Mastering the inventory equation as an Amazon seller
Last updated: 19 Nov 2025
Learn how to manage inventory and keep your Amazon business growing with WorldFirst
Key takeaways
- Effective inventory management protects your margins and rankings on Amazon
- Balance stock levels by forecasting demand and factoring in supplier lead times
- Choose the right fulfilment model (FBA, FBM, or hybrid) to control costs and scale
- Prevent stockouts and dead stock with real-time tracking and strategic reordering.
- Use World Account to manage supplier payments and Amazon payouts seamlessly.
When you’re new to selling on Amazon, it’s easy to focus all your energy on the frontend of your store–product listings, photos, and keyword rankings. But one of the biggest differences between successful, long-term sellers and those just starting out is how they manage inventory.
You can optimise your listings and drive sales, but what happens when your top-selling product suddenly goes out of stock, and the next shipment from your supplier is still 2-3 weeks away?
Running out of stock doesn’t just mean losing sales today. It can also tank your keyword rankings and force you to cancel orders or take your listing offline altogether.
Then there’s overstocking, which can create a different set of problems. Your capital is tied up in slow-moving products, you’re paying unnecessary storage fees, and your cash flow stalls, making it harder to invest in growth.
If you’re currently managing 1-50 orders a day, this guide will help you set up an inventory system that supports your growth, rather than holding it back.
Table of Contents
What does inventory really cost you?
Inventory is more than sourcing, storing, and shipping goods. It’s a margin game where the true costs don’t always show up upfront. Here are the different ways your inventory can cost you over time.
- Stockouts: Every time you run out of your best selling products, your listing loses rank and Buy Box visibility. That means, you miss sales now and later as well
- Overordering: Your capital gets tied up, which you could have used for faster-moving Stock Keeping Units (SKUs) or marketing. Plus, if you use Amazon FBA, you will be charged long-term storage fees
- Rushed restocks: Reordering late often means paying for express air freight, which can sometimes cost 5-10x more than sea freight
- Dead stock: Products that don’t sell and sit too long (271+ days) get hit with aged inventory surcharges on Amazon. They also take up extra, unnecessary space, which could instead be used by more of your popular products.
Know your fulfilment options
Your fulfilment model will directly affect your operations, cash flow, control, and scale. Here are your main fulfilment options.
Fulfilment by Amazon (FBA): Amazon handles storage, packing, shipping, and customer service on your behalf and your FBA products become directly eligible for Prime. FBA is a good option for new sellers who want to focus on building their business on the marketplace without worrying about the backend stuff.
But that convenience comes at a price: monthly storage fees, aged inventory surcharges, and strict restock limits tied to your IPI (Inventory Performance Index) score. FBA works best for fast-moving SKUs with consistent demand and slim packaging.
Note: If your suppliers are based in China, you can benefit from Amazon SEND and get your products shipped directly from China to FBA warehouses.
Fulfilment by Merchant (FBM): With self-fulfilment, you get more control. You handle the packing and shipping, or use a local courier service. This option keeps storage and shipping in your hands and avoids FBA fees. But you miss out on Prime visibility and you also have to spend more time managing returns and customer service. For low-margin items or oversized goods with high FBA fees, FBM can be more cost-effective.
Third-party logistics (3PL): Third-party logistics (3PL) providers offer external warehouses to store and ship products on your behalf. Some Amazon-friendly 3PLs integrate directly with Seller Central. A 3PL can be helpful if you’re selling across multiple platforms and managing large restocks from overseas. But the pricing in this case can vary a lot: you’ll usually pay for storage, pick-and-pack, and shipping separately. Unless you’re moving a high volume, the per-unit cost may be higher than with FBA.
Hybrid model: Now, hybrid is all about getting the best of all worlds where you find the sweet spot for inventory management that works best for your e-commerce business. For example, you might keep your top-performing SKUs in FBA while housing slow-movers or oversized products in a 3PL. Some sellers use FBM during Q4 to stay in stock when FBA restock limits tighten. Other sellers may ship small test batches via FBA and restock via 3PL based on performance.
| Model | Best for | When to use it? | Pros | Cons |
|---|---|---|---|---|
| Fulfilment by Amazon (FBA) | New to mid-level sellers | Start with FBA if you're under 100 orders/month |
Prime badge, fast shipping, hands-off | Less control, strict storage limits, high fees |
| Self-fulfilment (FBM) |
Low-volume or oversized products | Add a 3PL once storage fees creep up or you need buffer stock outside FBA | Full control, no long-term storage fees | Time-consuming, slower shipping, no Prime |
| 3PL (Third-party logistics) | Mid-to-large sellers scaling SKUs | Go hybrid if you have a mix of fast and slow movers or sell across multiple channels (Amazon + Shopify) | Scalable storage, better rates, more control | Requires setup, integration, and upfront planning |
| Hybrid (FBA + 3PL) | Sellers balancing fast movers and long-tail SKUs | Go hybrid if you have a mix of fast and slow movers or sell across multiple channels (Amazon + Shopify) |
Flexibility, cost optimisation | More complex to manage |
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Forecasting without the guesswork
Your forecasting system doesn’t have to be perfect or 100% accurate, but it needs to exist.
The goal is simple: predict how much inventory you’ll need and when. Even a basic spreadsheet can help you avoid stockouts, reduce waste, and plan reorders with confidence. Start by calculating your average daily sales for each SKU over the last 30 to 60 days. Then factor in your supplier lead times: how long it takes from placing an order to having stock ready to sell.
- Sales velocity: The number of units you sell per day/week
- Lead time: The total time it takes from placing an order to having stock ready to ship (including production + shipping + check-in time)
- Reorder point: The lowest stock level you can hit before starting your next order.
As you scale, factor in seasonality, product launches, and promotions. A spike in ad spend or a Prime Day deal can quickly throw off your forecast if you’re not accounting for it. And if you’re sourcing from China, consider how shipping methods (air vs sea), port delays, or holidays like Golden Week or Chinese New Year can affect timelines.
Preventing stockouts and slow-moving inventory
Even with solid forecasting, things can sometimes go wrong. Supplier delays, inaccurate demand estimates, and sudden sales spikes can all leave you either out of stock or stuck with excess inventory.
To avoid stockouts
- Build redundancy into your supply chain: Place smaller, more frequent orders instead of bulk shipments. This reduces the risk of long lead times or unexpected delays derailing your operations.
- Use backup inventory channels: Store a portion of your stock at a 3PL or external warehouse in case FBA runs into capacity issues or shipment delays.
- Split shipments strategically: Send part of your inventory by air for faster restocking and part by sea to keep shipping costs manageable.
- Monitor inventory in real-time: Use tools like Seller Central’s inventory dashboard or third-party software to track stock levels and get low-inventory alerts.
To manage slow-moving inventory
- Start small with new SKUs: Instead of ordering 500 units upfront, test 100-150 units. If they gain traction, you can restock. If not, you’ve limited your exposure.
- Watch for FBA-specific risks: Slow sellers can negatively impact your Inventory Performance Index (IPI), incur aged inventory surcharges, and take up valuable storage space that could be used more profitably.
- Use promotions to move dead stock: Limited-time offers, bundles, or discounts can help you clear space and recover costs on underperforming items.
Successful e-commerce businesses start with effective inventory management
Mastering inventory isn’t just about avoiding stockouts. It’s about creating a business that adapts to demand and scales sustainably. But even the most well-planned inventory systems can run into roadblocks if payments to suppliers are delayed, currency exchange eats into margins, or marketplace payouts are slow to arrive.
With an international payment provider like WorldFirst, you can send funds in over 100 currencies, hold balances in major currencies like CNY, USD, and EUR, and lock in exchange rates for up to 24 months to protect against FX volatility. Sellers can also collect payouts from Amazon in 15+ currencies, pay Amazon fees using the World Card, and even pay their suppliers–all through the same account.
Disclaimer: The information contained is general only and largely our views. Before acting on the information you should consider whether it is appropriate for you, in light of your objectives, financial situation or needs. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions, estimates, mentioned products/services and referenced material constitute the author’s own judgement as of the date of the briefing and are subject to change without notice. WorldFirst shall not be responsible for any losses or damages arising from your reliance of such information.
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