Amazon’s Fulfillment by Amazon (FBA) services allows merchants to tap into a powerful logistics platform that can serve millions of Amazon shoppers. But what about customers on other platforms?
Managing inventory on this vast marketplace can be complex and challenging if you’re an aggregator who oversees multiple brands and sells through various sales channels.
Keep reading to learn about the unique logistics challenges you face managing multiple brands, along with practical solutions for optimizing omnichannel inventory management.
The complexities of inventory management
When you sell on multiple channels, managing inventory becomes complicated due to the sheer number of products, brands, and sales channels involved.
In addition to stock levels, you’re also responsible for other aspects such as seasonal fluctuations, promotions, and the impact of external factors like market trends and economic conditions.
Each sales channel will likely have unique inventory management requirements, such as different order processing times, shipping methods, and packaging standards. Consequently, you must juggle various inventory management tasks simultaneously to ensure smooth operations.
Below are the inventory management requirements for some of the most popular sales channels.
Amazon inventory management requirements
- Adhere to Amazon’s FBA requirements, such as packaging, labeling, and product preparation
- Comply with Amazon’s storage limits and Inventory Performance Index (IPI) thresholds
- Understand Amazon’s fulfillment fees and long-term storage fees to minimize costs
- Create product listings according to Amazon’s guidelines, including accurate inventory levels
- Keep track of Amazon’s policies regarding product restrictions and prohibited items.
eBay inventory management requirements
- 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, including creating precise and accurate product descriptions and images
- Understand eBay’s fee structure, including insertion fees, final value fees, and listing upgrade fees, to optimize inventory costs
- Manage shipping and handling processes according to eBay’s guidelines, such as offering various shipping options and maintaining accurate shipping times
Walmart Marketplace inventory management requirements
- 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 includes referral fees and subscription fees for fulfillment services
- Ensure a seamless returns process in accordance with Walmart’s return policy and guidelines
Shopify inventory management requirements
- 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, including third-party logistics (3PL) providers or in-house fulfillment
- Understand Shopify’s fees, including subscription fees, transaction fees, and payment processing fees
FBA benefits for aggregators
Amazon FBA provides online retailers 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 allows 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: FBA lets you tap into Amazon’s massive customer base and enjoy exposure to millions of potential buyers.
- Prime eligibility: FBA products are eligible for Amazon Prime, offering customers free, two-day shipping and other benefits, which can increase sales and customer loyalty.
- Global fulfillment network: With Amazon’s extensive network of fulfillment centers, you can store your inventory closer to customers to reduce shipping times and costs.
- Customer trust: Amazon is a trusted marketplace, so customers are more likely to purchase from FBA sellers knowing Amazon 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 for aggregators
- Cost: FBA fees can quickly add up with storage fees, fulfillment fees, and additional charges for long-term storage. As an aggregator, you’ll need to analyze the cost structure carefully and ensure it’s financially viable for your business.
- Inventory management complexity: Managing inventory for multiple brands and products can be difficult, especially when dealing with different sales channels. You’ll need to establish effective inventory management 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 process, which can raise challenges with maintaining consistent branding and customer experiences across different channels.
- Competition: Selling on Amazon means competing with numerous other vendors, including Amazon itself. As an aggregator, you must develop strong marketing strategies to differentiate your brands and products from the competition.
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 Amazon.
While it may not directly impact inventory management across other channels, understanding your Amazon IPI still offers 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, The Amazon Inventory Performance Index Explained and How to Improve Your Score.
Multi-channel inventory management principles
Effective inventory management is crucial for successful eCommerce operations. All multi-channel retailers must focus on core principles like:
- Stock levels: Maintaining appropriate stock levels is essential to avoid stockouts and overstocking. Stockouts can lose sales and anger customers, while overstocking 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 levels.
- Quality and safety standards: Your inventory must meet Amazon’s quality and safety standards. Regularly inspect your stock and remove damaged or expired items to maintain a high level of quality.
Best practices for inventory tracking and forecasting
You need to adopt effective inventory tracking strategies to manage your stock across multiple brands and channels. These include:
- Regular stocktaking: Conduct periodic physical stock counts to verify the accuracy of your inventory records. This will help you identify discrepancies and address potential issues before they escalate.
- Monitoring inventory levels: Keep a close eye on stock levels across all your brands and channels. This enables you to make informed decisions about reordering and allocating stock where it’s most needed.
- Updating records: Ensure your inventory records reflect changes in stock levels, returns, and damaged items. Accurate records are crucial for effective inventory management.
Forecasting also plays a vital role in inventory management. By accurately predicting demand, you can prevent stockouts and overstocking and thus protect your sales and cash flow.
To improve your forecasting accuracy, analyze the following factors:
- Historical sales data: Review your past sales data to identify trends, seasonality, and other factors influencing demand.
- 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 influence consumer preferences.
- External factors: Consider the impact of external factors, such as economic conditions, competitor activities, and changes in consumer behavior.
How effective are your current inventory management strategies? Your inventory turnover ratio on Amazon is a crucial KPI to monitor in this regard. Check out our Understanding Amazon Inventory Turnover article to evaluate the strength of your management.
Invest in inventory management software solutions
Consider investing in inventory management software solutions that cater specifically to aggregators. They help you track inventory across multiple channels, automate stock-level updates, and provide valuable insights for clearer decision-making.
Key features to look for in a 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.
- Real-time inventory updates: Opt for software that provides real-time inventory updates, ensuring you always have an accurate picture of your stock levels.
- 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.
Inventory optimization tactics designed for aggregators
As we’ve discussed, aggregators face unique challenges when optimizing inventory across multiple brands and channels. In response, you need to employ strategies tailored to this role to streamline operations, reduce costs, and improve overall efficiency.
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. This tracks inventory more efficiently so you can make data-driven decisions.
Analyze your inventory data to identify patterns, predict trends, and detect potential issues. You can hone 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.
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.
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.
Learn how to take control of your eCommerce inventory management and boost your business’s efficiency by exploring MyFBAPrep’s guide, How to Track eCommerce Inventory Across Multiple Channels.
Adapt to marketplace changes
As an aggregator, staying on top of fluctuating market trends and consumer behaviors is essential for long-term success. Keep yourself up to date on Amazon’s 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 inventory management as an aggregator
For aggregators, optimizing your inventory management is essential to achieve streamlined, efficient, and profitable operations.
Navigating the complexities of these duties across multiple brands and channels can be challenging. However, with the right approach and tools, you can overcome those obstacles and ensure smooth processes on all your platforms.
Embrace best practices, leverage the latest technology, and be adaptable to changing market trends to optimize your inventory management and position your aggregator business for long-term growth and success.