How To Manage Your Inventory On Amazon (NO MORE OUT OF STOCKS)

Optimize Amazon Inventory for Sales Success

Unlock the secrets to mastering your Amazon inventory and avoid the dreaded out-of-stock scenario! 🚀

Welcome to the seventh question out of our "Amazon FBA Beginners' 10 Questions" series, where we dive into the crucial world of inventory management.

I'm Vova Even, your guide through the Amazon trenches for the past seven action-packed years.

In this article, we're focusing on one burning question: How do you manage your inventory effectively on Amazon?

Lucia Cracogna, representing the voice of Amazon FBA beginners, brings us this vital query.

I've structured this article in the same friendly and conversational manner as our enlightening video.

But if you're more of a visual learner, catch the full discussion here:

Now, let's embark on this insightful journey into the world of Amazon inventory management, where I answer Lucia's questions and provide valuable insights to help you navigate the intricacies of keeping your products in stock and your business thriving.

Ready for a dose of upbeat and actionable advice?

Let's dive in! 🌟

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Lucia: How can I correctly manage the inventory?

I mean, I don't want to go out of stock.

So, is there any trick there?

Vova: Absolutely, Lucia!

Managing inventory effectively is crucial, and there are indeed some tricks of the trade.

It's not just about avoiding stockouts; it's also about optimizing your cash flow.

I delved into this topic in two other videos featuring Orion Avidan, an expert from Israel, who shared valuable insights on balancing inventory.

I am embedding them right below so you can watch them at your convenience.

While I bring my seller's perspective and share my expertise, it's essential to highlight that Orion Avidan, the expert in our discussion, does this for a living, especially with larger companies.

Her insights go beyond my firsthand experience.

She breaks down the concept of maintaining a healthy cash flow cycle.

I'll simplify it for you.

Imagine you're a new seller trying to manage your inventory – it can be a bit overwhelming, right?

Although there are software solutions available to help with that, for newer sellers, it might seem like trying to solve a puzzle without all the pieces.

But, picture a big company.

They've got loads of products coming in and out, and keeping track of everything is like trying to organize a massive library.

So, what they can do to keep their cash flow positive is pretty clever.

Here's the trick: bigger companies, especially when they have established relationships with trusted suppliers, must avail of the available solutions.

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Read Now: 5 Best Amazon FBA Inventory Management Software

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They can negotiate payment terms.

Instead of shelling out money upfront, they might say, "We'll pay you 30 days after our products start selling."

This means they don't have to pay for the inventory until it essentially pays for itself.

It's a bit like telling your supplier, "Hey, we believe in our product, and we'll settle the bill once the sales start rolling in."

Now, that's a tactic commonly used by larger companies dealing with trusted suppliers.

On the flip side, if you're making deals in China for, let's say, 500 dog-faced mugs destined for Amazon, you can try negotiating similar terms.

It's like saying, "Create the mugs for me, and I'll pay you 30 days after they arrive at Amazon."

It gives you a bit of breathing room and ensures you're not out of pocket before your products hit the virtual shelves.

Smart, huh?

Now, I'm not saying you need to be a communication guru or possess an impressive track record to pull this off.

It's simply about knowing that such options exist.

Think of it like this: the closer we get to this kind of arrangement, the better for your cash flow.

Let me break it down a bit.

A negative cash flow cycle, which is not the friendliest, means you pay today and wait for the money to roll in sometime in the future.

Now, the goal here is to make that cycle as short and positive as possible.

The shorter, the sweeter – it's like giving your cash flow a little boost of positivity. 

Understanding this cash flow cycle makes handling inventory a breeze.

But, let's say you're starting with the usual terms most sellers kick off with – 30% upfront before production, and the remaining 70% after it's done but before shipping.

Now, here's a neat trick: you can negotiate not just with your suppliers but also with the freight forwarder.

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Read Now: 3 Best Freight Forwarders For Amazon FBA (I Worked With All Of Them)

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Instead of paying the entire shipping fee upfront, consider saying, "How about we pay 50% when you take the product, and the remaining 50% when it safely lands at Amazon?"

It's a win-win – you keep a bit more in your pocket until your products are well on their way to their destination. 

Now, giving this a shot can be worth it.

It's all about relationships.

If you're stepping into the game for the first time, you can sweeten the deal by bringing in recommendations.

For example, if I vouch for my friend, a serious aspiring seller, to the freight forwarder, they might be more open to flexible terms.

It's like saying, "Hey, we're connected, and she's serious about this venture."

So, use your connections wisely in any business endeavor.

It might just be the ace up your sleeve.

But that's one thing.

Another thing to consider is understanding your inventory.

Let's break it down.

Imagine you're in the business of selling kitchen scissors, moving about 10 units a day.

Now, it takes you 30 days to whip them up, and another 40 days for them to sail over from China.

So far, so good, right?

Let's call that your cost-efficient period, a total of 70 days.

Now, here's where it gets interesting.

Add in 10 more days for unforeseen issues or the time it takes for your products to cozy up inside Amazon's warehouse.

We're looking at a grand total of 80 days from production to hitting the virtual shelves.

The key is to be mindful of this timeline.

When you're down to about 10 days' worth of inventory left, that's your cue to start the reorder process.

It's like a well-timed dance – you want to keep the rhythm flowing so you never run out of stock.

Actually, let me paint a scenario for you.

Picture this: you've just ordered 500 units of these kitchen scissors.

[That was my first order, by the way, and here's the kicker – we went out of stock with those 500 scissors just as we started selling.]

Now, let's say you're cruising at 10 units a day.

You're doing some promos, catching up with organic sales, and throwing in a bit of PPC magic.

Suddenly, you're selling, let's say, 10 units a day.

Now, here's the catch – if you don't keep an eye on it, you could run out of stock in about 50 days.

Remember, it takes you a full 80 days to cook up a new batch of your product.

That's not a pleasant spot to find yourself in.

But fear not!

There are ways to tackle this challenge.

One option is to consider air shipping instead of the usual slower methods.

It might cost a bit more, but it's like hitting the fast-forward button on your inventory timeline.

Now, let's talk logistics.

Whether you're managing a variety of products or just one, there's some nifty software out there – think Helium 10, Jungle Scout, or Sellerboard.

These tools let you input details like your product creation time, shipping duration, and other vital info.

The magic happens when they crunch the numbers and give you a heads-up on your Amazon inventory.

It's like having a virtual assistant that tells you, "Hey, it's time to reorder!"

But here's the thing, these tools work with data you feed them.

They're not mind readers.

So, in addition to relying on the software's calculations, remember what Hiba Weber from SellerMobile mentioned in a recent discussion on my channel.

-: Video Version :-

-: Blog Version :-

SellerMobile Review And Tutorial - With Hiba Weber COO at Seller Mobile

So, in our conversation, Hiba pointed out the importance of tapping into your entrepreneurial instincts.

These tools might not grasp the nuances of special occasions or events, like the holiday rush.

That's where your gut feeling comes into play.

If Christmas is around the corner and you anticipate a spike in sales, don't hesitate to manually adjust the inputs to reflect the upcoming surge in demand.

It's like blending the power of data with your business intuition to stay a step ahead in the game.

Now, speaking from my experience as a seller, I've been in the game since we started with sales over a million one hundred thousand dollars.

But hey, there are sellers out there who do that in a month or even a day – they're the real pros.

While I can share my insights, it's essential to recognize that there's always more to learn.

So, consider this not just as a one-stop shop for all your Amazon wisdom but as a starting point.

Yes, I've got some mileage on the Amazon road, but there's a whole community out there with diverse experiences and strategies.

Tap into that wealth of knowledge – join groups, ask questions, and listen to what others have to say.

Plus, as I mentioned, there's a buffet of software options out there – Helium 10, Jungle Scout, Sellerboard, and many more.

These tools are like your inventory wingmen, helping you navigate the Amazon landscape. I've got my favorites, but there are plenty to explore.

So, use what works best for you, and don't hesitate to explore different options to find your perfect match.

It's a dynamic world out there, and there's always something new to discover!

What do you think?

Lucia: Absolutely, I get what you're saying.

Once your product is live, you'll quickly see its performance – how many units are selling and if there's a demand for more.

Vova: Absolutely, you've hit the nail on the head.

Starting with low stock is fine, especially as you test the waters, but it's crucial to be mindful of your production time.

If your product creation takes a while, and you see an opportunity for higher sales, that's where strategic planning comes in.

Conducting thorough product research, observing what the top sellers are doing, and also checking out the smaller players with fewer reviews can give you a clear picture.

Analyzing their sales numbers helps you identify opportunities to carve out your space in the market.

It's like finding a sweet spot where demand meets availability.

Now, let me throw in a valuable resource for you and our listeners.

There's a book by Eliyahu Goldratt called "The Goal," written in 1986.

This book dives into the theory of how the business of products works.

It not only explains the intricacies of lowering production time but also sheds light on optimizing the cash flow cycle.

Understanding these principles can make a significant difference.

When you have a positive cash flow, life gets smoother.

On the flip side, dealing with negative cash flow can be challenging, as it requires constant investment.

So, Lucia, and everyone tuning in, consider checking out "The Goal" for a deeper insight into streamlining your product business.

It's like a guide to making your business journey more efficient and less financially strenuous.

Lucia: Yeah.

Vova: Another key aspect is ensuring high return on investment (ROI) for your products.

When your ROI is solid and you're making sales, the revenue generated can often be used to reinvest in more inventory.

This way, you're not constantly relying on external funding or loans.

While I do occasionally take loans, especially during product launches, my aim is to minimize dependency on them.

I also have another business running through YouTube, involving affiliate marketing and other ventures, which acts as an additional support.

Diversifying income streams can be a game-changer in managing cash flow and ensuring a more stable financial position.

So, that's my take on this aspect of the inventory management puzzle.

Lucia: Sometimes, maybe it's necessary, and that's okay.

Loans can indeed be a useful tool if they are calculated and part of a well-thought-out plan.

It's all about understanding the financial dynamics and having a clear strategy in place.

Speaking from the perspective of a seller operating at a lower to mid-size scale, the idea of larger companies taking a million-dollar plunge today to invest tomorrow might be intimidating.

Personally, I haven't navigated those kinds of figures yet, and it does seem a bit daunting.

However, it's a step-by-step process, and as long as you have a grasp on the numbers and a solid plan, it can be a manageable aspect of the business journey.

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Conclusion

So, in a nutshell, managing inventory is like orchestrating a well-timed dance.

Starting with low stock is okay, but keep an eye on your product's performance, and when you see that sweet spot of demand, go all in strategically.

Learn from the top sellers, check out the newcomers, and find that perfect balance.

And hey, if you ever need a boost, consider Eliyahu Goldratt's "The Goal" for some business wisdom.

When it comes to financing, loans can be a handy tool, especially if calculated and part of a plan.

But remember, it's a step-by-step journey.

Whether you're a mid-sized seller or just starting, the key is to keep learning, adapting, and maybe diversifying your income streams.

In the world of inventory management, each move counts, and with the right insights and a positive mindset, you're on the path to success.

Keep it upbeat, stay strategic, and enjoy the dance of inventory management! 🚀