Here's Why You Need Amazon Inventory Management Software to Grow Your Business

May 14,2018
by Matt Lurie

Illustration that depicts how Amazon inventory management software worksAmazon controls the world. The online retail juggernaut is not only a category leader, but with more than 200,000 employees and annual revenue over $177 billion, it's one of the largest companies, period. Suffice it to say that if you sell products online, you'll probably want to consider selling on Amazon.

Easier considered than done, right? Carving out a niche on Amazon—and remaining successful in that niche—is a daunting prospect for any e-commerce business. The sheer size and popularity of the marketplace pose challenges in terms of attracting customers, fulfilling orders, and earning a profit. Sellers need to act quickly to move product, keep inventory levels stable, and set prices in a way that meets consumers' needs without triggering a race to the bottom.

That's where Amazon inventory management software comes in. Amazon may control the world, but that doesn't mean you have to let the whims of the marketplace control your business. With a smart online inventory management solution, any seller can make Amazon work for them. Let's take a look at how the world's leading e-commerce platform is actually set up to benefit third-party sellers—particularly nimble, growth-minded sellers—and how inventory management software powers success on Amazon.

There's No Amazon Without Sellers

Ever wonder how Amazon got so big? The secret is e-commerce businesses like yours. Third-party sales now comprise more than 50% of all products sold on the site, and Amazon makes a large portion of its revenue from seller subscription fees.

Accordingly, it's in the company's best interest to keep its third-party sellers happy. Amazon offers numerous privileges and tools to e-commerce businesses who join the marketplace. And with competitors such as Walmart and Jet.com increasingly eating into its market share, the company is continually introducing new options to Amazon Seller Central make doing business on the platform easier and more rewarding.

Valuable sales tools and services provided by Amazon include the Selling Coach, the Brand Registry, a dedicated iOS and Android app for sellers, and Amazon Pay—the company's answer to PayPal and other e-commerce shopping carts and payment processors. (Sellers can find tutorials and training about each of these benefits at—where else?—Seller University.)

One especially useful tool is Fulfillment by Amazon (FBA). By enrolling in FBA, your company hands many of the most painful aspects of running an e-commerce business—including warehousing, picking, and shipping—over to Amazon's massive team and facilities. Moreover, sellers who use FBA increase their chances of winning the Buy Box (more on that topic later).

All of these options have their drawbacks, however. Remember: Amazon also sells its own inventory directly to consumers, and the company keeps in-house any resource it can't feasibly offer them a premium to sellers. As a result, sellers who don't independently seek additional tools wind up hamstrung by the Amazon platform. When your only partner is also your competitor, you lose the power to grow your business on your own terms.

Fortunately for all the enterprising e-commerce companies out there, inventory management software presents benefits that Amazon can't—or won't—provide on its own.

Reason #1 to Use Amazon Inventory Management Software: More Buy Boxes

Illustration of hand clicking the "buy now" box (known as the Amazon buy box)

The pane enclosing the "Add to Cart" button is what's known as the "Buy Box." On desktop browsers, a product's Buy Box can be found on the right side of the product detail page; on mobile browsers, it's right below the product image. The Buy Box also contains drop-down menus for quantity and product options (e.g. size, color), as well as information about the company selling and/or fulfilling the product.

What few shoppers realize when they add a product to a cart is that there's a war over that product's Buy Box raging between sellers. Every second, retailers are changing their prices, adjusting their inventory levels, switching shipping and fulfillment services, and gathering positive customer feedback—all in the hope that the combination of these factors will induce Amazon's complex (and largely opaque) algorithm to rank the company as the best option for shoppers and select it for inclusion in the Buy Box. This is known what's known as "capturing" or "winning" the Buy Box.

Amazon inventory management software can increase a company's odds of capturing—and remaining in—the Buy Box. How? By fighting algorithms with algorithms. A number of inventory management platforms have developed their own formulas that can instantaneously adjust product details, so sellers never miss an opportunity to compete. Think of these algorithms as data harnessed in real-time—they're automated ways to meet customer demand while keeping your business profitable. Which brings us to…

Reason #2 to Use Amazon Inventory Management Software: Intelligent Repricing

Illustration depicting intelligent repricing software for Amazon: a hand clicking on the Amazon Buy Box, and line icons that depict repricing considerations

Price isn't the only factor in competition over the Buy Box, but it is almost certainly the most important factor. Customers typically want to pay as little as possible, and if a company can offer products at a low price—along with quick shipping and superior customer service backed by a sterling reputation—Amazon will likely choose that company as the default option. Sellers also compete on pricing because it's often the easiest factor to change.

Of course, price-driven competition isn't ideal for sellers. Every sale closed through low price alone is a pyrrhic victory: margins shrink and customers receive the message that the company is the "cheap" option. It may help move your product, but it can hurt your brand—not to mention your bottom line—in the long run.

Some Amazon inventory management platforms, such as SellerActive, are designed to help sellers compete on price without sacrificing profit. Our software's intelligent repricing features allow sellers to configure their own automated repricing strategies. Users set minimum and maximum prices, as well as their own rules for price updates. You can choose whether to keep dynamic repricing on perpetually, or to let it happen conditionally—in response to factors such as certain market conditions, the time of day, or sales velocity.

The best part? The price that gets you through the door, so to speak, isn't necessarily your ceiling. As Hannah recently wrote here on the blog, "once your product hits the Buy Box, SellerActive can automatically raise your pricing, increasing your per-sale profit margins without losing you the coveted Buy Box spot."

Reason #3 to Use Amazon Inventory Management Software: Greater Ability to Expand Beyond Amazon

Illustration of multiple online marketplaces - eBay, Amazon, Walmart and Jet

Amazon may be the first place many customers and businesses think of when they hear the word "e-commerce," but it's far from the only option out there for sellers. The same inventory management tools that empower you to succeed in the world's leading online marketplace can help you dominate eBay, Walmart, Jet, Newegg, Google Shopping, and myriad other marketplaces.

The best Amazon Inventory Management Software for your business

SellerActive is built to synchronize your inventory, pricing, and product listings across sales channels, so your company can compete and grow everywhere you do business. Call it multichannel management, or call it, well, ruling the e-commerce world. You can learn more about our multichannel features and see how sellers use SellerActive to gain greater freedom and flexibility at our e-commerce channel management page.

Ready to learn more? Schedule a demo of our powerful Amazon seller software today!

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Have a question, tip, or rant about Amazon you'd like to share with our seller community? Leave us a comment below!

 

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