Your Amazon listing shows 12 units in stock. A customer orders 3 while your warehouse ships 5 to FBA. Another order arrives before your system updates. Your inventory count drifts further from reality, and you cannot tell how many units remain available to sell.
Amazon inventory management requires knowing exactly what you have, where each unit sits, and when to reorder before stockouts or excess inventory drain your profits.
In this guide, you will learn how to manage Amazon inventory accurately, avoid costly mistakes, and scale your operations without losing control.
Amazon inventory management directly impacts your revenue, costs, and seller performance metrics. Poor inventory control creates problems that compound as your business scales across channels and product lines.
When you run out of stock, Amazon stops displaying your listings in search results and removes them from the Buy Box.
Your “Best Seller Rank” drops while competitors capture the customers you spent advertising dollars to attract. Restocking requires time to ship inventory to FBA warehouses, and rebuilding lost rankings requires even more time and ad spend to regain momentum.
Excess inventory locks up cash that could fund new product launches or marketing campaigns.
Amazon charges long-term storage fees for units sitting in FBA warehouses beyond 365 days. Products that age without selling become dead stock that forces you to choose between steep markdowns or paying removal and disposal fees.
When your internal records diverge from Amazon's system, you lose the ability to forecast demand, plan purchase orders, or allocate stock intelligently across sales channels.
Multi-channel sellers amplify this problem when WooCommerce stores, eBay listings, and POS systems all display different stock counts than FBA warehouses show.
Amazon calculates your IPI score using metrics like excess inventory percentage, sell-through rates, and stranded inventory levels.
Sellers with low IPI scores face storage limits that cap how much inventory they can send to FBA. These restrictions prevent you from stocking bestsellers during peak seasons when demand surges.
Spreadsheets and manual updates function adequately when you manage 50 SKUs and fulfill 100 orders per week. The system collapses when you scale to 500 SKUs distributed across multiple warehouses and sales channels.
Errors multiply faster than you can correct them, and monthly reconciliation stretches from hours into days.
Inventory connects every part of your business, from sales to fulfillment to finance. But most multi-channel sellers struggle not from lack of effort, but from hidden pitfalls that only become visible when problems escalate.
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The most common Amazon inventory mistakes can erode profits and put your account at risk. These pitfalls are predictable and preventable with the right systems.
Amazon's Seller Central dashboard shows FBA inventory levels but excludes units in transit, inventory at other warehouses, or stock allocated to other sales channels.
Sellers who trust Seller Central alone cannot see their complete inventory picture.
How to avoid it: Maintain a centralized inventory system that aggregates data from Amazon FBA, your warehouse, and other sales channels. Platforms like Webgility consolidate inventory across Amazon, WooCommerce, eBay, and POS systems into a single dashboard.
Stranded inventory sits in FBA warehouses but cannot be sold because listings are suppressed or deleted. These units generate storage fees without producing revenue.
How to avoid it: Check your stranded inventory report weekly in Seller Central. Set up automated alerts for listing suppressions and fix issues immediately before long-term storage fees apply.
Suggested read: Amazon Seller Accounting Software Guide
Fixed reorder points based on average sales fail when demand patterns shift. Seasonal spikes and promotional campaigns cause fluctuations that static reorder points cannot accommodate.
How to avoid it: Calculate reorder points dynamically using recent sales velocity, lead times, and seasonal factors. Review and adjust reorder points monthly before major shopping events.
Many Amazon sellers calculate reorder points using average lead times without buffers for delays. Supplier slowdowns, customs holds, and carrier disruptions extend lead times unpredictably.
How to avoid it: Add safety stock buffers based on your longest historical lead time. Track supplier performance over time and maintain higher safety stock for critical SKUs.
Manual inventory updates lag behind actual sales, creating windows where customers can purchase unavailable products. Overselling generates cancellations and negative reviews.
How to avoid it: Implement an automated inventory sync that updates stock levels across all channels in real time. Webgility syncs inventory bidirectionally across ecommerce platforms, marketplaces, POS systems, and accounting software.
Storing Amazon FBA returns, ecommerce inventory, and wholesale stock in the same warehouse without proper tracking creates allocation chaos.
How to avoid it: Implement location-based inventory tracking that assigns specific warehouse zones to each sales channel. Multi-location inventory management features help track stock by warehouse and channel simultaneously.
Returns increase available inventory, but many sellers fail to account for returned units when calculating reorder points. This leads to overstocking because purchase orders are placed without accounting for returned items, making inventory appear lower than it is.
How to avoid it: Track return rates by SKU and factor them into demand forecasts. Establish workflows for inspecting returned inventory and updating stock counts based on sellable condition.
Sellers who reconcile inventory quarterly allow small discrepancies to accumulate into large gaps between system counts and physical inventory.
How to avoid it: Reconcile inventory weekly or monthly, depending on order volume. Automated ecommerce reconciliation tools flag discrepancies immediately so you can investigate and correct errors before they compound.
Most pitfalls stem from treating inventory as a silo. Next, let us map how inventory decisions ripple across your Amazon business.
Inventory management is interconnected with every major Amazon business lever. One weak link can undermine your entire operation.
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Business function |
Inventory impact |
|
Advertising |
Stockouts waste ad spend and reduce campaign ROI |
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Account health |
Low IPI scores, late shipments, and storage fees hurt your standing |
|
Financials |
Inaccurate COGS tracking and fee reconciliation distort margins and cash flow |
|
Customer experience |
Late shipments and unavailable products lead to negative reviews |
Table 1: How inventory management affects key business functions
With so many moving parts, manual tracking quickly breaks down. Automation tools like Webgility sync Amazon inventory with accounting, eliminating manual reconciliation and giving sellers true margin visibility.
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Manual inventory management starts with a few proven formulas and Amazon’s built-in tools.
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Reorder Point = (Average daily sales × Lead time in days) + Safety stock |
Example: If you sell 10 units per day, your supplier lead time is 14 days, and you keep 50 units as safety stock: Reorder Point = (10 × 14) + 50 = 190 units
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Safety Stock = (Maximum daily sales × Maximum lead time) - (Average daily sales x Average lead time) |
Example: If your maximum daily sales are 15 units, maximum lead time is 18 days, average daily sales are 10 units, and average lead time is 14 days: Safety Stock = (15 × 18) - (10 × 14) = 270 – 140 = 130 units
Manual methods work, but as your order volume grows, tracking every SKU by hand becomes unsustainable. Tools with real-time tracking, like Webgility, can automate these calculations and flag trends, but these formulas are essential for every seller.
Here is how to know when it is time to automate.
Once you exceed 500 orders per month or add more sales channels, manual inventory management cannot keep up. Automation tools become essential for accuracy, speed, and growth.
Red flags that signal it is time to automate:
Tool categories to consider:
Take Rider Shack, for example. They saved 10 to 15 hours per week and reduced operational costs by $1,400 per month after automating inventory sync. The real-time inventory visibility eliminated stockouts and cancellations, while reducing shipping processing time by 25%.
Webgility also integrates Amazon, Shopify, and QuickBooks, helping sellers handle 10x more orders with the same team and saving up to 90% of reconciliation time. Plus, Webgility is trusted by over 5,000 ecommerce businesses and processes over 80 million transactions annually.
Ready to streamline your workflow? Start your free Webgility trial today.
Use the formula: (Average daily sales x Lead time) + Safety stock. This ensures you reorder before running out, accounting for supplier delays.
If you process more than 500 orders per month, sell on multiple channels, or spend hours reconciling data, automation will save time and reduce errors.
The IPI is Amazon’s score for inventory efficiency. A score below 400 can trigger storage limits, so maintaining a high IPI helps avoid extra fees and keeps your account healthy.
Regularly review inventory age, use Amazon’s inventory dashboards, and plan promotions or removals for slow-moving stock before it reaches 181 or 271 days in storage.