As an Amazon seller, understanding that proper Amazon inventory management directly impacts your success is important to realize before you start sourcing inventory. Sourcing and financing your inventory can make all the difference in how you’re able to grow your business and spread your brand across Amazon. In this article, we dive into what you need to do to properly manage your Amazon inventory.
If you need cash in your bank account to finance your Amazon inventory, you’re not alone. Amazon typically only pays sellers once every two weeks, causing stock outs before you have the cash to buy more inventory. Payability solves this problem by providing sellers with daily cash flow so you can buy inventory at the speed it’s selling. For a 2% flat fee you can sign up and get funded as fast as today.
Why Amazon Inventory Management Is Important & How to Be Successful With It
Amazon is a huge marketplace with millions of active sellers trying to top each other in pretty much every product category you can imagine. Competition can be fierce and the fight for the buy box is real. You’ve got to stay on top of your inventory to be competitive against other sellers, but you also need to do it in order to save time and money.
Not having a handle on your inventory can mean running out of inventory, losing the buy box, or extra fees from the Fulfilled by Amazon service. Losing the buy box can cost you thousands of dollars in sales and potentially can take months to win back.
What does it mean to properly manage your Amazon inventory? Here’s a list of the 7 most important things you need to do to have success at Amazon inventory management:
1. Use an Amazon Inventory Management System
Having an Amazon inventory management system can solve many of the other important aspects on this list by automating much of it for you. A good system will give you up to date information for how much inventory you have in stock, what your sales are, and automate the process of implementing new inventory into the system. It can also give you a better handle on theft or shrink throughout the supply chain.
2. Keep Your Inventory Stocked
The worst thing you can do as an Amazon seller is run out of inventory. This could lose you the buy box and cost you bad reviews for slow delivery. Instead, you should be proactive about managing your inventory by continually keeping your inventory levels high. This will make your customers happier and it will help you build a successful brand throughout the marketplace. Your sales will grow faster if you never run out of inventory.
Cash flow is a big problem for many Amazon sellers. Since Amazon only pays every two weeks, many small businesses struggle with replenishing their inventory quickly. The solution to this problem is Payability, who will pay you today for yesterday’s Amazon sales.
Check out this Payability seller’s story:
For only a 2% fee you can grow your Amazon sales and never run out of inventory. They can get you funded in as quick as 1 day, which can help you keep the buy box by always having plenty of inventory on hand for potential sales.
3. Organize Your Product & Vendor Information
Ordering new product is a nightmare if you’re not prepared to do it quickly. The easiest way to prepare is to have all of your product and vendor information organized and at your fingertips. It will speed up your ordering process and help you get inventory back in stock when you need it.
You should easily be able to find the information necessary to contact any vendor you use and order new products. This includes the business contact information, SKU numbers, and all pricing information necessary to make ordering decisions. A good inventory management system should automate most of this for you.
4. Create Accurate Purchase Orders
Suppliers aren’t always quick to deliver, and they don’t always have the best communication levels. This can create some issues for you if you provide incorrect information when submitting a purchase order.
For example, your inventory order could be held up due to incorrect payment information or an inaccurate SKU number. That order could get thrown into a reach out pile and it could be several days before you hear about the error. This could cost you valuable time in replenishing your inventory.
Additionally, providing inaccurate information could cost you money. This mistake could cause you to order too much inventory, costing you more money than you budgeted. It could also cause you to order too little inventory, preventing you from getting the stock levels you need to grow your business. Using an inventory management system can take away a lot of the potential for human error in these order processes.
5. Properly Record All Inventory and Sales
The only way you’ll know where your inventory is, and how much you need at any given time, is to accurately record the inventory you purchase and the sales going out the door. This will keep your inventory levels current and help you set minimum standards for when you need to order more. This simple, but effective, strategy will keep your inventory stocked and you in business.
While an inventory management system will help you keep your numbers straight, you can’t buy inventory if you don’t have the cash in the bank.
According to Victoria Sullivan, Marketing Manager at Payability (an Amazon Financing Company):
“Your success on Amazon is dependent on your ability to turn as much inventory as you can at the fastest rate possible. Since Amazon is such a fast-moving marketplace, many sellers will buy inventory, sell out in 1-2 days and have to wait 14 days to get paid. Sellers can lose sales and miss out on the ability to scale their businesses while waiting to get paid.”
With Amazon paying sellers every two weeks it can be difficult to find the funds to replenish inventory. Payability can fund you in as quick as 1 day. For only a 2% fee you can get paid today for the sales you made yesterday. . You can sign up through an online form and get funded by tomorrow.
How to Source Your Amazon Inventory
Sourcing your Amazon inventory can be done by many of the same methods as a traditional retailer, but on a much smaller scale. You don’t need as much inventory on hand in the marketplace to be successful as you do in a physical retail store. The exact way you go about sourcing your inventory really depends on the type of Amazon products you’re selling.
Typically you’re either selling a unique product that is tied to your brand, or you’re reselling someone else’s branded products. An example would be if you’re an authorized Apple reseller then you could sell their Macbooks in your store. Or you might be a reseller if you focus on product arbitrage where you find cheap products in bulk and resell them on Amazon.
Unique Product Sellers
If you’re selling your own product then the hardest part about sourcing inventory is finding the right manufacturer or distributor. The right one for you is going to not only be able to provide you with a product that meets your quality standards, but they’ll also be able to do it as quickly as the lead time you need.
Most distributors you’re using who just put your logo on their product can typically replenish your inventory much faster than it would take to do a whole manufacturing run from scratch. For small businesses selling on Amazon and nowhere else, this is the preferred method.
If you’ve got your own patent on a product and need to do a manufacturing run every time you replenish inventory then you’re better off selling in more places than just Amazon because you’ll likely have to order very large quantities of products every time you complete a run do to the high costs of manufacturing a small amount of items.
Some things to look for in a distributor are:
- Speed: How fast do they process and ship inventory orders?
- Reliability: Are the products always the same level of quality?
- Communication: How easy is it to pick up the phone and talk to them? Can you get a response via email the same day you submit an purchase order?
- Experience: How familiar are they in working with Amazon sellers?
If you don’t like the answers to some of these questions then you’re likely not going to like your experience with that distributor. You may be better off finding one that knows how to work with Amazon sellers and can easily get your inventory restocked in a timely manner every single time you need them to.
Many Amazon sellers are resellers, selling products that don’t have their own brand on them. Sourcing that kind of inventory is very different than if you’re selling your own unique products. For one, it’s much easier to find a distributor that can process orders quickly.
This is because they don’t have to put your logo on the product and they don’t have to worry about your quality levels. The product is what it is, and it will look the same and operate the same no matter where you get it from. In fact, you’ll often receive products directly from the manufacturer who stamps their own logo on the product. This just increases the potential for a reliable distribution channel.
If you’re sourcing products from another distributor you can use many of the same attributes above to find the right one. For these products you should pay close attention to detail in your distributor contract. This is where you could be losing money to the distributor or you could be required to purchase larger amounts of inventory from them than you’re able to.
The other way to source inventory as an Amazon reseller is through arbitrage. Essentially this means finding products at discount prices and then reselling them at market. Many specialized Amazon stores make plenty of money with this effort if they’re able to purchase items at a discount in bulk.
Sourcing arbitraged inventory at a discount can be a lot of work. It takes research, a constant level of shopping, and keeping your ear to the ground for liquidation and bulk sales. It can be difficult to keep inventory levels stocked for products if you don’t have a consistent supplier source to replenish your inventory. Reselling products from distributors is a safer bet if you’re looking to build a long-lasting business.
How to Finance Your Amazon Inventory
Regardless of how you source your inventory items you’ve got to find a way to pay for them, and the way you find the cash flow to make these payments won’t change regardless of your supplier. Many Amazon sellers don’t have the needed cash flow to grow their business and keep their inventory levels high enough to retain the buy box or have products to sell their customers at any given time.
Amazon doesn’t pay their sellers but every two weeks. This makes it extremely difficult for small businesses, or independent sellers who only sell a few products, to find the cash necessary to keep their products in stock. Financing can be a solution to this problem by getting you money faster so you don’t ever run out of stock.
There are many financing options out there for Amazon sellers looking to keep their inventory from going out of stock. From short term loans to a business line of credit to credit cards. Each provides it’s own unique strengths, but all of them come up short in costs. None of them are an affordable solution if you need financing to consistently finance your inventory.
Our Recommended Amazon Inventory Financing Solution: Payability
The best solution out there to finance inventory on Amazon is accounts receivable financing from Payability. They finance your recent Amazon sales so you can get paid on them within 1 day instead of waiting two weeks. Their financing costs 2% of the sales you’re financing and there’s no debt payments because it’s not a loan. It’s the fastest financing option for Amazon sellers.
Victoria Sullivan, Marketing Manager at Payability says:
“Payability is the only financing solution that moves at the speed of an Amazon business. Next day payments allow sellers to immediately reinvest those profits back into their business, turn more inventory and avoid a stockout. Daily payments give sellers the ability to invest in inventory faster and more often which gives them a competitive advantage.“
If you’re looking to finance your Amazon inventory to protect your buy box or to actually grow your sales, look no further than Payability. This fast and flexible alternative is the best option on the market today. They can be the solution you’ve been needing to finally make your Amazon store the business you want it to be. Fill out an online form today and you could be funded in as quick as 1 day.
The Smart Hack
There’s plenty of ways to source Amazon inventory, depending on what type of products you’re selling. The best method is finding a distributor that you’re comfortable with who’s easy to communicate with and who can replenish your inventory quickly. The tricky part of restocking your inventory is often paying for it.
The best Amazon financing solution on the market today is a daily payments solution from Payability. They will forward you 80% of your Amazon earnings every business day. The remaining 20% stays in a reserve to cover returns and chargebacks and is released to you on Amazon’s 14 day payment schedule. The approval process is incredibly fast. Many sellers sign up and get their first payment the same day.