Major Challenges of Amazon FBA wholesale and their solutions
Amazon FBA wholesale is going to be dominating with the passage of time. In this global market products are formed and transported from one locality or country to global open market and this is increasing the range and width of Wholesale business.
At the same time wholesale is challenging in Business consulting. Some major challenges are listed here to give you an idea to so you can easily surpass those hurdles and secure profits.
Inventory overstock and shortage Management:
Inventory overstock and shortage can create problems for a wholesaler. There need a constant research on products demand from the customer side and its stock. Overstock and shortage definitively are not going to help the wholesaler to increase his profits. Overstocks incur you to pay for security maintenance. While shortage gives your profit to someone else
Solutions
Try to keep these important steps in mind to avoid problems of shortage and overstock
Inventory turnover ratio:
As a wholesaler you must have constant look on the consumption of the goods. Constant analysis will make you capable to make decisions to get more stock of a product or to decrease the stock. Thus inventory turnover ratio informs you to stock more or decrease a stock with the analysis of demand s of the products.
Fast selling, slow selling and dead product:
You must keep an eye on demand of products. Some products sell at very high rates and these are the products to stock more .The more you stock they’ll be ensuring the more profits for you. Minimize the stock of slowly selling products and try to sell them even on promotions and discounts because they can create a problem if not sold after a certain time.
And surely you are smart and doing business for profit right? Why would you like to stock dead or obsolete products. Surely you’ll always stay away from stocking the piles of dead.
Amazon FBA wholesale is pick, pack and ship:
Remember the line Wholesale is all about pick, pack and ship. Want to earn more through wholesale? Manage pick, pack and ship efficiently and earn more. Avoid last minutes run which surely decreases efficiency eventually profits.
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Reordering and minimum quantity ordered:
Wholesaler can’t fall behind the demands of the customers because that’s the point to earn. Arrange reordering of profits seeing the demand and margins. Moreover as a wholesaler you must have an idea of minimum order quantity as cheap products usually have high MOQ as compared to expensive products.
Wrong predictability of profit margins:
A wholesaler’s profits depend on the following factors
- Inventory costs
- New prices for new bidding
- Payments after due date with fines
- Transactional costs
- Hidden costs
Thus you must have accurate data on the expenses only then a true profit can be calculated. If you miss and underestimate some factors, it may cost you to decrease your profit or sometimes in the form of loss. A wholesaler always keeps in mind the hidden costs of inventory that are going to decrease the profit margins.
Hidden costs can be in the form of
- Extra inventory storage costs
- Manpower inefficiency and more use of manpower
- Lack of technical machinery
- Transportation costs
- Varying labor costs
These factors are not easy to detect in normal inventory visibility reports thus following measures can be taken to reduce the chance of wrong predictability of profit margins due to these hidden costs. But data on selling rates and a complete walk-through of expenses will give you a clear idea of profits.
Supplier and customer demands:
Wholesale seems simple process. Get the order from customer, forward it to your supplier and then the product to customer, Right? But complexities are there. Urgent order from customer can’t give you the profit if it is not already in process or supplier is in not the position to provide you the product. But certain steps can be also be followed here to decrease the risks
- Use option of Backorder (Back order is the order of a product that is not fulfilled at the present time)
- Inventory management system
If there is no inventory, management system, there can be a mismatch between suppliers and customers demands. Inventory management system gives you information about the orders received from your supplier and orders delivered to your customer. Thus less chance of suppliers and customers demands to mismatch.
- Suppliers’ competition
Suppliers can be ranked on the basis of
1: Quality of products offered
2: Cost of the products
3: Lead time (How much time Supplier takes to complete the whole process)
Ranking on this basis you can perfectly select your vendor for the deal and earn the profits.
Supplier and customer demands:
Every business has its own pros and cons. As a wholesaler you must know that wholesale does not give you a much faster growth (annual rate of nearly 5%). But you can take some steps to increase this growth
- Create and expand international connections
- Online availability
- Audience attraction by different campaigns
