Most eCommerce sellers start out with Amazon’s Fulfillment by Amazon (FBA) service, which allows them to tap into a powerful logistical platform that serves millions of Amazon shoppers. But what happens when you expand to other platforms? How do effectively handle your omnichannel inventory management? Doing so is a great way to secure your customer base and grow your brand, but it also brings new challenges.

Managing inventory across marketplaces can be complex and challenging if you’re a company or aggregator that oversees multiple brands and sells through various sales channels. Keep reading to learn about the unique logistical challenges you face when managing multiple brands, along with practical solutions for optimizing omnichannel inventory management.

The basics of omnichannel inventory management tracking

Maintaining accurate and up-to-date information about your inventory levels helps you make informed decisions about restocking, pricing, and even promotions. It also avoids stockouts, which can lead to lost sales or, worse, lost customers.

If customers order a product that’s out of stock, that can lose their business, damage your reputation, and, if it occurs frequently, drive them to a competitor. With accurate inventory information, you can quickly identify which products are running low and restock them before they sell out, no matter how many platforms you operate on.

To accomplish this, you’ll need real-time omnichannel inventory management software. A robust solution will also provide a clear understanding of which products sell well and which don’t. Based on that information, you can then adjust your purchasing and marketing strategies.

For example, if you notice a particular product is moving at a fast pace, you may want to order more of it or increase its price to slow its sales velocity. Conversely, if an item sells slowly, you might choose to reduce its price, add it to bundles to clear out that stock, or simply discontinue it altogether. Or, if you notice it sells better on one platform than another, you can adjust marketing strategies for that product to prioritize the platform where it’s most popular.

Omnichannel inventory management tracking also improves your cash flow management: When you know exactly how much inventory you have and how fast it sells, you can better predict when you’ll need to restock and how much money you’ll need to spend. This allows you to plan and avoid unexpected (or unnecessary) expenses like extra warehousing costs or having too much of a slow-moving item due to premature ordering.

Here again, inventory management software comes to the rescue. These systems allow you to track your stock levels in real time, generate reports, and even set up alerts for when levels drop below a certain threshold. As a result, you’ll stay on top of your inventory and ensure you always have the products your customers want in stock.

The complexities of omnichannel inventory management

When you sell on multiple channels, omnichannel inventory management becomes complicated due to the sheer number of products, brands, and sales channels involved. In addition to stock levels, you also have to oversee other aspects like seasonal fluctuations, promotions, and the impact of external factors like market trends and economic conditions.

Each sales channel has unique inventory management characteristics, such as different order processing times, shipping methods, and packaging standards. Consequently, you must juggle various tasks simultaneously to ensure smooth operations. Below are the inventory management requirements for some of the most popular sales channels:

Amazon

• Adhere to Amazon’s FBA requirements, such as packaging, labeling, and product preparation
• Comply with Amazon’s storage and restock limits and Inventory Performance Index (IPI) thresholds
• Understand Amazon’s fulfillment and long-term storage fees to minimize costs
• Create product listings according to Amazon’s guidelines, including accurate inventory levels
• Stay on top of Amazon’s policies regarding product restrictions and prohibited items.
• Maintain a 28- to 60-day stock for all items in FBA based on sales throughput to avoid penalties and additional fees
• Restock products in quantities to avoid product placement fees wherever possible

eBay

• Ensure accurate inventory levels to avoid overselling and order cancellations, which can negatively impact your seller performance rating
• Adhere to eBay’s listing requirements and policies, which entails creating precise and accurate product descriptions and images
• Understand eBay’s fee structure — including insertion, final value, and listing upgrade fees — to optimize inventory costs
• Manage fulfillment processes according to eBay’s guidelines, such as offering various shipping options and maintaining accurate delivery times

Walmart Marketplace

• Comply with Walmart’s listing and product content guidelines, including accurate inventory levels and product information
• Adhere to Walmart’s shipping and delivery requirements, such as offering free shipping options and meeting the specified delivery times
• Understand Walmart’s fee structure, which involves referral and subscription fees for fulfillment services
• Ensure a seamless returns process in accordance with Walmart’s return policy and guidelines

Shopify

• Manage inventory levels and sync them across sales channels, as Shopify allows you to sell on different platforms like Facebook, Instagram, and Amazon
• Comply with Shopify’s product and content guidelines, including accurate product information, images, and pricing
• Select and integrate the right shipping and fulfillment options, like third-party logistics (3PL) providers or in-house fulfillment
• Understand Shopify’s fees, including subscription, transaction, and payment processing fees

Key elements of omnichannel inventory management

Omnichannel inventory management involves monitoring your company’s stock levels, tracking sales and orders, and ensuring products are in stock and available for purchase across your various channels.

Every additional sales channel increases the complexity of this process, which is why overseeing inventory effectively is critical to omnichannel success. A solid omnichannel inventory management and tracking system can ensure you have enough goods to meet customer demand while also lowering the risk of stockouts or overstocking. Additionally, robust inventory management can reduce operational costs by minimizing waste and maximizing efficiency.

To develop strong inventory management, multi-channel retailers must focus on core principles like:

• Stock levels:
  Maintaining appropriate stock levels is essential to avoid stockouts and overstocking. The former can lose sales and anger customers, while the latter can increase storage costs and risks inventory becoming obsolete.
• Reordering:
  Timely inventory reordering ensures you have enough stock to meet consumer demand. Establish an efficient reorder process that considers lead times, order quantities, and safety stock.
• Quality and safety standards:
  Your inventory must meet quality and safety standards for every platform you sell on. Regularly inspect your stock and remove damaged or expired items to maintain a high level of quality.

Best practices for omnichannel inventory management tracking and forecasting

To facilitate accurate inventory tracking, you need to adopt strategies that enable you to oversee your stock across multiple brands and channels, such as:

• Regular stocktaking:
  Conduct regular inventory audits to support precise stock counts. An inventory audit is a comprehensive review of your current levels, including the quantity and condition of products, as well as the accuracy of your inventory records, while stocktaking is when someone physically counts the stock in your warehouses. Running audits regularly will help you identify any discrepancies or errors in your inventory records and verify that your stock levels are up to date.
• Monitor inventory levels:
  Keep a close eye on stock levels across all your brands and channels so you know when to reorder and where to allocate stock. You should know your throughput or rate of sale, how much inventory you have at any given period, and the time it takes to replenish. By holding a base amount of goods, you ensure enough on-hand stock to meet customer demand and avoid stockouts before a resupply arrives. In this regard, your tracking software has to update in as close to real time as possible, or you’ll have to split inventory.
• Update records:
  Ensure your inventory records reflect changes in stock levels, returns, and damaged items. Having a real-time inventory management system that automatically updates stock levels as you make sales will greatly reduce manual workload and errors.

Forecasting also plays a vital role in inventory management. By accurately predicting consumer demand, you can keep the right amount of inventory on hand to prevent stockouts and overstocking and thus protect your sales and cash flow.

To hone your forecasting accuracy, analyze the following factors:

• Historical sales data:
  Review your past sales data to identify trends, seasonality, and other factors that influence demand. Most marketplaces will display each product’s throughput and rate of sale per, which you can add together to obtain a clear picture. Meanwhile, a good inventory management system will collate all that data for you.
• Promotions and marketing activities:
  Factor in any planned promotions or marketing activities that may affect customer demand for specific products.
• Market trends:
  Keep an eye on industry developments that could affect consumer preferences.
• External factors:
  Consider the impact of external factors, such as economic conditions, competitor activities, and changes in consumer behavior.

Your inventory turnover ratio on Amazon is a crucial KPI to monitor for your inventory management strategies. Check out our article on Amazon inventory turnover to evaluate the effectiveness of your management.

Invest in omnichannel inventory management software solutions

The market is flooded with inventory management software for multi-channel models. However, the most important functionality to look for is the ability to update in real time (or as close to real time as possible). That allows you to remain up to date on your stock levels at all times.

Consider investing in omnichannel inventory management software solutions that cater specifically to your type of business. These solutions are a must-have to help you track inventory across multiple channels, automate stock-level updates, and provide valuable insights for clear decision-making.

Important features to look for in robust inventory management software are:

• Multi-channel integration:
  Choose a solution that integrates with all your sales channels so you can manage inventory from a centralized dashboard. You’ll also want integration into all your fulfillment providers.
• Real-time inventory updates:
  Real-time inventory updates are non-negotiable, as they ensure you always have an accurate picture of your stock levels. That means tracking stock in, stock out, and shipments.
• Reporting and analytics:
  Advanced reporting and analytics features reveal insights into your inventory performance and identify areas for improvement.
• Forecasting and replenishment:
  Look for software with demand forecasting and automated replenishment features, as these enable you to maintain optimal inventory levels and avoid stockouts.

MyFBAPrep’s Inventory Tracker Tool

MyFBAPrep’s Inventory Tracker tool allows you to follow your stock across various channels without the hassle of manually updating everything.

Simply enter the date when you performed an inventory check and mark the product check complete when finished. Then, enter how frequently you run checks to determine when to do it again. In the Products Overview section, you’ll see the number of items in your inventory, their total value, and any products that you need to restock.

Each time you run an inventory check, reset the date and checkboxes and repeat the steps above. You can quickly run your inventory reports in your management software and plug those numbers into the tool to gain a bird’s-eye view of your overall inventory with ease.

Download MyFBAPrep’s free Inventory Track to start tracking your inventory.

Omnichannel inventory management with FBA

FBA offers a multi-channel fulfillment solution that allows brands and aggregators to transfer the bulk of fulfillment and customer service to Amazon. However, even in the program, you’ll still have to handle your own omnichannel inventory management.

In addition, like with a 3PL, introducing FBA will require adding new warehouses and types of warehouses to your inventory management workload. It introduces new challenges like managing inventory responsibilities in terms of product prep and compliance with Amazon regulations, which means you’ll need infrastructure to manage your FBA-specific inventory.

FBA benefits

The FBA program provides online retailers with a comprehensive solution to store, pack, and ship their products. Amazon handles the entire fulfillment process on behalf of the retailer, including warehousing, order processing, shipping, and customer service.

This frees sellers to focus on other aspects of their business like marketing, product development, and brand management. Other benefits include:

• Access to Amazon’s extensive customer base:
  Tap into the marketplace’s massive following and enjoy exposure to millions of potential buyers.
• Prime eligibility:
  FBA products are eligible for Amazon Prime, which offers shoppers free, two-day shipping and other perks that can increase sales and customer loyalty.
• Global fulfillment network:
  With Amazon’s extensive network of fulfillment centers, you can store your inventory closer to buyers to reduce shipment times and costs.
• Customer trust:
  Amazon is a trusted marketplace, so shoppers are more likely to purchase from FBA sellers knowing the platform handles the delivery process.
• Streamlined operations:
  As an aggregator managing multiple brands, FBA can simplify your operations by consolidating your inventory storage and fulfillment under one provider.
• Multi-channel fulfillment:
  FBA can also handle order fulfillment for sales made through other channels, such as your own website or other marketplaces.

FBA challenges

• Cost:
  FBA fees can quickly add up with storage fees, fulfillment fees, and additional charges for long-term warehousing. You’ll need to analyze the cost structure carefully and ensure it’s financially viable for your business.
• Inventory management complexity:
  Overseeing inventory for multiple brands and products can be difficult, especially when dealing with various sales channels. You’ll need to establish effective processes and embrace inventory management software to keep track of stock levels and ensure smooth operations.
• Amazon’s rules and regulations:
  FBA sellers must adhere to Amazon’s strict guidelines and policies, which include requirements for product listings, packaging, and inventory quality. Failure to comply can lead to account suspension and other penalties.
• Limited control over fulfillment:
  By outsourcing your fulfillment to Amazon, you relinquish some control over the logistical process, which can cause issues with maintaining consistent branding and customer experiences across different channels.
• Competition:
  Selling on Amazon means competing with numerous other vendors, including the marketplace itself. You must develop strong marketing strategies to differentiate your brands and products from the competition.

Managing inventory for FBA

Properly managing FBA inventory allows you to maintain sales, manage throughput, and reduce total costs and fees. For example, throughput (the rate at which products sell, roughly calculated by time spent in Amazon warehousing) impacts your total FBA restock levels. In turn, restock levels impact how much inventory you’re able to ship to Amazon and therefore sell via FBA.

You’ll want a solid grip on sales velocity, demand for products, and how marketing and promotional events (like Amazon Prime) impact sales so you can keep products in stock. Many sellers also create duplicate listings that their 3PL can fulfill in case stockout events occur, especially during big sales days.

• Track and understand your replenishment lead times. If FBA prep adds a week to shipment and shipment takes a week, you’ll need that incorporated into replenishment cycles.
• Keep in mind that inventory inbound to FBA counts as FBA inventory.
• Through the Ships in Product Packaging program, most brands can ship in their own branded packages while reducing fees for standard FBA fulfillment. To achieve that, you’ll need a prep partner like MyFBAPrep to solidify your packaging, labels, and boxing. However, this will also ensure you don’t need custom boxing for FBA products, which simplifies inventory splitting and management.
• Make sure your inventory management software can manage split inventory streams. You can use FBA to fulfill multi-channel orders, but if you use a 3PL or your own fulfillment solutions, that FBA inventory is a separate inventory source that must be tracked separately.
• Use your knowledge of inventory throughput, geographic sales data, etc., to better manage inbound inventory to Amazon so you can reduce placement fees.

Amazon’s Inventory Performance Index (IPI)

Amazon’s IPI is a metric specific to marketplace sellers, particularly those who use FBA services. The IPI helps you measure the efficiency of your inventory management on the platform.

While it may not directly impact inventory management across other channels, understanding your Amazon IPI does offer valuable insights that can be applied to your overall inventory management strategy.

Unlock the secrets to mastering Amazon’s IPI by diving into our detailed guide.

Inventory optimization tactics designed for multi-channel brands

As we’ve discussed, aggregators and other multi-channel brands face unique challenges when optimizing inventory. So, you need to employ strategies tailored to this role to streamline operations, reduce costs, and improve overall efficiency.

Consolidation

Streamline your inventory management by consolidating your supply chain where possible. This may involve negotiating bulk discounts with suppliers or centralizing inventory for multiple brands in one main warehouse.

Implement an effective SKU system

Create a unique SKU (stock-keeping unit) system that allows you to identify products across various brands easily. A SKU gives you clearer insight into inventory so you can make data-driven decisions.

Data analytics

Analyze your inventory data to identify patterns, predict trends, and detect potential issues. You can home in on best-selling products, seasonality, and other factors influencing your stock requirements.

Automation and AI tools

Leverage automation and AI tools to improve your inventory management processes. These streamline repetitive tasks, optimize inventory levels, and forecast demand more accurately.

Cross-docking and just-in-time (JIT) strategies

Implement cross-docking and JIT strategies to reduce inventory holding costs and boost the efficiency of your supply chain.

Cross-docking involves directly transferring products from the supplier to the customer, which bypasses the need for storage. Meanwhile, JIT strategies aim to minimize inventory levels by ordering products only when necessary.

Use ABC analysis for better prioritization

ABC analysis is a method of classifying items into three categories (A, B, and C) based on their importance to a business. Items in category A are considered the most important and should be closely monitored and managed, while items in category C are deemed the least important and need less attention. Categorizing products will help you prioritize your inventory management efforts and focus on the items that are most important to your business.

Employ first in, first out

A helpful strategy for intelligent inventory management is the first in, first out (FIFO) method. This approach ensures the oldest products are sold first to avoid expiration. It also reduces waste and ensures customers receive only fresh products. This is especially relevant in areas where you’re selling products with an expiration date. But, keep it in mind even if you’re selling blocks of wood. Moving inventory out faster reduces damage and the chance you’ll have to throw the product away.

Vendor-managed inventory (VMI)

Consider adopting a VMI program, wherein your suppliers are responsible for managing and replenishing your inventory. This approach reduces the burden of inventory management while ensuring optimal stock levels. Just keep in mind it can get complicated if you work with multiple vendors.

Demand-driven material requirements planning (DDMRP)

Look into the DDMRP methodology, which combines aspects of both the traditional material requirements planning (MRP) and the JIT systems. DDMRP focuses on demand-driven inventory management to help you optimize stock levels based on customer demand.

Adapt to marketplace changes

As a multi-channel brand or aggregator, staying on top of fluctuating market trends and consumer behaviors is essential for long-term success. Keep yourself up to date on changing policies and standards and be ready to pivot when necessary.

Further, regularly review your inventory management practices and adjust them as needed to remain competitive in the evolving eCommerce landscape.

Wrapping up — Mastering omnichannel inventory management across channels

Optimizing your omnichannel inventory management is essential to achieve streamlined, efficient, and profitable operations. With the right approach and tools, you can ensure smooth processes on all your platforms.

Omnichannel selling is a powerful strategy for eCommerce professionals, as it diversifies revenue streams and reaches a wider audience. However, managing stock for multiple sales channels can be time-consuming and requires additional resources. To be successful, merchants must have a solid strategy in place and be willing to invest time and effort.

One key element is creating a robust inventory management system. This entails combining regular inventory checks with stock planning, analysis, and reliable software to gain a clear overview of your holdings and identify current and potential problems. By following the best practices we’ve outlined in this article, you can effectively track and manage your inventory and meet customer demand in a timely manner.

Published: June 8, 2023
Updated: July 12, 2024