Amazon’s dominance in e-commerce is undeniable, driving 40% of all U.S. online sales in 2023. For high-growth businesses, listing products on this marketplace is crucial, but managing that inventory effectively is even more critical. With millions of active users and Prime members, the stakes are high. Are you equipped to handle the challenges of Amazon inventory management?

Why Inventory Management Matters More Than Ever

Shoppers today expect cost-effective, flexible, and reliable delivery options. 

In fact, recent studies show:

• 90% of consumers prefer free standard shipping over paying for expedited delivery.
• 45% use alternative delivery locations like lockers or in-store pickup.
• Winning the Buy Box often comes down to maintaining consistent stock availability.

Beyond customer expectations, sellers also face rising FBA storage fees, strict IPI score restrictions, and costly stockout risks—all of which directly impact profitability and Buy Box performance.

Poor inventory management can mean:

• Lost revenue due to stockouts.
• Higher FBA storage fees from overstocking.
• Reduced Buy Box eligibility, hurting visibility and conversions.

With so many moving parts, successful inventory management requires a well-planned approach. In this guide, we’ll break down the essential strategies that help sellers optimize stock levels, reduce costs, and stay ahead of Amazon’s ever-changing policies.

What You’ll Learn in This Guide

This guide breaks down essential Amazon inventory management strategies, including:

• How Amazon’s inventory system works and why it’s crucial for sellers.
• Common inventory pitfalls (stockouts, overstocking, policy changes) and how to avoid them.
• The benefits of automation—how real-time tracking and AI forecasting can cut costs and boost efficiency.
• Best practices for FBA, FBM, and hybrid fulfillment to balance costs and control.
• How multichannel inventory management helps sellers grow beyond Amazon.

With the right strategies, you can reduce manual workload, improve operational efficiency, and scale profitably on Amazon. 

Before we dive into the strategies, let’s first define what Amazon inventory management is and why it’s crucial for sellers.

What is Amazon Inventory Management?

Amazon inventory management is the process of tracking, organizing, and optimizing stock levels to ensure products remain available for sale while minimizing costs. Effective inventory control helps sellers prevent stockouts, overstocking, and unnecessary fees, all of which impact sales performance and profitability.

With Amazon’s fulfillment policies constantly evolving, sellers must carefully balance supply and demand while complying with storage limits, restock restrictions, and IPI score requirements.

Why It’s Essential for Amazon Sellers

Managing inventory effectively ensures:

• Steady Sales Flow: Avoiding stockouts prevents lost revenue and Buy Box penalties.
• Cost Optimization: Keeping the right amount of stock reduces FBA storage fees.
• Faster Fulfillment: Accurate inventory tracking speeds up order processing.
• Stronger Seller Metrics: Meeting fulfillment performance standards helps maintain account health.

In 2025, automation and AI-driven tools are transforming inventory management, providing real-time tracking, predictive restocking, and demand forecasting to help sellers stay competitive.

Beyond just keeping stock levels in check, inventory management also depends on choosing the right fulfillment model. The next section explores the key differences between FBA (Fulfillment by Amazon) and FBM (Fulfillment by Merchant)—and why many sellers use both.

Amazon’s Built-In Inventory Management Tools (FBA vs. FBM)

Amazon sellers must decide how to store, fulfill, and ship their products. The two primary fulfillment models—Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM)—offer distinct advantages and trade-offs. Choosing the right approach depends on costs, control, and fulfillment priorities.

Fulfillment by Amazon (FBA)

With Fulfillment by Amazon (FBA), sellers send their inventory to Amazon’s fulfillment centers, where Amazon handles storage, packing, shipping, and customer service.

Pros of FBA:

• Prime Eligibility – FBA products qualify for Amazon Prime’s fast shipping, increasing visibility and conversion rates.
• Streamlined Logistics – Amazon picks, packs, and ships orders, reducing seller workload.
• Better Buy Box Performance – FBA listings have a higher chance of winning the Buy Box, improving sales potential.

Cons of FBA:

• High Storage & Fulfillment Fees – FBA costs vary based on size, weight, and storage duration, with long-term storage fees penalizing slow-moving inventory.
• Inventory Performance Index (IPI) Restrictions – Amazon enforces IPI score limits, restricting how much stock sellers can send to FBA warehouses.
• Less Control Over Inventory – Amazon may relocate stock across fulfillment centers, causing unexpected availability delays.

Fulfillment by Merchant (FBM)

With Fulfillment by Merchant (FBM), sellers handle storage, packing, and shipping themselves or through third-party logistics (3PL) providers.

Pros of FBM:

• Greater Inventory Control – Sellers manage stock levels, shipping methods, and returns independently.
• Lower Storage Costs – No FBA storage fees, making it more cost-effective for slow-moving or oversized products.
• No IPI Restrictions – Unlike FBA, Amazon does not impose restock limits on FBM inventory.

Cons of FBM:

• No Automatic Prime Eligibility – FBM products must qualify for Seller-Fulfilled Prime (SFP), which has strict performance requirements.
• Higher Operational Workload – Sellers must handle warehousing, shipping logistics, and customer service.
• Lower Buy Box Advantage – FBA listings typically receive higher priority in Amazon’s algorithm, making it harder for FBM products to compete.

Why Many Sellers Use a Hybrid Approach

Top Amazon sellers strategically mix FBA and FBM to cut storage costs, maintain inventory flexibility, and improve fulfillment efficiency.

• FBA for fast-moving, high-demand products to maximize Prime eligibility.
• FBM for slow-moving, niche, or oversized products to reduce storage fees and inventory restrictions.
• 3PL (Third-Party Logistics) as a flexible alternative for multichannel fulfillment and backup inventory storage.

By diversifying fulfillment methods, sellers reduce risk, lower costs, and optimize inventory efficiency to stay competitive on Amazon.

Next up—avoiding common Amazon inventory challenges and keeping your stock levels optimized.

Common Challenges in Amazon Inventory Management & How to Solve Them

Managing inventory on Amazon isn’t just about keeping products in stock—it’s about balancing demand, fulfillment costs, and compliance with Amazon’s evolving policies. Without the right approach, sellers risk stockouts, overselling, penalties, and lost revenue.

Here’s how to avoid the most common pitfalls and keep your inventory running efficiently:

Challenge #1: Time Investment & Errors with Manual Inventory Tracking

Manual inventory management is time-consuming and prone to errors. Sellers often spend hours updating stock levels across multiple platforms after each sale. Fluctuations due to seasonal demand, supplier delays, and marketplace trends make manual tracking increasingly difficult. Errors in data entry can lead to misreported inventory, incorrect order fulfillment, and stock discrepancies, negatively impacting sales performance.

Solution: Automated inventory tracking tools synchronize stock levels across marketplaces, reducing manual workload and errors.

Challenge #2: Rising Consumer Expectations

As e-commerce matures, consumer priorities around delivery speed, cost, and reliability have evolved. According to a 2025 McKinsey survey:

• 90% of consumers are willing to wait 2-3 days for deliveries—especially if it means avoiding shipping costs.
• Cost is now the #1 concern—over 90% of consumers abandon carts due to high shipping fees.
• On-time reliability has overtaken speed as a priority—Consumers prefer consistent, predictable delivery windows over ultra-fast shipping.
• Free shipping remains a dominant expectation—Shoppers overwhelmingly prefer free standard shipping over paid expedited options.
• Flexibility matters—Consumers, especially in urban areas, want the ability to schedule deliveries or choose alternative drop-off locations.

For Amazon sellers, failing to meet these expectations results in lower conversions, reduced customer loyalty, and negative reviews. Since Amazon’s algorithm favors reliable, high-rated sellers, poor inventory planning that leads to stockouts, delayed deliveries, or unexpected fees can directly impact Buy Box eligibility and overall sales performance.

Solution: Optimize inventory management with real-time tracking, hybrid fulfillment, and automated restocking to meet consumer expectations while minimizing costs.

Challenge #3: Stockouts & Lost Sales 

Stockouts are one of the biggest threats to an Amazon seller’s success. If inventory runs out:

• The product listing can drop in search rankings, making it harder to recover.
• Amazon may reduce restock limits for sellers with frequent stockouts.
• Competitors gain an advantage while the seller loses potential revenue.

Additionally, Amazon’s restock limits now impose tighter storage controls based on Inventory Performance Index (IPI) scores. Low scores limit the amount of inventory sellers can send to FBA warehouses, increasing the risk of stockouts.

Solution: Utilize AI-driven demand forecasting to predict sales fluctuations and adjust reorder schedules. Employ hybrid fulfillment (FBA + FBM) to maintain backup stock outside of Amazon’s warehouses.

Challenge #4: Overselling & Order Cancellations

Selling more than available stock—known as overselling—is a critical issue that can result in negative customer experiences and potential account penalties.

Canceled orders due to stockouts can damage seller credibility and affect Buy Box eligibility.

Solution: Implement real-time inventory tracking and automated restock alerts to ensure accurate stock visibility across all sales channels.

Challenge #5: High FBA Storage & Long-Term Fees

Overstocking leads to:

• Higher Amazon FBA storage fees, especially long-term aged inventory charges.
• Cash flow restrictions, as capital is tied up in unsold inventory.
• Forced discounting, reducing profit margins.

Amazon’s fee updates penalize sellers with high-aged inventory, increasing costs for storing slow-moving stock.

Solution: Implement dynamic inventory forecasting to minimize over-ordering. Use promotions and Lightning Deals to clear slow-moving inventory before incurring additional storage fees.

Challenge #6: Adapting to Amazon’s Unpredictable Policy Changes 

Amazon frequently updates its policies, affecting fees, storage limits, and reimbursement processes. For instance, starting March 10, 2025, Amazon will reimburse sellers for lost or damaged inventory based on manufacturing cost rather than sales price, potentially reducing reimbursement amounts.

Additionally, from October 15, 2024, to January 14, 2025, Amazon implemented holiday peak fulfillment fees, which affected sellers’ cost structures during those peak seasons.

Solution: Stay informed about policy changes by regularly reviewing Amazon’s updates. Diversify sales channels and consider third-party logistics to reduce dependency on Amazon’s fulfillment services.

Challenge #7: Preparing for Product Recalls & Compliance Issues 

While rare, product recalls can create logistical and reputational challenges for sellers. Without proper inventory tracking, sellers may struggle to:

• Locate and remove affected inventory.
• Issue refunds or replacements efficiently.
• Provide Amazon or regulators with accurate product traceability reports.

Amazon’s compliance policies require strict inventory control for certain categories (e.g., food, supplements, electronics). Failure to maintain accurate product tracking can result in seller account suspensions or regulatory penalties.

Solution: A centralized inventory management system ensures that sellers can track, locate, and recall products quickly while maintaining compliance.

By proactively addressing these challenges with advanced inventory management practices, sellers can enhance profitability, maintain compliance, and deliver superior customer experiences on Amazon.

Addressing these challenges manually can be overwhelming, but automation simplifies inventory tracking, compliance, and overall efficiency. Let’s explore how automated inventory management can transform your operations.

‍The Benefits of Automated Inventory Management

Why Automation Matters for Amazon Sellers

Managing inventory manually is not only time-consuming but also prone to costly errors. Sellers relying on spreadsheets or Amazon’s built-in tools often struggle with:

• Stockouts that hurt Buy Box eligibility
• Overselling, leading to cancellations and negative reviews
• High storage fees due to poor inventory forecasting
• Manual restocking processes that waste valuable time

With Amazon’s fulfillment policies evolving and multichannel sales becoming the norm, sellers need automated inventory management to stay competitive.

Many sellers who implement inventory automation see fewer stockouts, lower storage fees, and faster order processing times—leading to more efficient and profitable operations.

Key Benefits of Automating Amazon Inventory Management

Save Time & Eliminate Manual Errors

• Manual tracking leads to data entry mistakes, stock discrepancies, and fulfillment delays.
• Automation syncs inventory in real-time across Amazon, Shopify, eBay, Walmart, and warehouses.

Improve Inventory Accuracy & Prevent Stockouts

• Real-time stock tracking prevents overselling and missed sales opportunities.
• AI-powered forecasting analyzes past trends to predict demand and prevent understocking.

Reduce Storage Fees & Optimize Fulfillment Costs

• Amazon penalizes slow-moving inventory with high storage fees.
• Automated systems track aging inventory and recommend moving slow sellers to FBM or 3PL warehouses.

Enhance Demand Forecasting & Prevent Overselling 

• AI-driven planning tools predict sales spikes and seasonal demand based on historical data.
• Prevents overselling, which leads to order cancellations and account penalties.

Scale Multichannel Operations with Less Effort

• Selling on multiple platforms? Automation syncs inventory across Amazon, eBay, Shopify, Walmart, and more.
• Order management is streamlined, so sellers can fulfill from the most cost-effective location.

Automation is a game-changer for inventory management, but not all systems offer the flexibility and control sellers need. Let’s examine the limitations of Amazon’s built-in inventory tools and when it’s time to consider third-party solutions.

Why Amazon’s Built-In System Isn’t Enough 

Amazon provides inventory management tools through Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). While these systems work for many sellers, they come with significant limitations—especially for those scaling their business or selling across multiple channels.

Without a flexible, automated inventory management system, sellers risk stock issues, higher costs, and lost sales due to Amazon’s restrictions.

The Drawbacks of Amazon’s Built-In Inventory Management

1. Limited Multichannel Support

Amazon’s inventory management tools are designed primarily for Amazon sellers, making it difficult to sync inventory across multiple platforms. If a seller operates on Shopify, Walmart, eBay, or their own DTC website, Amazon’s system does not provide real-time stock updates to prevent overselling.

Without a centralized system to synchronize inventory across channels, sellers risk:

• Overselling on platforms where stock is not updated in real-time, leading to order cancellations and negative customer experiences.
• Stock discrepancies that disrupt fulfillment operations and damage brand reputation.
• Manual data entry errors, increasing the risk of inaccurate stock counts.

2. High Storage Fees and Costly Fulfillment

Amazon’s FBA storage and fulfillment fees are subject to change and can significantly impact a seller’s profitability. These fees often vary based on factors like storage duration, product size and weight, and seasonal demand.  Maintaining optimal inventory levels is also crucial, as Amazon’s Inventory Performance Index (IPI) system can impose penalties for excess or slow-moving stock. 

For sellers, managing these costs is essential. High storage fees can particularly impact those with slow-moving, oversized, or seasonal inventory. Effective inventory management becomes critical to avoid excessive fees and maintain profitability.

Third-party inventory management software helps reduce these costs by:

• Integrating with cost-effective 3PL (Third-Party Logistics) providers for storage and fulfillment.
• Optimizing stock levels with advanced demand forecasting tools to avoid overstocking and excess fees.
• Automating inventory transfer to non-Amazon warehouses when storage limits are reached.

3. Unpredictable Policy Changes

Amazon is notorious for frequently updating its policies, impacting storage limits, fees, and fulfillment requirements. For instance, Amazon has imposed policies such as:

• Restricted restock limits for FBA sellers with low IPI scores, forcing many to rely on FBM or third-party fulfillment.
• Changed reimbursement policies for lost or damaged inventory, reducing compensation based on manufacturing costs rather than retail price.
• Introduced mandatory peak fulfillment fees, impacting seller margins during holiday seasons.

These unpredictable changes leave sellers vulnerable to:

• Sudden increases in storage and fulfillment costs.
• Restock limitations, leading to stockouts and lost sales.
• Account suspensions for non-compliance, affecting long-term business continuity.

The Solution: Third-Party Inventory Management Software

Instead of relying solely on Amazon’s built-in tools, many sellers use third-party inventory management systems to gain more control, automation, and flexibility. These tools help sellers:

• Sync inventory across multiple platforms (Amazon, Shopify, eBay, Walmart).
• Prevent stockouts and overselling with real-time tracking.
• Lower FBA storage fees by optimizing inventory placement.
• Automate stock replenishment and fulfillment for greater efficiency.

Next, we’ll explore how these systems help sellers reduce costs and scale operations efficiently.

How Third-Party Inventory Management Software Helps Sellers Reduce Costs & Scale More Efficiently

As Amazon’s marketplace becomes more competitive, sellers need more control, automation, and flexibility than what Amazon’s built-in tools provide. Third-party inventory management software solves these challenges by centralizing stock tracking, automating fulfillment, and reducing manual workload—helping sellers scale efficiently while minimizing costs.

Key Benefits of Third-Party Inventory Management Software

1. Real-Time Tracking Across Multiple Channels

• Sync inventory across Amazon, Shopify, eBay, Walmart, and other marketplaces in real-time.
• Eliminate overselling by ensuring accurate stock visibility across all channels.
• Centralize inventory management, reducing the risk of stock discrepancies.

2. Lower Storage Fees & Better Demand Planning

• Integrate with multiple 3PL providers for more cost-effective storage options.
• Optimize inventory levels with AI-driven demand forecasting, minimizing overstocking and long-term storage fees.
• Adjust reorder points dynamically based on seasonal demand and sales trends.

3. Customizable Workflows for Automated Stock Replenishment

• Automate restocking alerts to prevent stockouts.
• Create custom rules for inventory transfers between warehouses.
• Enable dynamic order routing for faster shipping and reduced fulfillment costs.

4. Enhanced Control and Risk Mitigation

• Reduce dependency on Amazon’s fulfillment system, protecting against policy changes.
• Adapt quickly to restock limits by leveraging FBM and third-party logistics.
• Improve business resilience by maintaining multi-warehouse inventory visibility.

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When Should You Invest in Third-Party Inventory Software?

• You sell on multiple eCommerce platforms (Amazon, Shopify, eBay, Walmart, etc.).
• You need real-time inventory tracking and dynamic stock updates across all channels.
• You want to reduce FBA storage fees by using alternative fulfillment options.
• You require customized workflows and advanced automation for efficient inventory management.
• You want full control over your inventory strategy instead of depending solely on Amazon’s policies.

Third-party inventory management software empowers Amazon sellers to scale efficiently, optimize costs, and enhance operational control. By leveraging these tools, businesses can maximize profitability and reduce risks associated with Amazon’s evolving policies and fulfillment restrictions.

But which system is right for your business? The next section compares the top solutions for Amazon sellers.

Choosing the Right Inventory Management Software for Amazon Sellers

With Amazon’s ever-changing policies, fulfillment restrictions, and rising storage costs, sellers need an inventory management system that goes beyond Amazon’s built-in tools. A third-party inventory solution helps sellers sync stock across channels, automate restocking, and optimize fulfillment—reducing costly errors and improving efficiency.

But with many options available, how do you choose the right system?

Features to Look for in an Amazon Inventory Management System

1. Real-Time Inventory Tracking

Why It Matters:
Inventory discrepancies lead to overselling, stockouts, and fulfillment delays, all of which negatively impact seller performance and Buy Box rankings. Without real-time updates, sellers may inadvertently sell out-of-stock items or hold too much inventory, incurring unnecessary storage fees.

How It Helps:

• Syncs stock levels automatically across Amazon, Shopify, Walmart, eBay, and warehouses.
• Prevents overselling by updating stock in real-time after every order.
• Provides accurate visibility into stock movement and fulfillment status.

2. Demand Forecasting & AI-Driven Predictions

Why It Matters:
Stockouts and overstocking both hurt profitability—either through lost sales or excessive storage fees. Many sellers rely on guesswork instead of data-driven forecasting, leading to poor inventory turnover.

How It Helps:

• Uses historical sales data, seasonality, and market trends to predict future demand.
• Prevents stockouts by recommending optimal reorder points.
• Avoids excessive Amazon FBA long-term storage fees by managing excess stock efficiently.

3. Multichannel Inventory Management

Why It Matters:
Amazon’s built-in system only tracks stock within its ecosystem, which is limiting for sellers who also sell on Shopify, Walmart, eBay, or their own website. Manual tracking across multiple channels leads to costly errors.

How It Helps:

• Centralizes inventory across all selling platforms to provide a single, accurate stock count.
• Eliminates manual updates, ensuring consistent stock availability across channels.
• Supports fulfillment from different locations (FBA, FBM, 3PL, warehouses).

4. Automated Restocking & Low-Stock Alerts

Why It Matters:
Sellers lose revenue when they run out of stock or fail to reorder inventory in time. Amazon’s restock limits make it even harder to recover from stockouts.

How It Helps:

• Sends automated alerts when stock is running low.
• Generates purchase orders automatically based on demand forecasts.
• Helps sellers stay within Amazon’s restock limits by preemptively adjusting inventory levels.

5. Flexible Order Routing & Warehouse Integration

Why It Matters:
Amazon imposes IPI score limits, restricting how much stock a seller can send to FBA warehouses. Sellers must find alternative fulfillment options to stay operational.

How It Helps:

• Allows automatic order routing to FBA, FBM, 3PL, or warehouses.
• Helps sellers adapt to Amazon’s restock limits without stockouts.
• Optimizes fulfillment costs by selecting the cheapest and fastest shipping method.

6. Analytics & Performance Insights

Why It Matters:
Without data-driven insights, sellers struggle to optimize stock levels and reduce unnecessary storage fees.

How It Helps:

• Provides sell-through rate, aging inventory analysis, and storage cost insights.
• Identifies slow-moving inventory to prevent FBA long-term storage fees.
• Helps sellers refine their inventory strategy based on real-time data.

Now that we’ve covered the essential features of a great inventory management system, let’s compare the top solutions available for Amazon sellers.

Comparison of Top Inventory Management Software for Amazon Sellers

Software	Best For	Key Features	Pricing
Linnworks Advanced	Multichannel sellers needing automation	Real-time inventory sync across Amazon, eBay, Shopify, Walmart AI-powered demand forecasting, Automated order fulfillment & workflow management	Varies based on business size
SkuVault Core	Warehouse-heavy operations	Advanced warehouse management, Barcode scanning & automated stock updates, Multi-location inventory tracking	Subscription-based
TradeGecko (QuickBooks Commerce)	Small businesses integrating inventory & finance	Inventory & order management linked to QuickBooks, Multichannel support, AI-based sales insights	Subscription-based
InventoryLab	FBA sellers tracking profitability	FBA-focused inventory management, Expense tracking & financial reporting, ROI calculations per product	Monthly subscription

Breakdown of Each Software’s Strengths & Best Use Cases

Linnworks – Best for Multichannel Automation

Why Sellers Choose It:
Linnworks offers advanced automation for multichannel sellers who operate across Amazon, Shopify, Walmart, eBay, and other platforms.

Key Features:

• Real-time inventory tracking across multiple channels.
• AI-driven demand forecasting to prevent stockouts.
• Automated order routing to optimize fulfillment.

Best For: Sellers scaling beyond Amazon who need centralized, automated inventory management.

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SkuVault Core – Best for Warehouse & Inventory Control

Why Sellers Choose It:
SkuVault Core is ideal for sellers managing warehouse operations alongside their Amazon business.

Key Features:

• Barcode scanning & stock tracking for warehouses.
• Automated purchase order generation based on sales data.
• Multi-location inventory management for seamless fulfillment.

Best For: Sellers with large inventory volumes who need a warehouse-focused system.

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TradeGecko (QuickBooks Commerce) – Best for Small Businesses

Why Sellers Choose It:
TradeGecko (now QuickBooks Commerce) integrates inventory and financial management, making it a great choice for small businesses.

Key Features:

• Real-time inventory tracking connected to QuickBooks.
• Sales reporting & forecasting based on financial data.
• Simple, user-friendly interface for growing sellers.

Best For: Small businesses looking for inventory + financial integration.

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InventoryLab – Best for FBA Sellers Managing Costs

Why Sellers Choose It:
InventoryLab is designed for Amazon FBA sellers who need detailed cost tracking to maximize profitability.

Key Features:

• FBA inventory management with real-time tracking.
• Profit & loss reports per product.
• Expense tracking and ROI calculations.

Best For: Amazon FBA sellers looking to optimize storage costs & profitability.

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How to Choose the Right Inventory Management Software

• For Multichannel Expansion: Choose Linnworks to sync inventory across Amazon, Shopify, Walmart, and eBay.
• For Warehouse Control: Use SkuVault Core for warehouse automation and multi-location tracking.
• For Small Businesses: Consider TradeGecko (QuickBooks Commerce) if you need QuickBooks integration.
• For FBA Profitability: Pick InventoryLab to track FBA expenses and optimize margins.

Sellers should evaluate their business size, sales channels, and automation needs before choosing the right solution.

Once you’ve chosen the right inventory management software, the next step is implementing proven strategies to optimize stock levels and fulfillment efficiency.

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Strategies to Better Manage Amazon Inventory

Effective inventory management on Amazon goes beyond just tracking stock levels—it’s about optimizing fulfillment, reducing costs, and preventing stock-related issues before they occur. Whether you’re an FBA seller managing Amazon’s strict storage limits or an FBM seller handling your own fulfillment, using the right strategies can help improve efficiency and profitability.

Here are key strategies to better manage Amazon inventory and stay ahead of stock challenges.

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Set Safety Stock Levels to Prevent Stockouts

Why It Matters:
Running out of stock not only leads to lost sales but also drops your product ranking in Amazon’s search results. If an item remains out of stock for too long, it can be difficult to regain Buy Box eligibility and recover lost traffic.

How to Implement:

• Calculate PAR (Periodic Automatic Replenishment) Levels – Determine the minimum stock required to meet demand before reordering.
• Set Reorder Points – Automate inventory alerts when stock falls below a set threshold.
• Maintain Buffer Stock – Keep safety stock based on historical sales data and seasonal demand.

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Use the Right Inventory Tracking Method

Why It Matters:
Different products require different tracking methods to minimize waste and maximize efficiency. The wrong tracking method can lead to expired or outdated inventory sitting in storage, leading to unnecessary costs.

Tracking Methods to Consider:

• FIFO (First In, First Out): Ideal for perishable goods, ensuring older stock is sold before newer inventory.
• FEFO (First Expired, First Out): Ensures products with earlier expiration dates get sold first, reducing waste.
• ABC Analysis: Categorizes products based on importance—A (high-priority fast sellers), B (moderate demand), C (slow movers)—to optimize storage space.

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Monitor Amazon Policy Changes & Stay Agile

Why It Matters:
Amazon frequently updates fulfillment policies, storage limits, and fees, which can impact inventory strategy. Sellers who fail to adapt risk higher costs or restrictions on how much stock they can send to FBA warehouses.

How to Stay Ahead:

• Track Amazon’s storage fee updates to avoid sudden cost spikes.
• Monitor IPI (Inventory Performance Index) scores to prevent stock limitations.
• Use third-party logistics (3PL) providers as backup fulfillment options when Amazon imposes restock limits.

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Leverage Multichannel Selling to Reduce Amazon Dependence

Why It Matters:
Relying solely on Amazon is risky. Policy changes, storage limitations, and increased fulfillment fees can negatively impact your business overnight. Expanding to Shopify, Walmart, and eBay reduces this risk.

How to Implement:

• Sync inventory across multiple platforms to prevent overselling.
• Use fulfillment flexibility (FBA + FBM + 3PL) to optimize costs.
• Diversify revenue streams to avoid total reliance on Amazon.

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Automate Replenishment & Demand Forecasting

Why It Matters:
Manually tracking inventory can lead to human errors, stockouts, and unnecessary storage costs. AI-driven forecasting and automated replenishment help sellers optimize inventory without manual oversight.

How to Implement:

• Use AI-powered tools to predict demand fluctuations.
• Automate restocking alerts based on sales velocity.
• Set up dynamic reorder points to adjust stock levels automatically.

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Optimize FBA Storage & Reduce Fees

Why It Matters:
Amazon charges high fees for slow-moving or excess inventory. Sellers who fail to optimize storage can end up paying unnecessary costs.

How to Reduce Fees:

• Identify slow-moving stock early to avoid long-term storage penalties.
• Use Lightning Deals & promotions to move excess inventory faster.
• Transfer slow sellers to a 3PL warehouse instead of keeping them in FBA storage.

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Track & Analyze Inventory Metrics for Continuous Improvement

Why It Matters:
Without tracking inventory KPIs, sellers won’t know where to optimize their operations. Analyzing inventory data helps sellers reduce costs, improve turnover rates, and adjust their replenishment strategy.

Key Metrics to Track:

• Sell-Through Rate – Measures how quickly stock is selling.
• IPI Score – Amazon’s metric for inventory efficiency; low scores result in restock limits.
• Stock Turnover Ratio – Shows how many times inventory is sold and replaced within a period.

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Final Takeaways: The Key to Amazon Inventory Success

• Prevent stockouts by setting smart reorder points & safety stock levels.
• Use the right tracking methods (FIFO, FEFO) to optimize fulfillment efficiency.
• Stay agile with Amazon policy changes to avoid costly fulfillment issues.
• Expand to multichannel selling (Shopify, Walmart) to reduce reliance on Amazon.
• Leverage automation & AI-driven forecasting to maintain optimal stock levels.
• Optimize FBA storage fees by identifying slow sellers before they incur penalties.
• Track key inventory metrics to continuously improve efficiency and profitability.

By implementing these strategies, Amazon sellers can reduce manual workload, cut costs, and improve fulfillment efficiency—ensuring long-term success in the competitive eCommerce landscape.

Final Thoughts: Mastering Amazon Inventory Management in 2025

Inventory management is at the core of success for Amazon sellers. Whether you’re scaling an FBA business, operating an FBM model, or diversifying across multiple sales channels, having the right strategies and tools in place is crucial to long-term profitability and operational efficiency.

Key Lessons from This Guide

Why Inventory Management Matters

• Amazon controls 40% of U.S. eCommerce sales, making it a highly competitive marketplace.
• Shifting consumer expectations (cost sensitivity, free shipping, predictable delivery times) mean inventory mismanagement leads to lost revenue and reduced Buy Box visibility.

The Limitations of Amazon’s Built-In System

• Amazon’s inventory tools only work within its own ecosystem, making it difficult for multichannel sellers to track stock accurately.
• FBA sellers face high storage fees, restock limits, and unpredictable policy changes, making third-party software essential for scalability.

Why Third-Party Inventory Software is Critical

• Linnworks, SkuVault Core, TradeGecko (QuickBooks Commerce), and InventoryLab provide automation, real-time tracking, and demand forecasting.
• The right software helps sellers optimize fulfillment, reduce storage costs, and prevent stock-related issues before they happen.

Actionable Strategies for Better Inventory Management

• Set safety stock levels & automate restocking alerts to prevent stockouts.
• Use demand forecasting to balance inventory levels and avoid excessive Amazon storage fees.
• Expand beyond Amazon to Shopify, Walmart, and eBay to reduce reliance on Amazon’s policies.
• Monitor Amazon’s evolving fulfillment rules and adjust storage and restock strategies proactively.

Next Steps: How Linnworks Can Help You Scale & Optimize Inventory Management

Managing Amazon inventory manually—or relying solely on Amazon’s built-in tools—limits your growth potential and increases risks like stockouts, rising storage fees, and fulfillment delays. 

Linnwork’s Amazon integration eliminates manual inventory headaches, giving sellers the power to:

• Real-time inventory synchronization across Amazon, Shopify, Walmart, eBay, and other channels.
• AI-driven demand forecasting to predict stock needs and prevent costly overstocking or shortages.
• Automated order routing for seamless fulfillment across FBA, FBM, and 3PL warehouses.
• Centralized inventory control to reduce manual work, eliminate stock discrepancies, and optimize supply chain efficiency.

With Linnworks, sellers can cut down on stock-related errors, reduce fulfillment costs, and scale profitably—without worrying about platform restrictions or inventory mismanagement.

Don’t let stockouts and high storage fees eat into your profits. Take control with Linnworks—sync inventory, automate fulfillment, and scale smarter.

Get Started Today