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Inventory Slump? Snap out of it!

Amazon's Phoenix warehouse - is that your inventory being processed?

This post is based on a great question I got from one of my readers who was experiencing a slump in sales despite a consistent amount of inventory kept up at Amazon.com (about 4,000 items in this case). While I obviously can’t make specific suggestions without looking at the inventory in Amazon Seller Central, there are common reasons for inventory slump. The biggest ones – ones we can’t do anything about – concern the economy, the consumer’s reluctance to spend in January and changes or problems at Amazon. If these are the case, you’ll hear everyone complaining on the forums and chat rooms – and these tend to be temporary.  Sales on Amazon have increased quarter after quarter for the past couple of years – it is one of the growth areas of the economy.

If you are consistently sending up inventory and not seeing steady sales, then there might be more to it.

Set aside some time to review your inventory carefully and see if this approach helps you to get back on track:

  1. Evaluate your inventory – ranking, pricing, timing (what books/toys/tools/household goods sell best, when?) and mix of products. Make sure you don’t have too many “long-tail” items in your inventory. Are your items perfect for graduation? Mother’s Day? Summer vacation? Are you looking ahead or are you still trying to sell Easter stuff?
  2. How much are you making per item? Obviously, this will vary, but you may want to look at your averages over the past couple of months. If your average sale is making you $2, then you have to sell a heck of a lot of volume to make a good living – and it has to sell fast. I’m happy to turn $1 into $3, but I’m even happier to turn $1 into $10 or $20. It is not the number of items you have in inventory that matters, it is the amount of items that are selling and for a good margin.
  3. Determine your best-sellers – can you get more items that look just like these?
  4. Re-evaluate your personal inventory acquisition “rules” to make sure that you are allowing for enough margin and for a ranking that insures quick turnover. You may not have adjusted your margins sufficiently for Amazon’s new fees, increase in shipping costs, etc. With gas prices over $4 in much of the country, UPS has gone up, the overall cost of goods is going up – have you adjusted?
  5. Reprice – even if you use a repricer regularly, it may be time to spot-check your repricing manually and make sure that you are still “right-priced” on your items.
  6. Examine your processes – where are you spending your time? Is it productive in terms of dollars per hour?
  7. Diversify – the best way to counteract a temporary slump in one category is to have products in another – are there other categories you’d like to explore?
  8. Experiment – if you’ve not tried something new in a while, it may be time. Beyond trying a new category, you may consider some product bundles or sourcing unique products, or using FBA to fulfill eBay items that will sell better there.
  9. Find a friend – one thing that helps my business tremendously is that I have trusted friends and family members in the business. Not only can I talk to them about business issues, they also call me all the time with great deals that I don’t have to hunt down myself (and I call/email them with ones I find, of course). If you don’t have your trusted tribe yet, I think you’ll be pleasantly surprised at how much your business increases with no extra effort on your part. Plus, it’s fun.
  10. Find a mentor — my copy of Chris Green’s Retail Arbitrage is dog-eared and marked-up and I have it on Kindle, too. I’ve not had time yet to implement all the great ideas I got from the book but I will over time. Skip McGrath, Lisa Suttora, Bob Willey, Kat Simpson and Nathan Holmquist have all helped me in my business through their books, podcasts and sharing on forums. I listen to podcasts like FBA Radio while I’m listing and packing inventory to inspire me. I don’t follow anyone blindly –  I test my mentors like I test my categories and ranks – but I feel lucky that there are so many generous sellers willing to share their experiences with the rest of us.

I find when I do these things myself; it changes how I operate my business and gives me a boost. I am still learning.

What about you? Have you found an approach or idea that has helped you overcome inventory slump? Please share it in the comments below!

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{ 1 comment… add one }

  • Kathi April 18, 2012, 10:22 PM

    Your advice is spot on! I just went through my first quiet period on both Amazon & eBay. I took ALL my books out of the closet and went through each one, repriced if necessary and changed the selling date to the current date. I sold 4 books in 2 days. The cloud has lifted just enough to move forward again.

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