How to Maximize Your Amazon Profits with Effective Inventory Management

January 20, 2023

A solid Amazon inventory management system is essential for any thriving FBA business, and here are the best practices to get your business's inventory on track

Did you know that a functional inventory management system is one of the most important ways that you can maximize your Amazon profits? Turns out, there are great ways to optimize your business success on Amazon that include proper inventory management. FBA sellers out there take note, because you can cut your losses and aim for more Amazon profits in 2023 with these tips for managing your inventory the right way. 

As FBA sellers ourselves, we know that it's vital for entrepreneurs to focus on the many different aspects of their business in order to maintain and even increase profits. 

Among the plethora of things on your to-do list, the main things include: marketing, growing your brand, finding and launching new products, your Amazon store's traffic, optimizing your store, PPC advertising, and of course, inventory management.

Can You Use Inventory Management to Maximize Profits?

First of all, good inventory management means fewer stockouts and ultimately less chance of losing your product ranking. Being bumped in ranking and visibility temporarily puts all of your hard work and efforts to waste, so this is definitely something you want to avoid. Inventory availability is one of the factors Amazon takes into account when ranking products.

Plus, focusing on your inventory management means that you'll be more informed on what products to sell and when to sell them (timing is everything, right?) - ultimately giving you lots of opportunities as a business owner to maximize your FBA revenue and improve your profits margins. 

Essentially, good inventory management on Amazon is the base of any successful, long-term FBA business. 

Have we peaked your interest yet? Here are some top tips on how to effectively manage your FBA inventory so that you can maximize your Amazon profits and set yourself up for sustainable success in 2023.

Why is Inventory Management Important for Amazon?

Before getting into the tips on how to manage your stock to maximize your Amazon profits, let's take a deeper look at why inventory management should be at the center of your FBA business model. 

Giving more attention to managing your Amazon inventory will also give you space to become more in sync with what is working in your business (and this includes the best sales periods, what sells, and even why it sells). This will mean that you'll have a better picture of what it takes to keep your FBA business running with each coming year. Sounds like a no-brainer, right?

Basically by planning ahead, better coordinating with your inventory supplier, being aware of your lead times, calculating your sales velocity, and even researching replenishable products to sell in your Amazon store are all simple steps you can take to grow your FBA business and brand in a sustainable way. 

Ready to effectively manage your Amazon inventory in 2023 to increase your profits? The following tips will cover everything from:

  • How to prevent inventory stockouts
  • How much inventory to order for each quarter in 2023 to maximize profits
  • Why your marketing plan and inventory management need to be in sync
  • What to do (if) a product suddenly goes out of stock

Apply all or some of these inventory management tips to your business strategy and you’ll be in better standing to maximize your Amazon profits. 

7 Ways Successful Inventory Management Can Increase Your Amazon Profits

Don’t let bad inventory management affect your business’s profitability. These 7 expert seller tips lay the framework for efficiently managing your stock and keeping your Amazon profits up this year. 

1. Have your marketing and inventory management work together

Ordering your products to go with the times when you plan on ramping up your marketing (or know that your sales will boost on specific dates, going from previous years numbers) can seem like a no-brainer, but honestly lots of Amazon FBA sellers can easily make this mistake in their inventory planning. It's a beautiful, delicate balance.

Your marketing plan may be just to up your ad spend during peak sales periods like Black Friday, or, you have a more specific PPC ad strategy to work for you throughout the calendar year. Either way, make sure that you take a look at that calendar before making your next product order so that you don't miss anything.

In this previous blog post, we go into a little more detail about the importance of inventory optimization in your marketing plan

2. Plan ahead 

This is what planning ahead looks like when it comes to your inventory as an Amazon seller: 

  • Making sure you have enough stock if you plan on big deals for Prime Day, etc. 
  • Coordinating your Holiday Planner with your inventory ordering 
  • Knowing your lead times (calculating the time it takes restocking an item, from when the order is made to when it is received in your FBA warehouse).

Don't let over scheduling and under planning ruin your budget and risk any inventory stockouts, which will essentially affect your profits. 

3. Invest in an Amazon inventory management software

Picking the right inventory management software can make all the difference if you want to maximize your profits this year. We are big advocates for personal and customizable Amazon PPC ads for your business, and this strategy should also be applied to your inventory management. 

While there are many free inventory management platforms available (simple ones such as Excel spreadsheets) , allocating some of your quarterly budget for a quality inventory management software system will be worth the investment.

4. Don't let lower predictions lead to stockouts

There is a bit of an art in predicting how much inventory to order based on past trends. But don't worry, this can be hacked! 

First, you need to look at your average sales velocities in the previous quarter. One mistake that some Amazon sellers make is not excluding the days when they were completely out of stock. Doing this will give you a lower average/prediction and you may end up with a (surprising) inventory stockout

Also, make sure you count any suspension days if your product listing was suspended temporarily because of a stockout. These are two key ways to maximize your profits and avoid any last-minute orders or worse, sudden stockouts.

5. Good communication with your inventory supplier

There’s been a lot of talk recently (by us at Mayan as well as other experts in the business) of the importance of choosing the right supplier for your inventory in 2023. While it won’t be exactly like 2020, many predict that in 2023, Amazon sellers will see lots of supply chain issues

On top of choosing the right inventory supplier, you must also be proactive in your communication with them. Effective communication is key in the business world, and this applies to your inventory management as well. Cultivating a relationship with your supplier can make a huge difference, where what could possibly turn into a big delay just becomes a small issue or hiccup in the process. 

6. Don’t be afraid to close any unprofitable product listings

Sometimes if something isn't working, you just have to let it go. What does bad inventory management look like? Keeping items in your inventory warehouse that rarely move (or don't at all). This is one of the easiest ways to lose profits. Don't leave inventory hanging around too long, because it will cost you heavily in warehouse fees. 

Instead, keep your products and your brand fresh by focusing on the products that are profitable for your Amazon business. Close those bad listings if needed and move on!

7. Go for replenishable products to maximize your Amazon profits

Familiar with replenishable products? These are items sold by businesses on Amazon that can easily be restocked before they go out of stock in the marketplace. They are easier to source and they are big sellers, which means an efficient way to maximize your profits. 

While finding the right replenishable products to sell in your Amazon store can be a little difficult at first, replenishable products are also a surefire way to streamline your inventory management and make things easier for yourself and even your supplier. 

How Mayan Can Help You Succeed

From our seller automation tools that can be personalized for your Amazon business such as advertising optimization, Mayan's seller tools are here to help you with your continued growth and success.

If you’re interested in seeing what Mayan can do for your Amazon FBA business, sign up today. We’re excited to show you our platform and run an audit to show you the opportunities our platform can provide. Once we’re aligned on your goals, we can get started bringing your business to the next level. Ready to see how Mayan can help?
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