Alasdair McLean-Foreman, CEO of Teikametrics, on the three most common areas that he sees FBA sellers struggling with in their businesses and how they should be addressed.
If you’re selling with Amazon’s Fulfillment by Amazon (FBA) program, you’re leveraging the power of Amazon’s powerful logistics network but you’ll also be dealing with a host of other issues. Here are a few tips to help you make the most of FBA.
Tip 1: Optimize FBA restocking
Staying in stock is a perpetual issue for FBA sellers. Send in too much product, and you’ll rack up semiannual storage fees, along with tied up capital. Send in too little, and you’ll miss out on additional sales. For most products, aim to keep a two week supply in stock and avoid blindly restocking every SKU. Instead, prioritize your buys by expected profit.
Tip 2: Optimize your FBA cashflow
With FBA, you’re incurring higher risks by making your inventory investments upfront. You’ll need to carefully manage your cash flow or your money may get tied up in dud products that collect warehouse dust. Keep an eye on your stale and aged inventory reports weekly, and if possible, adjust prices downwards to increase sales velocity.
There are also other creative ways to manage stale inventory, for example: recalling FBA inventory and creating bundles, selling on other channels (e.g. eBay), leveraging Amazon’s Merchant Fulfilled Network and liquidating merchandise.
Tip 3: Optimize your FBA inventory mix
The savviest Amazon FBA sellers understand that Amazon is like a stock market. The key to making money is by capitalizing on inefficiencies in the market while maintaining a diverse “portfolio” that is well protected against risk.
In order to optimize your own inventory mix, first analyze the profitability of your portfolio at the brand and SKU level to cull what’s not working and to expand what is. Consider sourcing more products from high performing brands. Finally, be very strategic in deciding what additional products to add to your mix. Avoid high competition products where you don’t have a pricing or volume advantage, for example, and negotiate deals with vendors for exclusives and other arrangements so you’ll be the king of the Buy Box.
Ready to optimize your FBA business?
High volume FBA sellers often find that they’re drowning in spreadsheets or piecing together disparate software solutions to manage their businesses. Our founder created Teikametrics after running a multi-million dollar FBA business himself to alleviate his own problems. The FBAfocused software suite automates profitability and aged inventory analysis, restocking, shipping, and repricing, all backed by a team of experts.
All views and advice provided in this article are opinions of the author and not those of World First.