Amazon Sellers: Inventory Tips & Tactics for 2021 Success via @sejournal, @AMZRobynJohnson

1 month ago 10
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Inventory has ever played a important relation successful the mode you sell connected Amazon.

Whether oregon not you person inventory tin find erstwhile oregon if to tally ads. It plays a relation successful integrated ranking and now, it tin adjacent interaction the full magnitude of units you tin person disposable connected the platform.

In this column, you’ll larn however astir 2 caller challenges facing Amazon sellers this upcoming vacation season. You’ll spot however to hole present for highest play income with inventory absorption tactics and tools that enactment your concern goals.

Keep speechmaking to larn much about:

  • New restock limits for Fulfillment by Amazon warehouses.
  • How your Inventory Performance Index (IPI) people impacts your disposable retention volume.
  • What the IPI is and however it’s calculated.
  • Recommended actions for improving your IPI score.
  • Tips for Amazon sellers who are caller to Seller Central.
  • Tips for expanding your restock limit.

Amazon Limiting Sellers Storage Based connected Storage Utilization

Amazon has announced 2 newer aspects that complicate selling connected the platform:

Restock Limits

This limits the magnitude of inventory you tin restock to Amazon’s FBA (Fulfillment by Amazon) warehouses successful 1 shipment and the full maximum units you tin person astatine Amazon.

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Storage Volume

This limits the maximum cubic feet of retention abstraction you person astatine Amazon. The Storage Volume is governed by your IPI (Inventory Performance Index).

Not paying attraction to however inventory is selling done your relationship tin person dire consequences for brands and sellers connected the Amazon platform.

Restock Limits successful  Seller Central.You tin find your existent restock limits connected Seller Central nether Inventory, Inventory Planning, clicking connected your IPI score, past utilizing the tiny arrows astatine the bottommost of the browser.

Sellers who autumn beneath the minimum criteria tin person their retention constricted to arsenic small arsenic 25 cubic feet. Trying to vie and beryllium profitable with that tiny magnitude of retention tin wholly demolish your income projections.

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We volition beryllium outlining the steps you tin instrumentality to guarantee that you person the retention abstraction disposable for your highest season, thus, maximizing your income connected Seller Central.

We’ll besides spell done what you tin bash if you’re already falling beneath Amazon’s acceptable criteria.

Success successful Q4 Means You Have to Act Now

It tin look a small aboriginal reasoning astir inventory power specifically for the Q4 season. However, due to the fact that of the IPI, Amazon’s superior measurement to find your disposable FBA warehousing abstraction is simply a rolling average.

It tin instrumentality 2-8 weeks to summation the people you presently person connected Amazon, truthful it’s indispensable to program up of time.

This means if your IPI is beneath the 450 required by Amazon you request to commencement taking assertive enactment today.

This nonfiction volition outline however to debar having detrimental retention limits, however it happens, and what to bash erstwhile you’re already beneath the threshold.

If you are looking for accusation astir Restock Limits, we volition sermon them further down successful the article.

What is the IPI (Inventory Performance Index), and Does It Affect Me?

The IPI volition lone impact those utilizing Seller Central and utilizing FBA warehouses.

It does not impact those utilizing Vendor Central, Kindle Direct Platform, oregon those selling connected Seller Central by Merchant Fulfilling oregon utilizing Seller Fulfilled Prime for their items.

Inventory Performance Index (IPI)

The Inventory Performance Index (IPI) manages however good you power and negociate your inventory astatine Amazon.

This metric is simply a 12-week rolling average. It looks astatine respective components implicit 3 months.

Four components marque up the Inventory Performance Index (IPI):

Excess Inventory

This astir important metric arsenic it measures wherever your profitability whitethorn instrumentality a deed owed to retention fees and holding costs for slow-moving FBA inventory. Excess Inventory percentages assistance sellers program erstwhile to restock much oregon region inventory from FBA.

Sell Through Rate

This refers to units sold/shipped implicit the past 90 days and the mean fig of units disposable astatine fulfillment centers implicit the past 90 days. This parameter is the astir heavy weighted.

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Stranded Inventory

This provides accusation connected products that aren’t selling owed to listing issues. This occurs erstwhile your listing doesn’t conscionable Amazon guidelines. In these instances, your products go stranded and incapable to determination portion inactive incurring FBA retention fees.

In-Stock Inventory

Amazon looks astatine the percent of clip your products person been successful banal during the past 30 days, with further value fixed to items that person sold much units implicit the past 60 days. If you support a precocious in-stock inventory, it volition effect successful less mislaid sales.

Four components of the Inventory Performance Index.It is important to item that these components are not weighted equally.

Excess Inventory and Sell-Through Rate are the parameters that person the astir important interaction connected IPI, portion Stranded Inventory and Restock Rates tin play a insignificant relation successful the wide score.

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This means you volition get much question focusing solely connected the archetypal 2 components alternatively than spreading your efforts arsenic crossed each 4 elements.

During the tallness of the pandemic, Amazon changed the minimum IPI to 500. Recently, they reduced the minimum IPI backmost to 450. However, Amazon tin summation oregon alteration that minimum astatine immoderate constituent successful time.

For this reason, we counsel our clients to purpose for a full Inventory Performance Index of 600.

Your minimum extremity should beryllium moving towards astatine slightest 50 points implicit the existent IPI requirement.

Some merchandise mixes marque maintaining a precocious IPI easier than others. If you are a tiny marque with a tiny fig of products that determination consistently, for example, your IPI volition mostly thin to beryllium higher.

If you are a seller with a ample merchandise premix that changes often, it is the astir challenging to manage.

Inventory Performance Index (IPI) and Inventory Limits

Amazon volition nonstop retired reminders with the 2 checkpoint dates for IPI measurement earlier each quarter. If you are beneath the IPI for some checkpoints, your retention volition beryllium constricted for the full adjacent quarter.

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If you’re presently experiencing an inventory limit, Amazon does not supply a mode to entreaty the decision.

There’s nary nonstop section that you tin scope to escalate your concern. You volition simply person to negociate done the adjacent 4th with the little retention limit.

You tin proceed to merchantability Merchant Fulfilling items utilizing different 3p sellers to determination your inventory, oregon simply nonstop successful tiny shipments of your fastest, astir profitable inventory into Amazon.

Further down successful this article, we volition item what you tin bash erstwhile your inventory show is low, you are facing imaginable inventory limits, oregon if you’re caller to Amazon.

Why Would Amazon Do This?

It seems similar it would beryllium counterintuitive for a institution that is truthful focused connected having arsenic galore products connected its level arsenic imaginable to bounds the magnitude of inventory you could sell.

However, arsenic much sellers joined the level and with rising FBA and Prime offers, overcrowding astatine the warehouses started to go and larger and larger occupation for Amazon.

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Amazon sellers were attracted to FBA due to the fact that of the debased outgo of retention rates. Sellers were utilizing the FBA programme arsenic a inexpensive mode to warehouse ample amounts of inventory.

At first, Amazon tried to summation retention fees. Adding semipermanent retention fees dramatically accrued the retention outgo for merchandise aged implicit six months.

However, adjacent with those changes, Amazon couldn’t curve the overcrowding and request connected their FBA warehouses.

As a result, they started to present retention limits successful 2019. From Amazon’s perspective, they privation to guarantee that customers person favorable buying experiences and rapidly get the products they want.

This means making definite that the products that are astir apt to merchantability are available.

Amazon looks astatine however you person managed inventory successful the past and whether customers are purchasing your products to find however overmuch abstraction is allocated to you.

The amended Amazon feels you are doing astatine managing your abstraction astatine Amazon’s FBA warehouses, the much retention abstraction you volition beryllium allowed.

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What if My IPI is Below the Current Threshold?

If your IPI is presently beneath the threshold oregon wrong 50 points of the lowest threshold, these are the actions we recommend.

The archetypal measurement is to cheque the existent threshold. As of the penning of this article, the existent threshold for IPI is 450.

However, here’s the nonstop nexus to the argumentation truthful you tin find the existent threshold arsenic Amazon has the quality to alteration this immoderate time.  You tin find the existent required IPI successful Seller Support nether the heading FBA Inventory Storage Limits (login required)

You tin reappraisal your existent IPI people successful Seller Central by going to Inventory, Inventory Planning, and past clicking connected your IPI score. 

IPI people     successful  Seller Central.

Even with the assertive tactics, it tin instrumentality 2-8 weeks to marque important advancement successful changing the Inventory Performance Index.

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The person the cut-off day and the much you request to rise your IPI, the much assertive you request to beryllium successful the pursuing tactics to get the inventory abstraction required for your highest season.

Recommended Actions to Improve Inventory Performance Index (IPI)

Excess Inventory – Dump Slow Moving Items

Excess inventory is mostly 1 of the apical 2 reasons your Inventory Performance Index people could beryllium debased since it is the astir heavy weighted metric.

The archetypal measurement to addressing Excess Inventory is to propulsion backmost inventory that you don’t expect to sell. Focus connected SKUs (Stock Keeping Units) that person gone retired of manner oregon merchandise experiencing a important request driblet similar seasonal products.

If you don’t expect it to merchantability wrong 3 months, you should propulsion backmost the inventory to merchantability connected a antithetic transmission by creating a removal order.

Sometimes it makes much consciousness to discount and/or advertise products to assistance them merchantability done faster to region them from your inventory alternatively than telephone backmost inventory from Amazon.

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Sometimes optimizing a listing that is not moving tin besides assistance summation the sell-through rate.

A speedy enactment connected having Amazon destruct products — sometimes they volition liquidate that merchandise alternatively of destroying it.

If inventory power is an indispensable origin for your brand, we volition urge pulling backmost the inventory adjacent though it costs more.

While Amazon is large astatine logistics and moving items done their process, they’re not large astatine returning items to sellers. Many times, items volition get damaged oregon mixed SKUs successful aggregate boxes, truthful that tin clog up receiving departments.

If possible, we privation to marque definite that we’re proactively taking enactment to debar having to propulsion backmost inventory and hazard inventory being damaged oregon being unavailable to beryllium sold for a agelong time.

Sell Through Rate – Send Fast Moving Items

Amazon looks astatine this to place whether the items you’re selling are things customers privation to purchase. The mode that we amended the sell-through complaint is to nonstop successful tiny shipments of items that volition merchantability retired precise quickly.

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If you’re presently utilizing LTL oregon FTL, we urge that you determination to tiny parcel shipments during this process truthful that you tin nonstop much and predominant shipments without going retired of banal for agelong periods.

As you’re restocking items, we privation to prioritize those items that volition determination quickly, sending tiny quantities of items that volition merchantability retired arsenic soon arsenic they get oregon soon aft they arrive.

This allows your wide sell-through complaint to summation dramatically and marque a much important interaction connected your wide IPI.

If you don’t presently person immoderate fast-moving items that you tin nonstop into Amazon, see listing products extracurricular of your regular merchandise mix. Consider purchasing items via wholesale that volition determination rapidly capable to summation your wide Sell Through Rate.

It is captious that nary substance however accelerated you deliberation a merchandise volition determination through, arsenic you nonstop these products in, you’re investigating tiny batches to marque definite that things volition merchantability astatine the gait you anticipate.

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Stranded Inventory

Inventory that’s being held successful FBA warehouses and not disposable for merchantability affects your wide IPI. Fixing Stranded Inventory tin marque a flimsy difference; however, if you request to determination your IPI significantly, this constituent of the wide metric volition lone marque a flimsy difference.

It would beryllium champion to code Stranded Inventory play oregon bi-weekly, depending connected your wide Sell Through Rate.

In-Stock Inventory

This is astir apt the astir frustrating metric of the IPI because, basically, Amazon is telling you that you can’t restock items due to the fact that they’re not selling accelerated enough.

At the aforesaid time, they’re trying to promote you to marque definite that you’re staying successful stock.

We person recovered that this metric is precise airy weighted, and you’re amended focusing connected the 2 cardinal metrics of Excess Inventory and Sell Through Rate.

There has been immoderate statement whether deleting erstwhile SKUs tin summation this; however, we person not seen that this importantly impacts the full IPI.

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General IPI Notes

As you’re moving to summation your wide IPI, it is important to retrieve that it tin instrumentality respective weeks to increase.

The IPI is an mean calculated implicit 12 weeks. It is important that you springiness the IPI capable clip to determination earlier you find whether the actions you person taken are making a difference.

It tin beryllium tempting to cheque your IPI often, however, your IPI people is lone recalculated erstwhile a week.

If you request to rise your IPI rapidly oregon a ample magnitude you whitethorn request to instrumentality overly assertive actions successful pruning your inventory and pumping fast-moving items done your relationship to summation your people to the required amount.

If You Are Not Able to Raise Your IPI Before the Next Quarter

If your people was already excessively debased and you don’t person capable pb clip to summation your IPI earlier the adjacent quarter, past it’s clip to commencement looking for alternate ways to determination your products.

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Sometimes this means utilizing third-party sellers to marque definite that inventory tin beryllium disposable to customers with a Prime offer. We person respective reliable third-party resellers we notation our clients to if it’s ever an issue.

If you don’t privation to utilize third-party sellers, the alternate is to summation the full magnitude of Merchant Fulfilled offerings that you have. Remember that Merchant Fulfilled offerings mostly don’t vie good against FBA offers, truthful ticker your contention to find feasibility.

While galore brands debar third-party sellers due to the fact that it whitethorn trim power implicit their brand, successful this instance, it tin beryllium a bully instrumentality to usage to marque definite that you don’t suffer imaginable marketplace stock to different competing merchandise lines.

Another measurement that you tin instrumentality is to allocate your FBA warehouse abstraction to items that person the highest borderline and smallest dimensional size arsenic they are highly profitable and merchantability done quickly. Leaving items that person little profitability oregon that determination slower done Merchant Fulfilled (MF).

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Tips for New Amazon Sellers

If you’re a caller seller coming to Amazon oregon moving from Vendor Central to Seller Central, commencement by sending tiny quantities astatine first. You bash person a grace model erstwhile you archetypal unfastened your account.

However, you privation to marque definite that you are sending successful tiny amounts of inventory. As small arsenic 1 lawsuit per merchandise tin assistance you place the wide Sell Through Rate.

There is nary minimum for sending inventory into Amazon FBA. So it is imaginable to trial arsenic small arsenic 1 portion astatine a clip to trial products connected Amazon.

Sending successful tiny shipments does summation your wide shipping outgo and tin trim profitability successful the abbreviated term. However, erstwhile you’re archetypal investigating the platform, sending successful smaller quantities tin assistance you amended recognize the request your merchandise volition person and assistance debar further fees that tin beryllium required to telephone inventory backmost oregon to wage for retention fees.

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Once you person a amended thought of your sell-through rate, you tin commencement to summation to full sizes of your inventory.

It is simply a delicate equilibrium to person capable inventory that you don’t tally retired of banal but besides that you don’t person excess inventory. While successful general, you privation to aggressively debar stockouts, the interaction of a debased IPI people should instrumentality priority.

How Seller Velocity Impacts Restock Limits connected Amazon

Just this past year, a caller complication of Restock Limits came into play connected Amazon. While galore sellers had been dealing with SKU-level inventory limits, Amazon instituted an account-wide bounds based connected a seller’s velocity.

Amazon defines the bounds by saying:

“Restock limits are acceptable per retention type, based connected your past and forecasted sales, allowing you to allocate these limits crossed your ASINs.”

It is important to enactment that this is not calculated by lone looking astatine disposable inventory.

How bash you cipher utilization?

Utilization counts against your maximum inventory level and helps find your maximum shipment quantity. Utilization includes your existent inventory astatine Amazon and each incoming shipments, including your shipments in WorkingIn transit, and Receiving status. Inventory pending removals and immoderate reserved inventory are not included successful the utilization calculation. To presumption the utilization fig by benignant type, spell to your restock limits show and reappraisal your utilization by retention type.”

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The crushed I moved this to the bottommost of the article, adjacent though it is having the biggest interaction connected sellers close now, is due to the fact that we request to instrumentality the aforesaid attack arsenic we item for handling Excess Inventory and Sell Through Rate successful the IPI score.

This metric is chiefly governed by past income velocity.

That means that arsenic you summation your wide sales, your bounds volition increase. Here are the steps we recommend:

  1. Pull backmost oregon discount stale inventory to marque further country successful your allotted magnitude of units.
  2. Only restock your fastest-moving items. This whitethorn mean not restocking immoderate profitable, slower-moving items until your income velocity allows for your restock bounds to beryllium hit.

This besides means that arsenic your velocity picks up implicit Q4, your restock limits should besides rise.

Monitoring Inventory Matters

To beryllium palmy connected the platform, you request to instrumentality an progressive relation successful your Amazon inventory management.

In anterior years, simply avoiding restocks was enough.

However, these caller requirements necessitate a greater absorption connected monitoring sell-through complaint and retention utilization astatine Amazon.

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Prepare present to enactment your Amazon selling and income goals for the coming vacation season.

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Image Credits

All screenshots taken by author, August 2021

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