Everything You Need to Know About FBA Inventory Management

Feeling confused about FBA inventory management and don’t know what steps to take to make sure you are on the right track? Keep reading to learn everything about the FBA selling experience.

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FBA, also known as Fulfilment by Amazon, is a popular service provided by Amazon. It can really help businesses simplify the logistics problem, and hence has the potential to improve any eCommerce venture’s sales strategy.

However, not all businesses know what it is, how it works, and how it can be of benefit to them. Not only that, but there is also a lack of knowledge when it comes to managing FBA inventory, which can seriously impact the overall FBA experience!

If you have been struggling with finding accurate information on the aforementioned topic, allow us to help you. Keep scrolling and find out everything about FBA, FBA inventory management, and Amazon FBA inventory management software.

Contents:

  • What is FBA?
  • Pros of FBA
  • Cons of FBA
  • FBA Tips
  • Streamlining the FBA Experience with an FBA Inventory Management Software
  • Conclusion

What is FBA?

Fulfilment by Amazon, or FBA, is a service offered by the eCommerce giant Amazon. Through this service, third-party sellers are given the opportunity to outsource their order fulfilment and shipping processes to Amazon. To put it simply, FBA entails that sellers sell, and Amazon takes over from there to actually ship the products. 

So, how does it work? Well, it’s actually quite simple and anyone with an Amazon seller account can do it easily. All you have to do is send your own products to Amazon. Amazon then warehouses everything and as orders come in, it is Amazon’s responsibility to process them properly; which includes all major fulfilment processes such as pick, pack, and ship. It’s kind of like all you have to do is sell your products and make sure Amazon is adequately stocked up on them – that’s all! Everything else is taken care of by Amazon itself without any hassle for you. 

Businesses that don’t have a lot of space and don’t want to spend a lot of money acquiring it can really benefit from Amazon FBA. Similarly, businesses that don’t want to spend money on streamlining fulfilment can leave it to Amazon and Amazon will step in and take care of everything without requiring a lot of effort. It is also a great option for smaller businesses that don’t really have a strong fulfilment framework to rely on, as it takes away the need to do that and instead, equips them with just the right logistical support they need.

One of the most important things that you need to know about FBA is that it can be a little costly. It does depend on a lot of factors, but you need to set aside a good amount of budget in order to actually get the most out of FBA. 

Some factors that do contribute to the overall cost of your Amazon FBA experience includes dangerous vs. non dangerous goods, fulfilment fees, inventory storage fees, and long-term storage fees. The options you pick will impact your overall budget, so it is generally a good idea to be mindful when choosing your course of action for each of these. 

Another thing that you should keep in mind is that with Amazon FBA, you can get an inventory health report. This is a report that Amazon generates and provides all its sellers, and it can give you a comprehensive breakdown of their inventory and price ranges as well as other important details that can give them a better idea of what pathway they should take.

Pros of FBA

Let’s have a look at some of the pros that selling with FBA can give you.

You get complete logistics support

One of the most challenging aspects of eCommerce is logistics and streamlining it in connection with your online activity. With FBA, you don’t need to worry about any of it. Amazon takes care of logistics for the most part,which makes it easier for you to focus on other elements such as sales, marketing, and customer care. With the weight of fulfilment off your shoulders, it becomes easier for you to actually work towards growing your business, which is more or less what every business wants.

You get all the benefits of Amazon Prime

If you sell with FBA, your products will automatically get the Prime member badge. The main perk of this is that it will give you the Prime free shipping status and as such, your customers can get free shipping. You will also be eligible for Prime shipping times, which is an additional benefit. Not only that, but having the Prime status also means that you don’t have to pay or charge premium shipping rates to enable free shipping as you normally would, since all of that is already included in your FBA services.

You have access to 24/7 customer support

If you are worried about something or have some confusion about the FBA services, you can simply reach out to Amazon’s customer support team. This customer service is available 24/7, which means that Amazon’s platform can be conveniently used if you need help with anything. This also leads to easier management, as you have resources readily available and hence, any problems that you may face can very easily be tackled. Thanks to this, you are more or less in control of your fulfilment process at all times and can benefit from complete visibility despite your fulfilment having been outsourced.

You can manage multi-channel fulfilment

The best part is – Amazon FBA is not just limited to Amazon FBA! In fact, you can manage your fulfilment on multiple channels with FBA. This is a great advantage and can really help you boost your overall sales and revenue. By using Amazon Multi-Channel Fulfilment (MCF), you can sell FBA products on various channels, including eCommerce platforms like eBay and BigCommerce. Amazon still handles everything fulfilment related, but you get the edge of selling on different platforms and hence, benefiting from boosted sales, which can be your main tool to grow as a business going forward.

Cons of FBA

It may increase your overall spending

FBA is not a cheap option. In fact, it can increase your overall spending. Therefore, FBA is certainly not the best fit for low-cost items. You have to be extremely selective about the products you let FBA handle. To make sure that you are making the right choice, you can use the FBA calculator offered by Amazon and see whether or not using FBA for your products will be a profitable move. Needless to say, you should only go forward and utilise it if it is profitable because otherwise it can seriously dent your overall spending and hence, may not be the best decision for your business. 

It requires highly advanced FBA inventory management

When selling with FBA, you simply cannot compromise on inventory management. Whether it means getting a robust FBA inventory management software or investing in other advanced technology forms, you simply must do everything that you can to make your inventory management processes more advanced. Essentially, you have to go the extra mile to make sure that the products FBA has to deal with are prepared accordingly. Not only that, you also have to make sure that no matter what happens, Amazon is stocked up on your products at all times otherwise all you’ll get are missed sales!

It may limit the impact of your branding

Also the inside packaging of your orders will be yours, the boxes they are shipped in will have Amazon’s branding and logo. This diminishes the impact of your branding and may be a serious disadvantage for businesses that are trying to solidify their presence as a brand. After all, when the order is shipped, the first thing everything will see are Amazon’s boxes and following that, they may associate the contents of the package solely with Amazon as well. Again, if you are not yet working on strengthening your brand, this con should not outweigh all the benefits provided by FBA, but is still something to be considered. 

It may lead to you having to deal with more returns

Some businesses have reported seeing an increase in the number of returns they have to deal with after selling with FBA. The reason this used to be quite a problem was that all the returns that took place were sent to Amazon first, and then you had to wait to get them back to your facility. Not only did this cause an unnecessary delay, but it also meant that your reverse logistics process was complicated without any major cause. However, it must be noted that this is not that much of an issue anymore, considering that Amazon does not allow customers to send returns directly to your facility. This helps you streamline your inventory to a great extent and also allows you to deal with returns with more control, which is what you need for an improvement in reverse logistics. 

FBA Tips

And now, let’s have a look at ways you can improve your FBA experience as a whole. Remember, the list of these tips is not extensive by any means, and the adjustments, improvements, and enhancements you bring to your experience will more or less be dependent on what exactly it is that you plan to improve. 

Use of analytics tools 

Perhaps the most effective way you can improve your FBA experience is with the use of analytics. Analytics will help you determine exactly what steps you need to take in order to make your journey with FBA more profitable. Using these tools, you should gauge which categories are the most popular to sell in and then base your strategy on that. Analytics can also allow you to learn from bestsellers on Amazon, and following their footsteps you can also make decisions that will help you ultimately dominate the platform by yourself as well! 

Make smart decisions regarding product selection

Your product selection will definitely make or break your FBA experience. In deciding which products you should actually sell on Amazon using Amazon FBA, think of sales rank as well as what you get in exchange. So, if you decide to sell high-ranking products, you will have to deal with a lot of competition. On the other hand, if you break into the market for low-ranking products, you can easily become a leading seller in no time as there will be less competition. Needless to say, there are pros and cons to both of these sides to the equation. Make yourself aware of these and pick the option that best aligns with your journey.

Establish your brand

As mentioned already, Amazon can be quite a competitive market. Your best brand is creating a brand image that genuinely attracts customers and gives you the edge that will push them into choosing you over your competitors. This is a long-term effort and you shouldn’t expect magic results; but just a little bit of hard work in this direction can really help you tap in on wonderful sales opportunities and take your business forward on Amazon as well as other platforms that you sell on with FBA.

Start small

Think big, but start small. There is no need to list every single product you own as an FBA item. After all, every item that you pair up with Amazon FBA will require an investment because it will cost money for storage and warehousing. Therefore, having a highly selectively curated collection will work in your favour as it will cost you less money, at least in the initial stages of your FBA experience. Then, as you gain more confidence and familiarise yourself with FBA, you can slowly grow your selection and add more products to the list that will help you do more in general as well. 

Focus on streamlining your inventory

For FBA success, you really do have to focus on streamlining your inventory. There is no other way to go about it. The best way to do this is with help of a specialised FBA inventory management system – as this will help you maintain adequate inventory levels and have a clear view of your activity in relation to FBA so that the actual back end of your business and FBA are well-aligned together. By doing this, you can get your inventory under control and just this one thing can help you achieve so much.

Streamlining the FBA Experience with an FBA Inventory Management Software

So, why do you need an FBA inventory management system? 

It is mainly because advanced inventory management is the only way you can actually streamline your FBA experience. Remember: although FBA takes care of all your logistics, it is still your job to make sure that you have the right inventory levels and are always stocked up. This can only be done with the help of advanced inventory management solutions such as an Amazon FBA inventory management software. 

Not only that, but there needs to be a strong connection between your Amazon portal and your inventory, which can be created with the help of a robust FBA inventory management system. This is because such a system will offer you integrations that allow you to connect your account to different solutions, and as such, will take your FBA experience to the next level. 

Since Amazon FBA requires consistent effort, especially in the inventory area, it is your responsibility to make sure that this particular aspect is being fulfiled, and you can do that conveniently with the help of an FBA inventory management system. 

Just make sure you pick an advanced solution like Canary7 – and you will be good to go just like that!

Conclusion

Amazon’s FBA is a great opportunity for all businesses, as it takes away the burden of managing fulfilment. However, there are a few pros and cons you need to consider before you actually decide whether FBA is for you or not. Not only that, but if it is the way to go for you, then you have to take extra care and implement a few best practices; especially if you want to see the best results – one of which is paying attention to your inventory. 

When it comes to the inventory, FBA inventory management can easily be executed with the help of a robust inventory management solution like Canary7!

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