SPACEGOATS

12 Sorts of Amazon FBA Inventory

By

Team SPACEGOATS

|

29. March 2022

Table of Contents
12 Sorts of Amazon FBA Inventory

1. Fulfillable Inventory

Fulfillable inventory (also known as available inventory or FBA inventory on-hand), refers to the stock stored at Amazon’s fulfillment centers that can be picked, packed, and shipped to customers.

Fulfillable inventory is directly affected by your instock rate. This calculation is based on the percentage of time replenishable FBA ASINs have held stock during the last thirty days. This number is weighted by the number of units for each SKU (of this ASIN) sold over the last 60 days.

The formula can be used if you currently have at least two products:

(% in stock of ASIN #1 for the 30 last days x 60-days’ sales velocity )+(% in stock of ASIN #2 for the last 30 day)/total 60th sales velocity (add ASIN#1 and ASIN#2) = In-Stock Quote

Let’s take Product 1 as an example. Product 1 is in stock for 80% and has a 3.0 sales velocity. Product 2 has been in stock for 70% of the previous 30 days. This product has a sales speed of 2.

You can calculate your in stock rate using the formula.

(80% + (3) + (70%x2)/5 * 100 =76% Stock Rate, which Amazon considers fair.

In-stock Rate is an indicator of how well you maintain your inventory to meet and satisfy customer orders. It can be viewed as an inventory management metric, which you can use to spot improvement opportunities in your restocking.

2. Unfulfillable Inventory

Unfulfillable inventory just means ineligible inventory. FBA shipments will be sent to the Amazon fulfillment center (FCs). Each item in the shipment will undergo quality inspection (and quantitative inspection).

Amazon will reject any item that is damaged or unfit for purchase if they are unsatisfied with the condition of the item. Amazon will notify you of the removal from their fulfillment system. After being notified you have 30 calendar days to submit the removal order.

When you create a removal request, you have the option of having your unsellable inventory either repackaged or rebuilt. (e.g., a customer returned items in sellable condition with damaged packaging can be repackaged and sold as new), liquidated, and/or returned to yourself.

The FBA Order Removal Fee is usually based upon product size, shipping weight, and tier. As of today, the standard size products which weigh less than 500g (or more than 1kg) are priced at €0.25-€0.55 (+ €0.50 per for each additional 1kg). Items weighing more than 500g can be removed for €0.55. For items over 5kg there is an additional €0.50 per kg. Amazon may charge an additional shipping fee to send the item back to your local address.

Amazon will be responsible for shipping damage that happens while the shipment is under their care. For further information, refer to FBA Shipping Reimbursement policy

3. Backorder Inventory

Inbound inventory refers to a product’s status that is currently in-transit, or being processed by Amazon FCs. It also contains the estimated quantity of units Amazon should receive. The status will change from inbound to receiving when the product arrives. This signifies that the product’s status is being checked in. It will soon become active or in stock at Amazon.

You must manage your inbound stock as this has a direct influence on your utilization, which will be a factor in determining your maximum inventory limits. You may have many open shipments that aren’t being used if your utilization rate is too high.

TIP: SPACEGOATS uses an automated just-in-time mechanism to avoid high inbound stocks, inventory limits, and extra inventory. You can calculate the minimum inventory needed by analyzing historical sales data of your product or if it is a new product by analyzing the data of comparable products.

4. Reserved Inventory

Amazon reserved inventory refers specifically to units in reserved status. These items can include customer orders that are ready for delivery, units that are checked into and/or taken out of Amazon FCs (aka FC transfers), or units that are stored in an FBA warehouse to be further processed or verified (aka FC processing).

Although Amazon states otherwise, just like inbound inventory. However, we found that reserves can have an adverse effect on your utilization rates. As such, it is important you monitor your reserved inventory levels so that you don’t reach your restock limits quickly.

This formula can be used for factoring reserved inventory into your max shipping quantity calculations.

Restock limit – FBA Inventory – Open Shipments – Reserved inventory = Maximum Ship Quantity

Limits on maximum restock allow you to limit the amount of inventory you can send in. If this happens, you could be at risk of overstocking certain products. Knowing this, Amazon selling out can hurt your IPI score as well, rank, sales and ranking. Monitoring your reserve inventory levels is essential, as there have been cases where inventory has remained in reserve for weeks or months and is not moving.

5. Extra Inventory

Extra inventory refers to excess inventory, which is inventory that remains unutilized or unsold in a warehouse. These unsold goods can lose value over time and become obsolete.

Amazon says an inventory might be considered excessive if:

  • Minimum one unit in your inventory has been more than 90 days old
  • Your inventory holds more than 90 day supply
  • The cost of keeping your unsold inventory at a warehouse while you wait for the action to be taken is greater than the cost involved in selling or putting the excess inventory up for auction.

TIP: Every so often, check your Inventory Health Report. If you find aging products in it, take the required actions immediately. This will help recover some of the money you have invested in your inventory and prevent it from sitting in a warehouse longer than three months, after which it will start to incur long-term Amazon storage costs.

The danger of holding too much inventory is:

  • lower Amazon IPI scores.
  • An increase in slow sellers products
  • Cash flow issues

There are many ways you can move excess inventory.

  • Listing your current stock on Amazon Outlet Deals / participating in Lightning Deals.
  • Liquidation orders or removal orders might be a good choice.

6. Amazon Stranded Inventory

Amazon stranded inventories are inventory that can’t be sold because it isn’t available for sale.

  • Listing errors
  • Pricing errors
  • You can place your listing in inactive status. Also known as a closed listing
  • Incomplete listing information
  • Suspended list
  • Amazon marks your product as out stock, even if you have FBA stock. Here are some reasons why this could happen:
  • You’ve added the product to Amazon in less than 24 hours. Just wait for Amazon’s catalog information to fully upgrade. Amazon has received customer orders equal to your last declared stock quantity. This is a sign that your stock is running low and you must replenish your inventory quickly.
  • Sending limited products into FBA
  • Amazon has marked some products as expired
  • To be able to market the brand/product on Amazon, you will need approval from either the brand owner or an authorized distributor.

To find out why a product is stranded, the first step in fixing it is to look at your stranded inventories report. Then, you can try to correct any errors in the listing or follow Amazon’s recommended steps. Once it is fixed, you may relist it. If you have unsellable stranded goods that need to be removed from Amazon, create a Removal Order in your Seller Account to give Amazon permission to either dispose of them (or return them to your office or warehouse).

7. Buffer Stock

Buffer stock is also known as safety stock. They are extra inventory that is kept at FBA or in your warehouse in order to handle unexpected shipping delays.

Sellers who often order or transfer inventory if their stock level is too low should learn to keep a buffer stock. This will allow them to be prepared for any unexpected situations that may quickly lead to stockouts.

TIP: Use your sales data to calculate your ideal buffer level. We use a weighted average of the last weeks to calculate the days of remaining stock. If possible try to take seasonal effects also into account.

8. Anticipation Inventory

Anticipation inventory consists of inventory that is kept seasonally to meet demand spikes.

In order to be able to sell more summer clothing, such as swimwear, sellers need to purchase sufficient swim trunks.

If you are planning your anticipation inventory, it is worth checking your calendar to make sure you don’t miss any major selling dates like Mother’s Day/Father’s Day/Valentines Day/Prime Day/Black Friday/Cyber Monday, or the lead up to the holiday sales period.

9. Amazon Commingled Inventory

Commingle can be defined as mixing and matching things. Amazon commingled Inventory is an acronym that refers to a group or products bearing the same barcode. This option is typical for resellers and retail and less common for private label sellers.

A commingled inventory does not have a specific merchant ID. Products are pooled based on the manufacturer’s barcodes.

Why does it work?

Optional commingled inventory is available. Once you have selected this option from your seller account and you are ready to send your shipment straight away to FBA, you don’t need to label your products. FBA FC staff store your products along with other products from sellers.

Amazon will ship your product to a customer who purchases your product from the commingled stock. Most customers will choose the closest FC for faster shipping and to save money.

You can activate the option directly in seller central. Amazon can choose the product of a different seller, and you will receive credit for the order and the other way around. This means a shorter shipment duration for the end customer and that you receive the credits from Amazon instead of the end customer. You will find the relevant invoices and credit notes in seller central under Reports, Tax documents. Implementing these documents into your bookkeeping can be difficult and should be discussed with your accountant directly.

This also means you do not have control over whether the product is authentic or of quality. Even if the customer files counterfeit complaints against you, it’s difficult to prove that the product was actually yours.

Amazon takes precautions to reduce such risks by ensuring that the products they include in their commingled inventories are:

  • In new condition
  • It is not perishable.
  • Expiration-dated
  • Not in the dangerous goods group
  • Each has a single UPC,EAN or ISBN code that matches an ASIN from Amazon’s catalogue.
  • Packaging must have a label containing identifiers such a model number, title, and color as well the corresponding EAN/UPC/ISBN barcode

If you don’t want to use commingled stock, make sure that you use the correct Amazon code for each product. Amazon uses FNSKU, the Fulfillment Network Stock Keeping Unit (FNSKU), barcodes to identify and track your FBA items back to you.

Amazon automatically generates the FNSKU barcode once you create an FBA shipment plan. The label can then be printed and attached directly to your product. Alternatively, you could sign up to the FBA Label Service, and Amazon will apply the labels on your product for a per-item charge.

10. Amazon Meltable Inventory

Meltable inventory is a category that includes all heat-sensitive products such as chocolate, gummies, and certain jelly- and/or wax-based items.

FBA doesn’t accept meltable inventory until October 16 or April 14. They are not accepted for meltable inventory from October 16 through April 14.

Furthermore, perishable goods, such as fresh meats or fruits, as well as vegetables that require refrigeration or air conditioning are banned.

FCs are typically kept at around 75 to 150 degrees Fahrenheit during the summer to maintain product integrity while shipping and storage. However, Amazon might charge different storage fees for heat-sensitive products, particularly during the summer months.

11. Restock Inventory

Restock Inventory describes the recommended replenishment amount that you should send Amazon FCs. Also, it specifies when you need to send it in order to keep it in stock. These recommendations are meant to help you determine the cost of running short of stock (lost revenues) and how much inventory you should keep.

Amazon provides all the information through its FBA Restock Inventory tool. It considers your account’s sales history as well as demand forecast and seasonality. You can also adjust your lead-time, case pack quantity, and replenishment frequency to get a better recommendation for restocking.

Be aware, however, that this tool has its limitations. Its customization capabilities are very limited compared to other inventory software systems. Here’s why:

  • Amazon only considers your total sales. They do not take into account your adjusted sales velocity.
  • Amazon’s restock recommendations algorithm does not take into consideration separate lead times between supplier and third-party logistics (3PL), order against transfer (warehouse/FBA) frequencies as well as inventory on hand at your 3PLs or inventory available at your suppliers.

It is possible to order excessive or insufficient stock if one variable is not included. This is why you shouldn’t just rely on Amazon for your reorders.

12. Amazon Inventory Missing or Lost

Amazon misinterprets two trailers to confuse destination addresses. A less than truckload freight shipping (LTL) shipment can get lost. It happens, even though it isn’t always common.

A 3PL owner was involved in an incident in which a trailer was supposed to be taken to Nevada, but instead went to California. This created problems that needed to be resolved. The wrong FCs can affect your shipping times and delivery times.

Lost packages can sometimes be found. But it may take several weeks or even months. Amazon representatives can tell you that they will need to wait 3 days and then 7 days.

In Q42015, my inventory went missing more than four weeks into December. I was considered “lost”. It was then discovered weeks after Christmas.

Amazon will refund you the cost of any lost inventory. Let’s take for example that your product was selling at $50 after Amazon fees. Amazon has lost 150 units. In that situation, you should be paid $7,500. Most of the time you won’t receive the full amount especially if the product was selling for a lower price the last 90 days.

Amazon can return the payment if it happens that they miraculously find all your missing items. They will return all 150 units to your account and allow you to sell them.

Tip 1: When you book an LTL carrier, make sure you take note of your trailer’s # and Bill of Lading. This will allow Amazon and your carrier to locate your shipment if it becomes lost.

Tip 2: You should look for a service provider that does either open missing stock support tickets in seller central automatically or provides you all the necessary information to do it yourself. SPACEGOATS checks it automatically for you once every month.

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