How to Manage Your Amazon Inventory in 2021
Amazon inventory management is critical to the success of any Amazon company. It reduces the chances of two big profit killers: losing sales due to out-of-stock situations and incurring expensive storage costs due to overstocking.
Supply chain problems are impacting companies big and small as the COVID-19 epidemic continues to be unrelenting and unpredictable. As a consequence of the illness, the closure of production facilities, and the scarcity of shipping containers, there have been unprecedented inventory delays, shortages, and skyrocketing shipping prices. And they are undoubtedly having an impact on the company’s growth and profit margins.
Let’s take a closer look at what’s causing the present supply chain issues, how they’re expected to impact the Holiday shopping season in 2021, and how Amazon sellers should manage their sales strategy in the face of these issues.
Table of Contents
What is the significance of Amazon inventory management?
Customers of days are impatient with inadequate inventory management. When it comes to internet purchasing, they have high expectations regarding ease and delivery speed: Consumers in the United States anticipate their purchases to arrive within one to three days after purchase, with 47 percent ready to pay extra for quicker delivery. Online consumers don’t want to wait for items to restock, and the majority of them (70 percent) would be disappointed if their purchase came late.
If you consistently run out of supply, your consumers will have no option but to buy from your rivals, which will boost their organic ranking as yours falls each day you’re out of stock. If you overstock your goods, on the other hand, you risk tying up money in your company and incurring long-term storage costs if you use FBA.
The Most Important Elements Affecting Amazon’s Supply Chain
As you know, there are increasing shipping expenses from China as a result of import taxes in the United States. According to CNBC, American firms are absorbing more than 90% of the extra expenses associated with the 20% tax on Chinese imports, prompting some businesses to reduce the number of items they buy from China.
Then there’s the global scarcity of shipping containers caused by the epidemic. Since June 2020, the cost of shipping a 40-foot container from Shanghai to Los Angeles has almost quadrupled. Suppliers are finding it more difficult to secure containers, given that containers carry 60% of world products and China produces 96% of global manufacturing.
Aside from the container scarcity and interrupted supply chains, the epidemic has also caused delays in container turnaround times, clogged ports, and equipment shortages across the globe.
Raw material costs are also increasing as supply chain issues continue. Strong worldwide market demand, shortages of numerous raw materials, a 58 percent increase in oil prices since November 2020, the international shipping container scarcity, and other reasons are all contributing to the cost increase.
Many big U.S. businesses are increasing prices as product demand recovers with the reopening of the economy, despite the effect of higher-priced raw materials, increased labor costs, and supply-chain problems.
“We took price increases in every region of the world, and range from 5% to 12%,” Whirlpool (WHR) CFO Jim Peters told Yahoo Finance Live. “Those are driven by commodity cost increases, and it’s something we have done historically,” Mattel stated that in the second half of the year, it will increase prices to meet rising commodity and transportation expenses. In the third quarter, Starbucks stated that pricing hikes helped offset large labor expenditures and increased supply chain expenses. Kimberly-Clark Corp. also announced pricing increases to cover rising raw material costs.
Managing Your Inventory in Holiday Season, Tips:
With the Holiday shopping season in 2021, now is the moment for Amazon brands and sellers to strengthen their plans for the difficulties posed by increasing shipping prices in China, supply chain problems, and the pandemic’s continuing impacts. Here are some suggestions on how Amazon businesses can prepare for the Holiday shopping season;
- Estimate your Holiday demand based on previous years’ Q4 sales, and/or if you offer non-seasonal goods, add a 20% anticipated sales increase, and arrange your inventory accordingly.
- Make sure your inventory meets Amazon’s holiday schedule and FBA warehouse arrival requirements for 2021. Amazon’s FBA inventory cut-off date for U.S. sellers is November 1 to guarantee your goods are available for sale throughout the holiday shopping season of Black Friday, Cyber Monday, and Christmas.
- Be ready to deal with delays brought on by increasing shipping container prices and continuing Amazon supply chain problems.
- Importing just your best-selling goods is another way to reduce risks and expenses. With fewer goods to handle during the supply chain crisis, you can be confident that the ones you do invest in will pay off. Simply ensure that your Holiday inventory arrives well in advance of the holiday season, and aggressively advertise your best-selling items.
- Having a backup plan in place for the Holiday shopping season of 2021 is critical. What can you do if your inventory’s supply chain is backed up?
- Working with a 3PL (third-party logistics) company, which includes fulfillment firms, couriers, and freight forwarders that serve as intermediaries between shippers and manufacturers is one alternative.
- Think about having a “Plan B” for Fulfillment by Merchant (FBM). Have a strategy in place for how your company will manage the capacity to hold inventory and fulfill Holiday orders if your goods cannot arrive to FBA warehouses before Amazon’s cut-off date.
The present supply chain problems must be addressed front-on by Amazon brands and merchants. The Holiday shopping season of 2021 nearly come, so start planning now to deal with problems like incoming tariffs, a worldwide shipping container scarcity, and increasing raw material prices.
Investing in technologies like inventory management, advertising, and price optimization can also assist optimize earnings and stabilize inventory. Overall, you can prepare your strategies ahead of time for a profitable holiday season by following these Amazon seasonal inventory recommendations and investing in the appropriate optimization tools.
Eva can help with all these. Know exactly when and what to replenish with Eva. Easily share that information with your suppliers. Increase your prices automatically when there is a stock-out risk with alerts helping you act immediately.
Furthermore, Eva is free for a 15-day trial period! So go ahead and try it now. Meet with an AI-Powered Pricer to help you expand your company.