What Is Amazon Stranded Inventory, and How Do You Fix It with automation?

Mar 9

Amazon FBA business isn't always a bed of roses. It's not always a perfect path to follow. As a seller on Amazon, you must always be aware of many frustrating aspects of the process.

Inventory management is a major component of operating an e-commerce business, whether it is Amazon or any other. For example, it understands your inventory, making sure that it is accounted for and how it is performing.

In order to avoid unnecessary storage fees and account issues, it's extremely important to inspect your stranded inventory frequently.

Let’s see what causes stranded inventory and how you can fix it with an automated inventory forecasting software system.

What is FBA stranded inventory?

When there is no longer an active offer for an item that you store in Amazon's warehouse, customers will not be able to purchase that item. Stranded inventory would be described as such. It is important to remember that even if you do not either sell your inventory or are not actively selling it, Amazon will still continue to charge you storage fees for your inventory even if it is inactive and not available for sale.

In the event that stranded inventory issues exist and you do not regularly monitor them, you may be subject to a variety of costly fees. FBA charges fees for long-term and short-term storage as well as overage storage fees for inventory stored in our warehouses.

The impact of stranded inventory on your IPI (inventory performance index) is also significant. IPI is a scale that Amazon uses to evaluate your inventory performance, which ranges from 0 to 1000. Essentially, it's a system that Amazon has developed to make sure that their sellers are optimizing their inventory properly. However they do not specify their method of determining performance. However, if you have stranded inventory in Amazon's warehouse, this means it takes up unnecessary space, and Amazon does not want you to have this.

Amazon will begin limiting the amount of storage space that can be placed in FBA warehouses if your score goes below 400 by January 1, 2022. It is therefore essential to take care of any stranded inventory you may have to lie around in an Amazon warehouse right away to prevent it from becoming a serious problem. Learn what caused your amazon warehouse management system to strand inventory in the first place and take control of it.

What is automated inventory management?

Modern retailers track stock, supplies, and sales using automated inventory management, both for e-commerce and otherwise. It is imperative for retailers to manage their inventory in real-time and make decisions that are crucial to their business in a timely fashion by implementing an automated system.

You might, for example, have one of your products running low on stock, and that stock is approaching the predetermined reorder point. The inventory management software your business uses will inform you or reorder it automatically if that is the case.

It is also advisable to use inventory automation in conjunction with other retail management programs such as order management and point-of-sale (POS) programs. It is vital to make sure that you are aware of what is happening through the entire sales channel in order to achieve real-time inventory management accuracy. Investing in an inventory management solution as soon as possible is, therefore, a critical step in preventing loss.

How can automated inventory management help with stranded inventory?

One of a retailer's most important assets is the ability to manage the inventory of the company efficiently and effectively. A wise move would be to invest in an automated system for managing inventory and keeping track of inventory. Below are some ideas on how to combat stranded inventory using automation.

Ensure real-time visibility of your business processes

The retail operating systems help you by monitoring real-time the amount of inventory in your store. We will provide you with information regarding the level of inventory you have in your warehouse(s), the amount of inventory that needs to be picked for current orders, and the amount of inventory ordered from your suppliers. In your warehouse, you will be able to identify stranded inventory so that you can address it promptly.

Make sure that stock levels are not miscalculated.

A retailer's worst nightmare is a miscalculation of their stock levels resulting in stock shortages. With the use of an inventory management solution, you can go a long way towards obtaining an inventory control system that will make this particular task very easy to accomplish.

Using inventory analytics, you can forecast optimal inventory levels based on customer data and replenish stock levels within your inventory as needed. A timely notification will be provided to you if any unsold or excess stock is available in your warehouse space so that you will not order extra stock if the old stock can be easily sold.

Enhances store reporting

Don't overlook the importance of reporting capabilities. You will be able to utilize this data to help in making better business decisions across the entirety of your supply chain management process. You will be able to track everything with the help of your automated inventory management tool. Ensure that your chosen software enables you to track inventory in real-time and that it generates real-time data. As far as the reporting function is concerned, it is certainly a very beneficial tool in identifying any items that are stranded in your warehouse.

Get a higher level of accuracy.

It is all too common for human errors to occur when data is entered manually. How can this be avoided? Get rid of the need to enter inventory data manually in the first place. When you automate your inventory management processes, the software itself will enter the stock and replenish the stock in real-time. It will do this by adding, removing, forecasting, and making changes to the stock on a regular basis.

You will save tons of time.

Imagine all the times you have spent manually updating your inventory on Excel spreadsheets. You may have forgotten to enter some useful information in the spreadsheets. If you use an automated system, you can ensure that all your stock counts across all your channels will be updated effortlessly and accurately. The automation engine on your computer will automatically record every successful sale, return, receipt, or stranded item and will update the system without the need for manual intervention. This frees up your time to focus more on what is more important: taking care of your customers.

Automated machinery

The majority of us will have seen news or internet stories about automated machinery. If you work in a warehouse, you may already have encountered it. Automated Guided Vehicles (AGVs) are setting new standards for warehousing and inventory management with their ability to go where humans cannot. With an increasing number of warehouse processes taking place in an automated manner, automated machinery will become more in demand. This type of machinery will be useful if warehouse processes need to be guided and maneuvered and stranded inventory issues dealt with.

Conclusion

Maybe you didn't know how important Amazon's Stranded Inventory was until reading this post. For your Amazon business to run smoothly, you must understand what it means and how to control your inventory.

To ensure your account remains in good standing, make sure you check these steps every few months to ensure nothing is overlooked. Keep your inventory performance healthy and up to Amazon's standards by taking any inactive items off Amazon as soon as possible.