for you to plan and prepare your inventory accordingly. This process is referred to as inventory management. Whether you are shipping your own products or using Fulfillment by Amazon (FBA), making a few changes in your inventory management will have a big impact on your export readiness.

What is inventory management and why
is it important?

Inventory is the product stock that a seller or exporter owns and wishes to sell internationally. While having the right amount of stock or inventory ready is a key step, managing this inventory on Amazon marketplaces is equally important. This usually involves the flow of products from manufacturers or sellers to the respective warehouses and then to the port for shipping before it finally reaches the customer.

Inventory management involves the process of tracking and storing your products to meet customer demands efficiently. It is necessary for a business to strike a balance between demand and supply. Inventory management helps you do this and aids in better planning and stocking of products.

Let’s consider an example – ahead of the Amazon Prime Day sale in the USA, your business receives a large number of orders for a particular product that you have noticed has been one of your bestsellers in the previous year sale events. According to your business analysis, you expect a higher number of orders next year as well. In this case, it’s good to plan your production accordingly. This is where inventory management becomes important – where and how do you store these products? An effective inventory management system will help you track the stock in the warehouse and ship it accordingly.

An inventory management system can give you a realistic picture of what you have available and help you run your export business efficiently:

1. Ship on time
2. Avoid low or high stock levels
3. Avoid spoilage of products
4. Easy tracking of existing products

This management system can be a manual count and ledger combination, a spreadsheet, or an automated digital solution like Amazon inventory management system. Choosing the right solution for your needs usually depends on:

• Size of your business
• Nature of the products you sell
• Your selling and logistics channels
• Industry you belong to

What is Amazon inventory management?

For global FBA sellers, Amazon offers an inventory management dashboard on Seller Central to help them track inventory levels, sales, deliverables, and orders that are made on Amazon international marketplaces. The inventory performance dashboard sends an alert when stock quantities are running low and provides demand planning and forecasting to suggest recommended inventory levels and shipment timelines. The dashboard displays essential inventory information like sell-through rates, aging stock alerts, and recommended actions to optimize storage. This results in an accurate balance giving you an idea on whether to maintain either an excess or under stock of a certain product in international warehouses.

Amazon trivia

Sell-through rate is the amount of inventory you've sold in a month versus the amount of inventory shipped to you from a manufacturer.

How does Amazon inventory management system work?

When sellers choose to ship internationally with FBA, they automatically gain access to Amazon’s machine learning-based inventory management system. This system uses inputs like cost of goods sold, shipment time, and Amazon data to forecast customer demand and set optimum inventory levels. The performance of inventory management and replenishment is measured by a metric called the Inventory Performance Index (IPI), which determines how efficiently FBA inventory can be managed.

Your IPI score is based on how well you:
 Replenish popular products
 Maintain healthy inventory levels
 Fix listing problems

Exporters with a high inventory score are required to pay less than 1% of the storage fee as a percentage of revenue. A high IPI score will help to lower the storage cost and give you additional storage capacity in Amazon fulfilment centres. This will also help to reduce your operational costs and generate more sales.

Benefits of Amazon inventory management

1. Updating inventory at an automated level

Inventory levels get updated every time a product is sold.

2. Hassle-free tracking support

With Amazon inventory management system, you can locate and track your products in the warehouse easily.

3. More focus on your business

You can focus on your export business goals while your inventory requirements are tracked and updated on the dashboard.

Tips to effectively manage your inventory

1. Build and maintain relationships with suppliers
2. Monitor your sell-through rate
3. Restock popular products quickly
4. Run promotions to reduce aging inventory
5. Keep an eye on your margins
6. Reduce excess inventory to increase your profitability
7. Choose the right inventory management system
8. Maintain four weeks of inventory cover

With a planned inventory management system and product stock, you can take your local products across the world to 200+ countries and territories with Amazon Global Selling.

How to export from India with Amazon
Global Selling?

Amazon Global Selling is an e-commerce exports program that enables sellers to reach over 300 million international customers shopping on Amazon marketplaces in the USA, the UK, Australia, the UAE, Singapore, and more. Apart from Amazon inventory management system and FBA, you can also use other international tools and programs – Exports Compliance Dashboard, simple listing and A+ content – that make your export journey easy and seamless.

Frequently Asked Questions

What type of inventory management software should you use for Amazon global store?
When sellers opt to ship internationally with Fulfillment by Amazon (FBA), they gain access to machine learning-based Amazon inventory management system.
What is the simplest way to manage an inventory?
Using a shipping and logistics program like Amazon FBA allows you to automate inventory management aspects such as demand planning, maintaining healthy inventory levels, and avoiding aging inventory or spoilage. Third-party providers can also manage inventory at scale, helping you save on costs such as order fulfillment while offering fast shipping.
What’s the difference between order management and inventory management?
Order management refers to how you receive and process customer orders. Inventory management is how you manage products through your storage facility or warehouse. Integrating your order management and fulfillment management systems and processes can help you run your business smoothly.
Published on March 21, 2022.

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