Amazon FBA is an incredible passive income opportunity.
Once you have a few successful products established, it's truly a business model that required a few hours per week to operate, spent mainly on:
- Responding to customer inquiries
- Monitoring inventory levels
- Re-ordering inventory
- Monitoring PPC campaigns
Disclaimer: I also very strongly believe that sellers should constantly be scanning the horizon for new products to add to their catalog. That would be more of a time sink, but it's not a requirement.
Keeping an eye on inventory levels was a relatively easy task for me, as I used Fetcher's Inventory Levels dashboard to stay on top of things.
Try Fetcher risk free (31 DAY FREE TRIAL FOR NEW USERS) »
Today it's even easier, as Seller Central added their own Amazon Selling Coach panel that helps you keep inventory in stock.
Algorithmic Inventory Forecasting
Part of the reason why running an Amazon FBA business can be so "relaxed" and not time consuming is because power sellers make a habit of leveraging automation.
If you had to choose between regularly pulling sales reports, analyzing them to calculate your daily/weekly sales per-sku, and deciding when to stock...
OR you could sync software (like Fetcher) via API to your Amazon seller account, let it dynamically calculate your sales projections based on recent sales history, & tell you when it's time to re-order... which would you prefer?
Obviously you'd choose option #2!
The entire point of running a hands-off, passive income operation such as selling on Amazon is to outsource pieces of the puzzle & accept the fact that you're going to do so. Price it in to your business costs & move forward.
Fetcher's Inventory Levels Dashboard
You'll notice a few themes in my Amazon FBA content, one of them being that I can't live without Fetcher. I speak from my own personal experience - there may be other great tools out there, but this is what I use.
Check out my Fetcher.com review
It's worth the (minor) monthly fee, as it helps me easily stay on top of my Amazon FBA profit margins & sales data, along with easily monitoring my inventory levels!
Some suppliers take longer to produce orders than others, and you may have different shipping preferences as well. Fortunately, you can submit different lead times for each of your SKUs.
After you enter the lead times, you'll notice that it color codes the products that need to be restocked.
When you see ORANGE, it's almost time to re-order.
If you see RED, you should've ordered new stock yesterday :)
Calculating Lead Time
Most Amazon sellers order inventory directly from their suppliers overseas to Amazon FBA warehouses.
- Advantage: A simplified approach to importing & storing large orders
- Disadvantage: Potentially paying high fees on inventory sitting at FBA warehouses
Many of the larger sellers have large orders delivered to a 3rd party logistics center to warehouse their inventory, & send it to FBA (so that it's Prime eligible) as needed.
- Advantage: Lower Amazon inventory warehousing fees
- Advantage: Less re-orders (assuming you order larger quantities & leverage the 3PL inventory fees being lower)
- Disadvantage: More time consuming
At the moment I've interviewed a few 3PLs and considered using them as a solution to warehouse large orders, but at this point still haven't pulled the trigger and used one yet.
Amazon FBA fees haven't killed my business (yet), but it's worth mentioning that Jeff decided to change their holiday inventory fee structure in 2018 and it absolutely crushed my profits in November & December.
So yeah, there's that. One thing you'll always get out of me is transparency :)
Anyways, as you can see from my screenshots, I typically use 70 days of lead time. This accounts for 30 days of production time, 30 days of transit time (by sea), and an additional 10 days padded in for FBA intake time (products don't become available for sale immediately upon arriving at FBA - they have to be unpacked & scanned in).
I have one supplier that takes particularly longer than most others, so I padded in an additional 5 days of (75 total) for the 3 SKUs I order from them.
Calculating Order Size
This Jungle Scout YouTube video recommends ordering 3 months of inventory at a time.
Given that it takes about ~70 days on average to produce, ship, and see inventory "live" & for sale on Amazon, you should definitely be ordering somewhere in the range of 2.5-3 months at a minimum.
Again, the actually # of units ordered depends on your sales velocity. If your product sees seasonal spikes in demand, make sure to take that into account.
I typically order in that range, so I would agree.
Amazon Selling Coach
At some point in 2018 Amazon expanded Seller Central's "Selling Coach" to include an "Inventory" tab that attempts to tell you when it's time to re-order a SKU.
Unlike Fetcher, it doesn't let you input lead time. Not just on a per-SKU basis, but not at all.
As a result, I find that the restocking recommendations are ofter misaligned from my (more accurate) Fetcher recommendations.
The primary difference between the two approaches: The Amazon Selling Coach is free. Well, kinda free... we do pay $39.99/mo to use it.
Either way, find what works for YOU & DON'T RUN OUT OF INVENTORY! Losing that organic rank will be hard to get back!
