It also comes armed with numerous options to receive recommendations on how to optimise your inventory levels tailored to your store. Using this tool can help you to create removal orders for slow-moving or overstocked inventory as well as set up automatic removals should you need them. Find this tool in your Seller Central Account.Īs the name indicates, this tool will help you to identify and manage any excess inventory you have lying around. The higher the IPI score, the better your inventory management performance. Using factors like stranded inventory, excess inventory and stockout rate, the IPI generates a score to determine how well you, as a seller, manage your inventory. Luckily for Amazon brands, there are many tools and reports in existence that allow sellers to monitor the health of the inventory and analyse data to enable informed and streamlined decision making.īelow are 5 we think you should consider to get on top of your inventory health: It's important to keep in mind that your inventory turnover ratio may vary depending on the type of product you sell, the season, and other factors but it is a great place to start to better understand your inventory position. Maybe you could be doing a better job on the marketing front? Exploring Sponsored Ads and the like does come with a cost but luckily Point 10 can help with that too. A low inventory turnover ratio indicates that you're not selling your products as quickly, which could mean that you're overstocked or that there's not enough demand for your products.However, it can also mean that you're not keeping enough inventory on hand to meet demand. A high inventory turnover ratio indicates that you're selling your products quickly, which is generally a positive sign. ![]() Once you have your inventory turnover ratio, you can interpret it in the following way: To calculate your average inventory, add your beginning inventory to your ending inventory and divide the result by two. Find this information on your balance sheet. Average Inventory: This is the average value of your inventory over a specific period.Cost of Goods Sold (COGS): This is the cost of the products you sell during a specific period.Here's how you can break down the formula: Inventory Turnover = Cost of Goods Sold / Average Inventory The formula for calculating inventory turnover is: This ratio measures the number of times your inventory is sold and replaced in a given period. To understand your Amazon inventory turnover and in turn make informed decisions on reordering etc, you first need to calculate your inventory turnover ratio. Knowing how fast your products are selling will help you to determine when you need to reorder and how much inventory to hold to ensure you are not over or under stocked. Underestimating demand for popular products - Stockoutsīy being aware of these common mistakes and taking steps to avoid them, you can ensure that your Amazon FBA inventory management strategy is optimised for maximum profits.Some of the most common mistakes to watch out for include: ![]() Inventory management mistakes, however small they may seem, end up costing you valuable time and money and therefore impact overall profitability (not to mention can have a negative environmental impact as well). But before we do, it is important to flag some of the common mistakes made when it comes to managing Amazon inventory. ![]()
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