Over the past five years, I have worked with hundreds of Amazon sellers and there is one particular problem that stands out year after year. Most sellers focus so much of their energy on boosting sales ranks that they forget about key business fundamentals. While marketing tactics to increase sales are essential to the success of your Amazon business, it is critical that you don’t forget some of the basics that are required to grow a healthy ecommerce business.

I get it. Many of these tasks aren’t fun and they definitely aren’t exciting, but I can’t stress their importance enough. Here are four Amazon fundamentals that you can focus on and build into your routine:

1. Written Business Processes

As you grow your business, it is easy to get stuck focusing on operations and forget about establishing processes. Documenting your processes are essential for running a successful business – even if you are a ‘solopreneur.’ Processes force us to document and analyze what we are doing. It is from this place that we can then make improvements.

If you haven’t documented your processes, you are not alone. When I hired my first team member, one of my advisors asked me how I was tracking our processes. Of course, I replied “what processes?”.

Any repetitive task in your business should be documented to explain what to do and how to do it. It does not need to be complicated. A simple tool like Google Docs is great for tracking and sharing your tasks and processes. Use screenshots, videos, and GIFs to illustrate the details.

As your team grows, these documents can be used as part of the training process to establish procedures. They should be dynamic pieces of content that are continually improved upon. Ask your team for feedback and carve out time in your schedule to review them.

Pro Tip: Use video software to record your screen and voice as you complete a task. Ask a member of your team or a freelancer to turn that video into a process document.

2. Inbound Shipment Reconciliation

Many Amazon sellers do not routinely reconcile their FBA inbound shipments. Sadly, I regularly see sellers who pay for inventory, only to later realize that some of that inventory was not received at the FBA warehouse. You can’t afford to pay for products you don’t receive. It drives up your cost of goods sold and eats away at your profit.

Fortunately, Amazon will reimburse you for any inbound inventory that is lost, but it requires a bit of legwork on your end. You need to routinely audit your inbound shipments to ensure they are received properly. Tackle these audits in-house to ensure that you are not missing any shipments. Amazon may request a packing slip or invoice for larger shipments – something only an in-house team can provide.

3. Stock-Out and Excess Inventory Prevention

Inventory management is complicated. There is a science to forecasting demand and many Amazon sellers struggle in this area. Don’t turn a blind eye, though. Facing stock-outs and holding excess inventory are common occurrences that significantly impact your profit.

Demand forecasting is challenging and mistakes are bound to happen, but you have to start somewhere. Use data to spot problem areas. Work on reducing lead times and improving your demand forecasting through the use of predictive analytics. Establish a routine to review your inventory and a process to handle stock-outs and excess when they occur.

When you have excess stock, find ways to begin moving that inventory to free up cash. Stale inventory will inhibit health cash flow which is essential to business growth. Lightning deals and coupons are great methods to increase demand for stale products.

To help prevent stock-outs, don’t forget to incorporate safety stock into your inventory levels. Don’t use the same safety stock calculation for all of your products. Your most important items should have a higher percentage than your less important items.

Inventory replenishment mistakes can be very expensive. Build a replenishment process, learn from your mistakes, and continuously optimize that process.

4. Have A Plan

It’s all about G-O-A-L-S. You must define your goals, so you can determine a path and focus on what is important. Have you set your goals for 2018 yet? Be sure to include an operations plan. Include a budget and account for cash flow. Identify how much cash will be needed to ensure your goals are realistic. Map out each month so that you have a clear picture of the highs and lows.

To help make better decisions, consider using business intelligence and demand forecasting software. Software tools can help you work efficiently, especially as you scale. Don’t get bogged down with tasks that can be automated by software.

Don’t fall into the biggest goal trap. Goals shouldn’t just be set at the beginning of the year and never looked at again. Set an annual goal and break it down into smaller monthly goals. Review those goals each month. If circumstances change significantly during the year, adjust as needed. Goals should serve as motivation for you and your team. Don’t be afraid to remind everyone where you are headed in 2018.

Jeremy is the founder of Forecastly, an advanced inventory management system that helps  Amazon sellers work smarter. Using proprietary algorithms that are unmatched on the market today, Forecastly simplifies the inventory replenishment process by helping sellers quickly and easily reconcile FBA inbound shipments, build purchase orders, predict seasonality, and analyze inventory counts. Our mission is to help sellers reduce stock-outs and boost profitability.


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If you enjoyed this content, consider joining us at PROSPER Show, March 13-14, 2018 at the Las Vegas Convention Center.