How To Manage Inventory For Your Amazon FBA Business | How Much Should You Buy ? | Sourcing Warrior

How To Manage Inventory For Your Amazon FBA Business | How Much Should You Buy ? | Sourcing Warrior

what’s up my friend I hope your day is
going well if your Amazon FBA seller let me ask you why do you need inventory
make your think right so today I’m sharing a video from the power sourcing
training course to fully explain the concept of inventory you’re going to
tied up a lot of your cash in your inventory so before you plan I thought
this is going to benefit you a lot understanding the concept of the
inventory by the way if you’re still thinking about getting the power
sourcing training course I strongly encourage you to get it and start to
tree with me you’re going to spend thousands of dollars in your sourcing my
commitment to you is to guide you protect you and support you through the
sourcing process so you can be super successful with your sourcing save a lot
of money so let’s start the training video what’s up my friend I hope you’re
having a great day today we’re going to talk about the concept of an inventory
even if you have started to be Amazon FBA business whether you’re selling one
product or two products I still want you to have a solid understanding of
inventory if you haven’t started the Amazon fair business this is critical
for you to understand because once you started the Amazon FBA business most of
your cash is going to be tied up in the inventory so it is important for
everyone to understand how the inventory played a role in your business so the
question is why do we even need inventory the answer lies in the
business model if you are selling on Amazon the business model is everything
is in stock instant gratification that is the service level is I have
everything in stock right now but if you think about it if this is a make to
order business model you order one I make you one you don’t have to carry
inventory that the service level doesn’t have to be
100% right now so the inventory has direct relationship with the business
model you are in once you understand the business model you’re in and that the
service level you wanted to provide your customer now let’s look at your supply
situation how long you have to wait to get the supply so on one side of the
spectrum is the ideal situation is you have a consignment inventory meaning you
don’t have to buy inventory you just pay them when you sell it but most likely
you are going to have Li time you have to wait meaning you have to wait 10 days
30 days 60 days up to 90 days or even hundred days to wait for your supply so
you wanted to sell your customer right now but you have to wait to get your
inventory this gap between your service level and Li time is the inventory you
have to commit is the cash you have to commit so this gap is calculated between
your service level and your supply Li time if your service level is now and
you have a consignment in the inventory always in stock that means you have a
zero gap but if your service level is I have it in stock right now but my li
time is 90 days the gap is 90 that means you have to commit that much inventory
during this waiting time now let’s look at the cash requirement you know you
have to commit inventory for these many days for example if you have to commit
the inventor for sixty days that means this 60 days of cash are tied
into inventory the longer of this gap the bigger is this gaps a longer of the
lead time the bigger of the gap the more cash is tied into this supply chain you
are not going to get the money out until is sold during
this waiting time all the cash are tied into each one of these waiting time now
you know your lis time let’s take a look what type of suppliers you are going to
have to put you in this kind of lis type situation
the first one is consignment inventory meaning you have no cash out what kind
of relationship probably your factory is your partner or is your family you are
very lucky you don’t need to put out any cash that is consigned the inventory to
you the 10 days Li time supplier most likely is in u.s. you find a supplier
locally they can turn the production around very quickly then you have a very
little money out 30-day inventory mostly is the Chinese buyer but you’re not
using ocean freight but your air freedom in the product if the early time is two
weeks your air frating in the product you know it takes you a month so your
total cash commitment for that is only 30 days 60 days inventory you probably
still have a Chinese supplier but your ocean freedom the product 90 day
inventory that means you have a Chinese supplier you are ocean frating the
product in but remember there are inspection delays and there is
production delays owing all you have to commit a 90 day inventory so what is the
lesson here the lesson here is the longer is the Li time the more money you
have to put into inventory the time is money if you are just starting out you
are going to realize this very soon that lead time is money a lot of your money
is going to be tied up in the inventory until you sell the product until you get
paid by Amazon now you know Li time is money
reducing Li time is like saving money I’m going to touch base very quickly
what are the ways to reduce Li time yes in the training video I also talked
about ways to reduce lead time my goal is to have you master the inventory planning
because you are going to tied up so much cash in your inventory so in the
detailed inventory planning videos I put in so much effort to help you understand
all the elements that affect your inventory that you have to understand
how to maximize your cash utilization that’s the only way to keep your
business afloat anyway I hope you learned something in this video of the
inventory concept make small progress one brilliant day at a time I look forward
to see you next time

Comments (6)

  1. Thank you for another useful video Yuping! Defintely gonna apply to my biz planning! 😀😇🤑

  2. Great content as always! Love how you choose to spread the treasure of knowledge that you've built up over the years 🙂

  3. Hi…I really appreciate your videos…do u think still time for new sellers in amazon? Thx in advance

  4. thanks for the lead time chart info until now i calculated the lead time and required cash amount by my brain on the spot only few decision went wrong but i think if i went according to this chart i can again 100% accurate results

  5. thank you Yuping

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