Inventory management

How to: Inventory management explained simply

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Woman carrying out inventory management

What's it about?

Inventory management helps you organise your item stocks in your online shop. This enables you to manage all stocks and track deliveries. It allows you to manage purchases and sales of items to your customers without losing track of things.

Small changes in inventory management can have a big impact on your bottom line — both positive and negative. With a clear strategy, inventory management can increase sales. Missed opportunities, on the other hand, can mean lost revenue.

Some sellers may not be fully aware of the importance of an inventory management system for their online shop.

This is exactly what this article is all about. Find tips for managing inventory levels with Amazon here.
Inventory management - Amazon DE

What is inventory management?

Inventory includes all physical items that you offer for sale. In other words, it's the amount of products that you own and wish to sell through your company. Inventory management is the process of storing and tracking all product stocks to meet customer demand quickly and efficiently.

An effective inventory management strategy allows you to create a transparent and comprehensible cost overview. Inventory is an investment. Confusing inventory management can cost you money and result in dissatisfied customers.

You may lose track of spoiled or unsellable products, or incur high storage costs. Or, even worse, end up with exhausted inventories and unfulfilled customer orders. What's more, storage fees and storage costs can reduce your profitability, which can have a positive or negative impact on your return on investment (ROI).
What is inventory management?

Useful information for your inventory management

If you manage your warehousing yourself, you have a direct influence on the entire process, including quality control.

Three aspects are essential in inventory management: organising, forecasting and auditing. Organisation is primarily about item category, expediency and order. Forecasting allows you to determine your inventory sizes. There are numerous software tools that can help you report minimum stocks and reorder them. Auditing includes quality control and regular inventories.

Alternatively, you can outsource all inventory management to a fulfilment provider such as Amazon.

Inventory management with Amazon

For sellers who use Fulfilment by Amazon, Amazon offers various inventory management tools directly in Seller Central.
These tools can help sellers manage their inventory efficiently and offer options for faster order processing.

The dashboard can help you get an overview of all important inventory information, such as sales rates, notifications about ageing stocks and recommended measures to optimise warehousing.
All available tools for your seller account can be found via Seller Central and the mobile Seller app.


Inventory management covers all processes from receipt of goods to sales to end customers. Changes to inventory management can have both a positive and negative impact on your earnings. Optimising inventory management can increase sales — neglecting it can lead to missed opportunities.


How can I easily undertake inventory management?
With an inventory management system. This gives you an overview of your inventory in one place and allows you to optimise order fulfilment costs.
What is an inventory management system?
An inventory management system helps you manage your stocks and provides an overview of items, stocks, minimum stocks and sales rates.
What is inventory control?
This describes the process of ensuring the right quantities of items, so you can monitor and manage all your inventory levels and track deliveries.
How can I access inventory management tools with FBA?
You can access inventory management tools from the Seller Central dashboard or on the Seller app on your smartphone.
What is the Amazon inventory management dashboard?
Your inventory management dashboard shows your Inventory Performance Index (IPI) and the key factors that influence it.

You should monitor your IPI score on a regular basis, as a low score could result in overage fees and limit your capacity to ship additional goods.
How can I improve my Amazon IPI score?
To improve your Amazon IPI score, it's important to know that your IPI score is based on how well you:

- Refill popular products
- Maintain healthy inventory levels
- Resolve supply issues
Which techniques improve inventory management?
There are various techniques you can use to optimise your inventory and keep it healthy:

1. Manage surplus inventory effectively by understanding when you should reduce or get rid of products.
2. Track the age of your inventory and understand how much you're storing to avoid long-term storage fees.
3. Maintain accurate records of stranded inventory and keep your listings active by including necessary pricing and condition information and resolving errors.
4. Replenish your inventory by making sure your best-selling items are always in stock so that you can meet demand.
Does Amazon manage inventory?
Amazon provides inventory management services for e-commerce businesses and entrepreneurs who use Fulfilment by Amazon (FBA) in order to help them monitor the inventory they store in Amazon warehouses.

Start selling online with Amazon today

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