Basics of inventory management: essentials for e-commerce businesses

Whether you sell gourmet pickles, high-end cosmetics, or portable phone chargers, having the right stock to meet demand can keep your business going.

What is inventory management?

The product stock you own and intend to sell through your business is called inventory. The process of tracking and storing products to meet customer demand quickly and effectively is called inventory management. It applies to how products are sourced, stored, and processed before the sale.

Inventory is an investment. It’s possible that poor inventory management won’t be apparent for several weeks or months. It can be unpleasant when they do become apparent: spoiled goods, unused inventory, high storage costs—or, even worse, depleted inventory and unfulfilled customer orders. Your profitability may also be affected by holding costs and storage fees.

Statistics on Amazon’s inventory and fulfillment

How many warehouses does Amazon run?

Amazon operates more than 175 fulfillment centers around the world.

In the warehouses, how much shelf space is allotted to third-party sellers?

Sortable fulfillment centers can employ over 1,500 full-time associates and measure around 800,000 square feet in size.
More than 1,000 associates work full-time at non-sortable fulfillment centers, which range in size from 600,000 to 1 million square feet.
Many centers can hold tens of millions of items on any given day and span the length of 28 football fields.

What new developments has Amazon developed to benefit business owners?

In 2019, Amazon invested $15 billion and introduced 225 brand-new tools and services to assist worldwide third-party sellers, primarily small and medium-sized businesses, in expanding and flourishing.

What are inventory management systems?

Products are tracked by inventory management systems from procurement to shipment. When it comes to crucial business decisions like how many units you need, your ideal inventory levels, when to reorder items, and which products to liquidate or remove, an inventory management system can help.

You can run your business more effectively and get a realistic picture of what you have available with the right inventory system. A spreadsheet, an automated digital solution, or a manual count and ledger combination are all examples of inventory systems.

The following factors will play a role in your decision-making:

The size of your company
The nature of the products you sell
The industry you serve
Your selling channels.

When the system works right, you know what products you have available, as well as important metrics like how much space is available on the shelf, how many units are in stock, and where each product is stored.

Multi-channel inventory management

Amazon provides free software called Veeqo that syncs and tracks inventory across channels, locations, and FBA for sellers who sell on multiple websites and channels. Veeqo ensures that your inventory levels are reduced across all of your channels when you make a sale on one channel, preventing overselling.

What are the benefits of inventory management?

A company’s inventory of products is an asset. However, mismanaged inventory can also harm your business.

As your company expands, you might run into problems like: