How to Manage Inventory as a New Seller on Amazon
Starting your Amazon business is exciting—but if you don’t get a handle on inventory early, things can spiral fast. Good inventory management helps you meet customer demand, avoid running out of stock (or having way too much), and keep your Amazon account in good standing. Here’s a simple, practical guide to help new sellers manage inventory like a pro from day one.
1. Get to Know Amazon’s Inventory Tools
Amazon gives you some great tools right in Seller Central to help manage your stock:
Inventory Performance Dashboard: This shows when your inventory is getting low, gives you demand planning tips, and even suggests how much stock you should send in. It also flags aging inventory and helps you make smart storage decisions.
Inventory Performance Index (IPI): Think of this like a credit score for how well you’re managing your inventory. A good IPI score can help you avoid storage limits and extra fees.
2. Choose an Inventory Method That Works for You
There’s no one-size-fits-all strategy here—your approach should match your business model.
Just-in-Time (JIT): Order stock only when you need it. Great for saving on storage costs, but it requires reliable suppliers and tight timing.
ABC Analysis: Group products into A (your top sellers), B (moderate sellers), and C (slow movers). Spend most of your energy on the A group—they drive your profits.
Dropshipping: If you’re using dropshipping, your supplier handles inventory and shipping. You won’t need to store or ship anything yourself.
3. Build a Solid Inventory Process
A smooth inventory process helps your business run like clockwork. Here's a simple breakdown:
Receive and Inspect: Check every shipment to make sure everything’s correct and in good condition.
Sort and Stock: Organize your inventory by SKU or type, and update your system to reflect what you’ve got on hand.
Process Orders: Use Amazon’s tools—or your own inventory system—to manage and track orders.
Fulfill and Ship: Pack and ship quickly, and use the right packaging to avoid damage in transit.
Reorder Smartly: Keep tabs on your stock levels and reorder in time to avoid both stockouts and excess inventory. Automated tools can help forecast demand and set reorder points.
4. Follow Best Practices for Inventory Success
Here are a few habits that can make a big difference:
Audit Regularly: Do full inventory checks at least once or twice a year. Better yet, use cycle counting to catch issues early by checking small sections regularly.
Use Inventory Management Software: Look for tools that sync with Amazon, send alerts when stock is low, and offer demand forecasting.
Keep 60 Days of Supply: This gives you enough cushion to avoid running out while keeping storage costs reasonable.
Maintain Good Supplier Relationships: Strong communication with your suppliers means faster responses to changes in demand.
Plan Ahead: Account for shipping lead times, seasonal trends, and any unexpected delays.
5. Steer Clear of Common Mistakes
Avoid Overstocking: Too much inventory ties up cash and racks up storage fees. Use forecasting tools to order what you really need.
Watch for Stranded or Unsellable Stock: Check regularly for damaged, expired, or otherwise unsellable inventory. Remove or fix issues quickly.
Keep an Eye on Your IPI: A healthy score helps you stay clear of limits and extra charges.
Final Thoughts
Inventory management doesn’t have to be stressful. With the right tools, a clear process, and smart habits, you’ll stay organized and avoid costly mistakes. Start small, stay consistent, and let your data guide your decisions. That’s how you build a strong foundation for your Amazon business.