Friday, March 4, 2016

Amazon and the Mysterious Case of the Lost Inventory - Part 1 - Let's Do Math!

I really enjoy reselling merchandise on Amazon.  The buyer's experience is incredible and the number of customers is phenomenal.  I want to sell products where people are buying and that's the main reason I choose Amazon.  It also helps that Amazon has set up FBA and I don't have to store items or fulfill the orders.

After reselling for close to a year, the honeymoon stage has started to wear off and I'm beginning to see some major issues in the reselling platform specifically related to inventory tracking.

For a long time, I was using a spreadsheet for all of my tracking which was working for me but it becoming rather time intensive.  I looked to Inventory Lab for a solution and to avoid manual tracking.  I was extremely excited with Inventory Lab's capabilities but I've started to realize that Inventory Lab is great for tracking sales and COGS of those sales but does nothing for inventory tracking and reconciliation.

I need to know that if I sent in 10 units of one SKU into Amazon, that those 10 units have been received by Amazon, placed in my inventory and then sold.  If they are lost or damaged by Amazon, I need to know that I was reimbursed.  If there is only 8 units in my inventory and I only sold one, that's a major problem.

What happened to my missing inventory?  If I don't get reimbursed for that it's a straight loss and my wallet refuses to accept that.

The situation has gotten quite bad from Amazon that I am back to using a spreadsheet to track all of my inventory and whether anything is missing.  You too might be missing lots of inventory and you might not know it if you don't do a great job tracking.

This is part 1 of a series highlighting the major issues I have found in the Amazon tracking software.  Some are major only because of the consistency of the issue (a few dollars here and there really adds up) and some are major even if they happen just one time.

It's Math Time

Amazon has a very powerful reconciliation tool built into Seller Central.  You can put in any SKU for any time period and it will tell you in detail what has happened to this item.

Here is how to find it:

Click on Reports>Fulfillment

and then you can click on Inventory Reconciliation on the Left

Let's take iPad Air 2 64GB  Space Gray as an example:  Here is what comes up for me from the start of my selling history.

The most surprising thing to me is that I only sold 5 of them.  Really?  I guess it's possible.  Either way, I sent in 5, I sold 5 and I should have none in my inventory and I do not.  Everything checks out just fine.  Yay for Math!

Here is another more complicated example but once again everything is fine.

I sent in 15.  2 were lost but 2 were found.  I sold 15.  That's great.  3 were returned (that's what happens when you sell bad products) and 3 were removed and are currently in my basement.

What happens when it doesn't check out?  Let's take one example:

Hmm.  I sent in 5, didn't sell any and now I have 1.  None were lost or damaged.  Why do I have 1 instead of 5?  That's not good.  Especially since I have no reimbursement for that SKU.  How many do I actually have in my inventory?  You guessed it, one!

How about this one?

I sent in 14.  14 were received, 1 was lost and 1 was found.  How many should have? 14

How many does Amazon say I should have?  11.  How many units do I actually have?  9

Now, to Amazon's credit, the first screenshot was taken a couple of days ago.  The newest reconciliation correctly shows that I have 9 units but once again does not accurately reflect how they got to 9 when I sent in 14.   Of course, I have no reimbursement for these units because they aren't lost according to the system.

Welcome to the wonderful world of Amazonian math.

I hope you enjoyed Part 1.  More fun to come in upcoming posts...