How to optimize your inventory management process and inventory when selling on Amazon, Etsy, and Shopify

When selling on Amazon and other marketplaces, warehouse inventory management plays a key role. It doesn’t matter whether you use fulfillment from the marketplace, rent your own warehouses, or use the services of third-party companies. Without understanding the situation “at the moment”, it is impossible to achieve an optimal balance between supply and demand. Competent inventory control helps to minimize storage costs and reduces the risk of financial losses due to surpluses.

If your product is often out of stock, customers may turn their attention to competitors, which will lead to a loss of customers and lower sales.

In addition, marketplaces (and especially Amazon) carefully evaluate seller performance. A shortage of goods can lead to negative reviews and a lower rating. This, in turn, affects the store’s position in search results, customer trust, and access to privileged features and programs.

What is Inventory Management?

The main task of Inventory Management is to organize a systematic approach to the control, evaluation and management of stocks of goods in a company or warehouse. In particular:

• planning and forecasting demand based on past market analysis data;
• determining minimum and maximum levels of inventory balances;
• organizing optimal procurement periods and volumes;
• tracking the receipt of products to the warehouse and their subsequent shipment;
• assessing the efficiency of production and supply processes to find opportunities to optimize and reduce costs.

All of this is very important for ensuring successful business operations, improving customer service, and affecting the company’s financial performance.

When selling on Amazon and other marketplaces, warehouse inventory management plays a key role. It doesn’t matter whether you use fulfillment from the marketplace, rent your own warehouses, or use the services of third-party companies. Without understanding the situation “at the moment”, it is impossible to achieve an optimal balance between supply and demand. Competent inventory control helps to minimize storage costs and reduces the risk of financial losses due to surpluses.

If your product is often out of stock, customers may turn their attention to competitors, which will lead to a loss of customers and lower sales.

In addition, marketplaces (and especially Amazon) carefully evaluate seller performance. A shortage of goods can lead to negative reviews and a lower rating. This, in turn, affects the store’s position in search results, customer trust, and access to privileged features and programs.

What is Inventory Management?

The main task of Inventory Management is to organize a systematic approach to the control, evaluation and management of stocks of goods in a company or warehouse. In particular:

• planning and forecasting demand based on past market analysis data;
• determining minimum and maximum levels of inventory balances;
• organizing optimal procurement periods and volumes;
• tracking the receipt of products to the warehouse and their subsequent shipment;
• assessing the efficiency of production and supply processes to find opportunities to optimize and reduce costs.

All of this is very important for ensuring successful business operations, improving customer service, and affecting the company’s financial performance.

Methods of inventory valuation

The most popular method, which (according to our observations) is used by 90% of sellers, is the Specific Identification order management system – used when each item has a unique identifier (for example, a serial number) and the cost of each unit is taken into account separately. However, there are other methods:

First-In, First-Out. According to this system, the first goods (older in time) that go on sale are considered the first to be sold. Thus, the cost of goods sold is determined by the cost of the earliest units that went on sale.

Last-In, First-Out is the opposite of the previous method: the cost of goods sold is determined by the cost of the last items that went on sale.

Weighted Average – the average unit cost is calculated by dividing the sum of the cost of all units by their total number.

The minimum/maximum cost method is less commonly used. It assumes that the goods sold first were the cheapest/mostexpensive.

However, let’s leave the information from economic textbooks, since in modern realities, all processes have long been automated and managed using programs, applications, and services.

Warehouse inventory management programs for Amazon, Etsy, and Shopify

SellerApp is a popular platform designed to help sellers on Amazon and other marketplaces. It has extensive functionality and many ready-made solutions for the e-commerce niche:

• tools for analyzing business performance (sales reports, competitor analysis, rating monitoring, and other parameters)
• assistance in managing keywords to optimize listings;
• inventory management system and forecasting the need for new deliveries.

SellerApp also provides training materials for sellers to help them better understand and utilize the platform’s functionality. There is a free plan with limited functionality, and to get access to all the features, you need a subscription for $39-49/month (all prices here and below are current at the time of writing).

Zentail is positioned as an omni-channel commerce solution, which means the ability to manage sales on various online platforms, such as: Amazon, Shopify, eBay, Walmart, etc. from one centralized platform.

• allows you to efficiently create and update product listings on various online platforms;
• provides tools for tracking and managing inventory in real time, including automatic updating of inventory levels and forecasting of purchasing needs;
• has the ability to automate price optimization to increase market competitiveness;
• allows you to manage advertising campaigns on platforms such as Amazon Advertising.

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inFlow Inventory is a warehouse management system for small and medium-sized businesses:

• allows you to effectively manage orders, from creation to fulfillment;
• provides control over supplies and automation of ordering processes from suppliers;
• provides various reports on sales, profit, inventory turnover, and other important analytical data.

It can be integrated across various online platforms, which facilitates inventory accounting and management for individual sales channels.

Zoho provides a wide range of tools and promises to “change the way you work.”There are ready-made solutions for automating business processes, including:CRM, project management, accounting and finance, marketing, analytics, and cloud office applications.