Everyone would want to access the world’s biggest eCommerce marketplace. But, when orders come in quickly, the difficulty level also increases. For any growing retailer who manages inventory manually, it will be problematic to keep in pace with the volume of Amazon orders. This post walks you through the importance of having an Amazon inventory management system that ensures seizing the best opportunity from Amazon.
Risks involved in Amazon Inventory Management
Being aware of the risks involved in selling on Amazon for your business includes:
Substantial increase in order volume is likely, and the manual process can become tedious.
Inventory exhaustion can happen quicker than anticipated.
The higher-order volume will make splitting and routing orders for fulfillment can be more complicated.
Chances of Amazon suspending your account based on poor performance.
It is advantageous to know the possible risks in business and the potential costs of neglecting them.
Poor Inventory Management can lead to
Manually managing multiple inventories is slow and costly
Inventory mishandling and incompetence negatively affect cash flow
Shipments delays and reduce the volume of daily orders
Negative impacts on customer experience.
Mismanaged inventory can cut down on opportunities drastically
Amazon customers anticipate availability and quick delivery; else it can result in losing customers
Possibility for a lousy rating which may affect listing in Amazon’s Buy Box
Thus having an Amazon inventory management solution can ensure this doesn’t occur.
About Amazon Inventory Management Solution
A practical solution that can synchronize inventory across the entire sales channels and inventory locations are necessary. There are several inventory management solutions that the sellers can choose and which have a range of capabilities. To evaluate the solutions the following factors can be considered:
Sales Channel Backing – Many inventory management solutions differ in the channels they support. It can support only amazon, or eBay, or other eCommerce systems and online marketplaces. So it is essential to plan the growth and expansion of your business so that you choose the most flexible Amazon inventory management tool.
Business System Integration- It is essential to have systems that focus on both the front-end and back-end of your business, like accounting and ERP systems integration. Handling both inventories across your channels and synchronizing it with your business is essential. Integration into back-end systems differs from custom coding to pre-built integrations. Upgrades are standard in the accounting and ERP software and ascertaining that the software solution must be compatible with new version updates.
Meeting Business Requirement– Inventory management is a grave component to handle Amazon sales channels. In addition to that, there are other processes too. It is crucial to have an Amazon inventory management solution that supports not only inventory but also other multiple business processes, like:
Customer data collection
Choosing an aggregated solution that supports all these requirements makes work more comfortable and saves many expenses. Just make sure that the technology solutions that you prefer can meet your future business needs as well.
Automating Amazon Inventory Management
With the right solution, one can automate and sync the Amazon inventory flawlessly. It will sync with your POS, ERP, and other eCommerce sales channels and enable you to handle more sales volume. The advantages are listed below.
No more error-prone data entry
Can manage item data and inventory from one place
Integrate inventory data with your current sales systems
Centralize inventory management for multi-channel sales
Access accurate and updated inventory at real-time
Increase customer satisfaction by providing precise product availability and quick delivery
Surge overall sales and profits
Why go for Amazon fulfillment services
Fulfillment by Amazon enables any business to increase reach by utilizing the world’s biggest fulfillment network. Amazon’s Prime buyers are those who majorly utilize Amazon fulfillment service FBA. They spend more money than the average customer per year with Amazon. Also, it helps to leverage their exceptional customer service and storage.
It is crucial and a matter of building trust and brand recognition among the customer, which is well supported by Amazon. So, it is essential to use Amazon FBA to be more visible to Prime buyers.
The workflow of Amazon fulfillment services
The way that Amazon handles the entire process within FBA is systematic and straightforward.
1. Send products to Amazon warehouses
2. Amazon receives sorts, adds to inventory, and stores the products in their warehouses.
3. A customer purchase and payment transactions
4. Automatic inventory updations
5. Amazon packs, labels, and ships the product to the customer.
6. Amazon handles customer service, make sure they’re satisfied, and handles returns
7. Sellers get paid every two weeks. Amazon calculates the entire sales, takes away seller fees, and credits profits straight to the bank account.
Benefits of Amazon fulfillment services
The FBA program helps develop eCommerce business and increase product visibility to a large number of people. The reasons why Amazon has a lot of loyal customers are because of its FBA benefits.
Easy logistics and shipping – Managing fulfillment by oneself can be time-consuming. Higher the sales, more will be the time taken for packing and shipping. With Amazon fulfillment services, one can outsource it to experienced hands.
Discounts on shipping rates – Major shipping carriers who are tied up with Amazon offer discounts on shipping costs, which is given to sellers as lowered shipping prices. Customers also benefit as they get free shipping. Prime members can avail free two-day shipping on all FBA products, which is a big deal for sellers as sales increases.
Managing returns – Processing returns can be less painful when dealt with by experts. Amazon takes care of the entire returns process, including customer inquiries, return labels, and reverse logistics.
Customer service management – Amazon has a name for offering excellent customer service 24/7 support through phone, chat, and email.
Availability and access to unlimited storage space – Using Amazon fulfillment services relieves the sellers from handling storage space required for products, pay for a warehouse, or worry about warehouse size. There are no limits on inventory with Amazon, and in addition to those sellers who have high inventory performance scores are eligible for unlimited storage.
Quick delivery – Amazon fulfillment service centers are present worldwide. So wherever your customers may be located, Amazon can effectively deliver to them in very few days. As soon as the order is placed, Amazon figures out the most feasible fulfillment center nearest to the customer and ships from there.
Orders Fulfillment from other channels – Amazon’s Fulfillment service for Multi-Channel helps to sell products on other channels where Amazon can also fulfill those orders.
Demerits of Amazon Fulfillment services
Although Amazon has made its mark as a great selling enhancer, there are inevitable setbacks that you need to know.
Amazon fulfillment service is expensive – charges are applicable for storage and fulfillment. Keeping a check on inventory movement can help bring down storage fees.
Long-term storage fees – Storage fees may get high if your products are in the storage for more than six months.
More returns – The other side of having easy returns policy it is more likely for customers to make returns.
Prepping items can be hard– There are strict guidelines on preparing and shipping the products. It must be entered into Amazon’s database, labeled, and then shipped to warehouses.
Tracking inventory can be problematic – It can be challenging to keep track of products at hand, what and when to order, and what’s selling slowly or not selling. It’s even harder to sync if you have multiple channels to sell.
Difficulty in Sales tax calculation – Every state has various rules for sales tax collection. Since Amazon has virtual fulfillment centers globally, and they move inventory between warehouses frequently, tax calculation might be unclear.