When you hear the word “Amazon”, the first thing that comes into your mind is online marketing. Amazon has been able to run a seamless business for a decade now and is moving towards success with each passing day. The brains at Amazon have always tried to make it improved with different and unbelievable tactics to maximize earnings. And in doing so, Amazon Inventory Management has played a vital role.
Inventory Management is a critical process in any business. People working in the business sector have a knack of how inventory management can earn them or how much it can cost them if not operated efficiently. An efficient inventory enables you to ascertain how much stock you have in hand to meet the needs of your customers. Amazon inventory management has proven its mettle in earning the title of “great customer service” and an invaluable trust from its customers. Amazon inventory management is enhanced by the use of Appath software. To earn better customer relations, here Appath software is an ideal choice to make. The cloud software enables online businesses. Thus, you are able to carry out your business work without any inconvenience.
When Bezos launched the company in 1995, his sole aim was to earn money without much ado. At first, he aspired for hassle-free operations. He wanted to concentrate more on earning heavily, satisfying his customers also. What Bezos aimed was to spend his time and money on more important things rather than on dealing with the inventory. He wanted to offer a wide collection of books but did not want to get stuck in opening store and warehouses and running them smoothly. However, he soon realized that the only solution to satisfy his customers and enable Amazon to enjoy the benefits of time and cost-efficiency was to build and maintain its own warehouse. Amazon’s Inventory Management costed him about $50 million and in order to get the money, Amazon issued $2 billion as bonds.
Amazon earned huge sums of money, their sales increased to a considerable amount of percentage every year and therefore, steps were taken to improve the inventory. But as the sales increased, Amazon’s inventory ballooned by 650%. Experts say, “When a company manages inventory properly, it should grow with its sales growth rate”, they noted, when inventory grows faster than sales, “it means simply that they are not selling as much as they are buying.” In this particular scenario, people at Amazon thought it in their best interests to outsource Amazon’s Inventory Management.
Although, Amazon did great business and earned the reputation of providing great customer service when it managed its inventory however, it wanted to concentrate on its important activities and outsource its Inventory Management to earn profits. The people at Amazon had an idea that outsourcing Amazon’s inventory management would damage their hard-earned reputation. In spite of that, they decided to go ahead with their decision to outsource their inventory.
These points were considered while deciding a strategy:
- Reduce redundant inventory
- Blockage of working capital
- Low inventory turnover
- Inventory goals – right products in the right quantity to the right place at the right time.
- Cost of holding > cost of outsourcing.
And this is how they outsourced! Amazon achieved its goal, i.e. to make money while ensuring great customer services. Amazon inventory management outsourced holds products that are high in demand, and if any customer asks for a product that is not in Amazon’s inventory, it is then, ordered to the distributors and sent to the client.
To manage sales, purchase and payments Amazon inventory management is supported by the Appath cloud software, which carries the online e-commerce business to anywhere, without geographical limitations.