One of the behind-the-scenes factors of selling products on Amazon is your inventory. Where are you going to store all of the items you’re selling? How are you going to package them so you can ship them out to your buyers?
You have two major options. The first is to store, package, and ship all of your items out of an in-house solution. The second is to use Fulfilled By Amazon (FBA) and let Amazon handle the work.
Using in-house inventory as your solution is the most complicated option. Along with managing vendors for your supplies, you’ll also have to manage storage solutions, fetching items, and having a shipping solution.
Handling your inventory yourself might make it so you have to hire more help to manage your items, from acquisition to shipment. Trying to do it all yourself will mean it doesn’t get done. However, depending on your situation, it might make more sense for you to have an inventory solution you manage instead of outsourcing it to Amazon.
One of the main benefits of having an in-house setup is that you have a centralized inventory. If you have bulky items, bundled options, or refrigerated products, these are much easier to store at a storage location.
Another benefit of using in-house solutions means you have complete control. You can see what happens every step of the way, which means more opportunities for process refinement. Want to speed things along? Study what’s happening from production through the storage process. That’ll allow you to refine your process.
One of the best benefits is that you can improve your customer service. You have complete control over what happens, which means you can change things should something go wrong. You can get it to your customers on the same day if it’s a rush order, or bundle items together for their convenience.
Running an in-house inventory requires you to have many resources on hand. You have to pay for packaging materials, and you may not have a flat shipping rate for international customers.
Without a specific system in place, managing your inventory is going to take up a lot of your downtime. You may have to invest in specific inventory management software or hire someone to manage it all for you.
Another con of having in-house inventory is that you have to find the space to store everything. Along with finding space, you have to make sure it’s temperature-controlled and somewhere that you can often visit to change out orders. Some people start from their homes, but then find it expands far beyond what they’re able to manage.
Without a specific system in place, managing your inventory is going to take up a lot of your downtime.
How to Set Up an Inventory Management System
If it makes sense for you to host your own in-house inventory, you’ll need to come up with an inventory management system. If you haven’t done this before, it can be overwhelming. Here’s a guide on how to do that.
- Take stock of what you have. If you don’t know what you have on hand, you can’t create a system to track all of it.
- Figure out what storage options you would need to store all of it. Do you have bulky or oddly shaped items that are difficult to store? Do you need to store them in a specific, temperature-controlled environment? All of these factors and more will determine what type of storage solutions you’ll need to consider.
- Create a system where you can access both your item and item records at any time. Instead of trying to create one from scratch, consider using inventory management software that has already created a system like this for you.
- Apply barcodes or other labels that allow you to scan items and access and change inventory information in a flash. You’ll want something you can scan so you can immediately bring up the records on the item in question.
- Organize your inventory storage into categories. Keep similar items together, so you and your staff know where to go to ship out items.
- Keep ease of access in mind when creating a storage solution. You’ll need to get in and out of these places to fetch items and put them into your shipping solution.
- Keep repeatable processes in mind when creating an overall management system. Someone should be able to come in, see what you have, and be able to repeat it with few issues.
- Include your shipping solution in your inventory tracking system. You want to track how many of each item you have on hand, which means following how many things go out and when. You or your staff should have the option to scan items and mark them as shipped, taking them out of the rotation.
Keeping your inventory with Amazon is done through a service called Fulfillment By Amazon (FBA). The way FBA works is you store your items at their fulfillment centers. Once someone orders something, FBA packs, ships, and provides customer service for the products you sell.
You’re charged for storage space and fulfilled orders. You may also have to create a shipping plan for sending products to Amazon and putting them into their storage facilities.
There are six steps when it comes to shipping things to Amazon. These are:
- Choose the number of products being sent
- Prepare them for shipping
- Label them
- Review your shipments
- Prepare your shipment
- Send it off
The biggest pro is that you’re outsourcing your inventory, shipping, and packaging tasks. You can use the time you’ve saved to work on more product development and expanding your brand.
FBA also comes with free two-day shipping to Prime members, so your customers can receive your products quickly.
Shipping rates are the same all around. Your customers won’t have different shipping rates if they live in different parts of the country.
You don’t have to spend time picking and packing orders, so you have more downtime to spend on other tasks. You’ll have more time to manage your business and spend on marketing efforts.
FBA products also rank higher in product searches, since Amazon wants to promote its services.
At first glance, it might seem like there are no downsides to doing FBA. However, there are a few that might make you reconsider if this is the best option for you.
The biggest one is that you won’t have a centralized inventory. If you have bulky or expensive items, you have to invest in more expensive storage solutions with Amazon, or they may not ship those items at all. Refrigerated storage isn’t an option. Bundling items means you have to build kits, which can be a pain.
Another downside is that you don’t have control over how things work. If you have a specific way you want your products to be shipped, you might have to do the process yourself. Amazon has strict guidelines on how you can ship your items.
You’ll also have long-term storage fees. If certain items aren’t selling sell, you have to pay more to continue storing them.
There’s no right answer when it comes to storing via Amazon or finding your own storage solution. Choose what’s right for your business. Understanding the different advantages and disadvantages of each solution can help you make a more informed decision.