(This post was originally published on November 15, 2013. We’ve updated it for accuracy and completeness.)
Like many other retailers, you’ve decided to take your share of the opportunity to sell on Amazon. Who wouldn’t want access to the world’s biggest eCommerce marketplace?
But, what you may not realize (until you’ve done it) is how quickly orders come in. If you’re a growing retailer who has been managing inventory by hand, Amazon-sized quantities of orders will bury you.
In this post, we’ll dive into why you need an Amazon inventory management system to keep ensure you can seize the most opportunity possible from Amazon.
Amazon Inventory Management Risks
If you’re going to step into the world of selling on Amazon, you need to be aware of the inventory management risks that you introduce to your business:
- Order volume is likely to increase substantially, so manual processes will become a heavy burden.
- Inventory will deplete much more quickly. Every day you are out is a revenue opportunity you are missing.
- The higher order volume will make splitting and routing orders for fulfillment more complex.
- If you perform poorly enough, Amazon will suspend your account.
Nothing in business worth pursuing comes without risk. But, you should be aware of the risks and the potential costs of not addressing them.
Cost of Poor Inventory Management
The cost of mismanaging your inventory can take many forms.
- Managing multiple inventory systems manually is slow and expensive. It takes labor away from more strategic work that can grow your business.
- Inventory mismanagement and inefficiencies negatively affect cash flow. Knowing what you are selling, how much of it, and how often helps you plan purchasing so that inventory is always moving.
- When data entry errors occur, processes are halted, delaying shipments and lowering the volume of orders you can process daily. This negatively affects the customer experience.
The opportunity cost of mismanaged inventory can be massive. Amazon customers expect availability and fast delivery. If they dont find it from you, they will find another seller that can meet their expectations. Customers could give you a bad rating–the kiss of death in online retail. It may also keep you from getting listed in Amazon’s Buy Box.
You need an Amazon inventory management solution that ensures this doesn’t happen.
Defining an Amazon Inventory Management Solution
You need a solution that can synchronize inventory across all of your sales channels and inventory locations. There are several types of solutions sellers can choose with a wide range of capabilities. As you do you evaluate solutions, consider these factors:
Sales Channel Support
Systems vary in the channels they support. For example, some systems may support:
- Amazon only
- Online marketplaces only (eBay, Amazon, Etsy, etc.)
- eCommerce systems (Magento, Shopify, etc.) and online marketplaces
- eCommerce, online marketplaces, and point-of-sale (POS) systems
Don’t just consider your needs today. Make sure you think about how you plan to grow your business. Maybe you’re a single brick-and-mortar store selling on Amazon today. Could you expand into eBay tomorrow? What about setting up an eCommerce store on Magento?
Ultimately, the system that affords you the most flexibility for growth will bring you the most value.
Business System Integration
Many systems focus on the front-end of your business (your sales channels) but ignore the importance of integration into back-end accounting and/or ERP systems.
While managing inventory across your channels is important, synchronizing it with your business system is critical to ensure proper purchasing. If that piece is still manual, much of the benefit from automation is forfeited.
Integration into back-end systems varies from custom coding a connection to the system of your choice to pre-built integrations for popular accounting and ERP systems. Remember that upgrades are common in the accounting/ERP world, and you need to make sure that when the latest version is available, your integration solution will support it.
Inventory management is a critical component to managing your Amazon sales channel, but there are other important business processes as well. Some inventory management solutions support inventory only, while others include support for multiple business processes, such as:
- Item management
- Order management
- Accounting integration
- Shipping notifications
- Customer data collection
- Third-party warehousing
Choosing a single solution that supports many or all of these processes makes more sense (and cents!) than buying a point solution for each and trying to manage them individually. Again, keep in mind your current business needs and your potential future needs. Buy technology based on where you want to go.
Benefits of Automated Amazon Inventory Management
With the right solution, you can automate and synchronize your Amazon inventory seamlessly. And, it’ll sync with your POS, ERP or other eCommerce sales channels. Data will flow between the systems, eliminating data entry errors and delays. You will be able to keep up with more volume than you could ever handle before.
- No more error-prone data entry; manage item data and inventory from one place
- Integrate inventory data with your existing POS, ERP or eCommerce sales systems
- Manage inventory for multiple sales channel, centrally
- Access accurate and updated inventory counts across all sales channels; synchronize counts in real time
- Increase customer satisfaction by always showing accurate product availability and performing quick delivery
- Increase sales and revenue (the result of all the others)
nChannel’s multichannel management platform gives you exactly that functionality. Check out our Amazon connector and read about how we can help you successfully sell on Amazon.