Drip feeding inventory to Amazon FBA (Fulfillment by Amazon) can be a highly effective strategy for managing stock levels, reducing storage fees, and improving cash flow, especially with the new low-inventory-level fees in 2024. Here’s everything you need to know about this approach in 2024.
What is Drip Feeding Inventory?
Drip feeding inventory involves sending smaller, more frequent shipments of products to Amazon’s fulfillment centers rather than large, infrequent bulk shipments. This method helps maintain a steady flow of inventory, ensuring that you always have enough stock to meet demand without overloading Amazon’s warehouses.
What is the minimum inventory I need to keep at Amazon FBA fulfillment centers?
There is no specific minimum inventory amount that you must hold at Amazon FBA warehouses. However, Amazon introduced new inventory fees in early 2024 that penalize sellers that don’t maintain adequate stock levels to meet customer demand.
To avoid those fees, below are a few things to consider –
- Amazon recommends maintaining around 60 days of supply in FBA inventory. This helps avoid stockouts while not overstocking
- Amazon has introduced a new “Minimum Inventory Level” metric, which uses machine learning to recommend the minimum number of units per product you should have on hand in fulfillment centers. This metric is designed to help sellers avoid low-inventory-level fees and improve delivery speeds.
- The actual minimum inventory level can vary by product and is based on factors like historical sales data, forecasted demand, and replenishment settings.
- Maintaining inventory above the Minimum Inventory Level helps meet customer demand and can lead to faster delivery speeds and potentially increased sales.
- There’s no universal minimum across all products or sellers. The appropriate minimum inventory level depends on your specific products, sales velocity, and business strategy.
- While there’s no strict minimum, having too little inventory can lead to stockouts, which can negatively impact your sales, organic ranking, and overall performance on Amazon.
What are the new Amazon FBA inventory fees?
Low-Inventory-Level Fee
Amazon has implemented a low-inventory-level fee for products that fall below a certain threshold of historical days of supply. This fee is designed to encourage sellers to maintain adequate stock levels to meet customer demand
Minimum Inventory Level Metric
Amazon has introduced a new Minimum Inventory Level metric to help FBA sellers plan inventory levels more effectively and avoid low-inventory-level fees. This metric uses advanced machine learning models to recommend the minimum number of units per product that should be maintained in fulfillment centers
Benefits of Drip Feeding Inventory into Amazon
Reduced Storage Fees
Amazon charges long-term storage fees for items that sit in their warehouses for more than 365 days. By drip feeding inventory, you can minimize the amount of time products spend in storage, thus reducing these fees.
Improved Cash Flow
Smaller, more frequent shipments mean you don’t have to tie up a large amount of capital in inventory. This can improve your cash flow and allow you to invest in other areas of your business.
Better Inventory Management
Drip feeding allows for more precise inventory management. You can adjust your shipments based on real-time sales data and demand forecasts, reducing the risk of stockouts or overstocking.
Enhanced Flexibility
This approach provides greater flexibility to respond to market changes, seasonal demand, and promotional activities. You can quickly increase or decrease shipments based on current needs.
How to Implement Drip Feeding for Your Amazon FBA Store?
Accurate Demand Forecasting
Use Amazon’s inventory management tools to forecast demand accurately. Tools like the Inventory Performance Dashboard can help you monitor sell-through rates, aging stock, and recommended actions to optimize storage
Set Replenishment Alerts
Set up replenishment alerts in Seller Central to notify you when stock levels are low. This ensures you can send new shipments before running out of stock
Use Inventory Management Software
Invest in inventory management software that integrates with Amazon. These tools can automate stock level monitoring, reorder alerts, and shipment scheduling, making the drip feeding process more efficient
Monitor Inventory Performance Index (IPI)Keep an eye on your IPI score, which measures how well you manage your FBA inventory. A high IPI score can lower storage costs and provide additional storage capacity
Communicate with Suppliers
Maintain open communication with your suppliers to ensure timely production and shipment of goods. Building strong relationships with suppliers can help prioritize your orders and reduce lead times
Plan for Peak SeasonsAdjust your drip feeding strategy for peak seasons like holidays or special sales events. Increase shipment frequency to ensure you have enough stock to meet higher demand.
How Can An FBA Prep Center Help In Drip Feeding Inventory?
FBA Prep Centers can be extremely helpful for Amazon Sellers. Sellers can keep a buffer of safety stock at the prep center to cover unexpected spikes in demand or delays in shipments. By keeping excess inventory at a prep center and only sending what’s needed, sellers can avoid these costly fees.
They can also use the prep center’s inventory management system to monitor inventory levels and sales velocity. Depending on the situation, they can plan and schedule regular shipments from the prep center to Amazon’s fulfillment centers. This helps maintain a steady flow of inventory and avoids stockouts.FBA Prep Centers are very adaptive and Sellers can work with them to adjust the frequency and quantity of shipments based on sales performance and seasonal demand.
By leveraging FBA Prep Centers, Amazon sellers can optimize their operations, reduce costs, and potentially increase profitability through more efficient inventory management. Here are some of key benefits and cost savings they can provide to Sellers –
- Expertise in Amazon compliance: Prep centers are familiar with Amazon’s strict guidelines for packaging and labeling. They ensure that products are prepared correctly and comply with all requirements before being sent to Amazon’s fulfillment centers.
- Reduced risk of inventory issues: By maintaining a buffer stock at the prep center, sellers can quickly replenish their Amazon inventory if unexpected sales spikes occur or if there are issues with shipments to Amazon.
- Cost-effective shipping: Many prep centers are strategically located near Amazon fulfillment centers, which can lead to reduced shipping costs when sending inventory to Amazon.
- Scalability: As a seller’s business grows, prep centers can accommodate larger volumes of inventory, providing a scalable solution for storage and fulfillment needs.
- Time-saving: Outsourcing storage and drip feeding to a prep center frees up time for sellers to focus on other aspects of their business, such as sourcing new products or marketing.
If you’re looking for a reliable and reputable FBA Prep partner, then look no further than our team at ShipMaestro FBA Prep Services. We offer a wide range of services that will help you get your products ready for shipping to Amazon – including inspection, packaging, labeling, bundling, kitting, and much more.
We also have a team of experts who are well-versed in Amazon’s quality requirements and can help make sure your products meet all the necessary guidelines. We’ll help you get your products into Amazon Fulfillment Centers without a defect, so you can save money and focus on running your business.
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