The strategy and importance of improving Amazon sellers’ inventory turnover rate and inventory management

In Amazon’s cross-border e-commerce environment, inventory turnover rate is one of the key factors for sellers’ success. Improving turnover rates not only reduces inventory overhang, but also increases sales and profit margins. The following will explore how sellers can effectively improve inventory turnover and optimize inventory management by analyzing inventory management on the Amazon platform and its importance.

Why inventory turnover is important

Inventory turnover is a comprehensive indicator that measures the management status of each link such as procurement, production, sales and recycling. It is calculated as cost of goods sold divided by average inventory, which reflects how quickly a product is monetized. The level of inventory turnover rate directly affects the seller’s cash flow and utilization efficiency of working capital. For example, Seller A’s purchase cost is 10,000 yuan, and if it is sold out within 5 days, the turnover rate is 6 times; while Seller B has the same cost but needs 10 days to sell, and its turnover rate is only 3 times. Obviously, the faster the turnover speed, the faster the seller can withdraw funds to support the next stocking.

However, the higher the inventory turnover rate, the better. Sellers need to consider their own cash flow and profit margins. For example, although air freight can liquidate inventory faster than sea freight, the corresponding transportation costs are also higher. Therefore, sellers need to find a balance point that suits their own operating conditions, such as combining air and sea freight to reduce costs.

Effective strategies to improve inventory turnover

1. Real-time monitoring of product inventory
   Sellers should keep track of the sales quantity of goods and the existing quantity in the warehouse in real time to ensure a balance between supply and demand of goods. If the supply of goods exceeds demand, it will cause the sales ranking to decline, thus affecting sales. Therefore, dynamic control of order and inventory quantities is crucial.

2. Prevent out-of-stock situations
   Hot-selling products must be constantly replenished to prevent out-of-stock situations, which may affect store rankings and sales. Sellers need to manually calculate the number of days of stocking, replenishment quantity and arrival period to ensure continuity of supply of goods.

3. Leverage Amazon IPI performance data
   On Amazon’s platform, sellers can analyze inventory data through the “Inventory Age” module of IPI performance to identify problem SKUs so that targeted optimization measures can be taken. The data is divided into multiple dimensions, such as sales trends, product pricing, FBA inventory status, etc., which helps sellers intuitively understand the inventory situation and formulate reasonable management strategies.

4. Create an accurate warehousing plan
   With a comprehensive understanding of inventory status, sellers can quickly create warehousing plans and monitor product sales in real-time across multiple sites for better inventory management.

In short, inventory turnover rate, as a core indicator of Amazon seller operations management, plays a decisive role in profitability and competitiveness. Sellers should dynamically adjust strategies based on their own operating conditions to achieve sales growth and efficient inventory management.