Why the number of items in your FBA inventory is virtually meaningless at estimating your Amazon sales.
Your FBA inventory numbers are meaningless
Some of the biggest questions among new (and not new) Amazon FBA sellers go something like this:
- How many items do I need to have in my Amazon inventory to make $____ a month?
- How many items do I need to have in my Amazon inventory to start breaking even?
- How many items do I need to have in my Amazon inventory to quit my job?
The answer to each is “no.” Because they are predicated on a false assumption.
I’m here to destroy the following myth:
“There is a direct relationship between the number of items in your Amazon inventory, and how much money you make.”
There is almost no relationship between the number of items in your FBA inventory, and your sales.
Sound insane? Let me explain…
FBA inventory levels: A false metric
The number of units in your Amazon inventory is the worst metric of anything, because it says absolutely nothing about the factors that contribute to profit.
The factors that do contribute to your Amazon payouts are:
- How valuable are those items?
- How in-demand are those items?
And perhaps most importantly:
- How recently did they hit the Amazon warehouse?
Measuring your success and your Amazon business by how many items you have in your FBA inventory isn’t just misguided, it’s totally pointless.
The hard truth about the “FBA inventory / profit” equation
There are people with 500 units in their Amazon FBA inventory who are making more than people with 5,000 units.
Why? Because the size of your Amazon inventory has nothing to do with anything.
The Amazon seller with 500 units shipped everything in in the last 2 weeks. And the Amazon seller with 5,000 units ships in 100 items a month, with most of that 5,000 being over a year old.
Your profits have nothing to do with your Amazon inventory count
What does matter? How recently you’ve done an FBA shipment
The only question that matters is: How much have you shipped in lately?
(Or if you’re not an FBA seller: How many items have you listed lately?)
By lately, I mean in the last 30 days.
Why new inventory is better than a lot of inventory
200 units of new inventory is better than 2,000 units of old inventory. Why? Because most of what sells on Amazon will sell in the first 90 days.
And most of what sells on Amazon in the first 90 days, will sell in the first 30 days.
Two reasons new is better than many
- You bought items that had an Amazon sales rank of 90,000 when you bought them, have a sales rank of 3 million 6 weeks later, and historically only sell a copy a year, though the sales rank hinted otherwise at the time of purchase.
- With FBA items in particular, it’s difficult to reprice accurately and consistently, leading to prices of your inventory becoming increasingly outdated and uncompetitive the longer they sit in an Amazon warehouse.
There is also a mystical element to this I can’t explain. Even items that are well-ranked and remain well-ranked still seem to sit for awhile if they don’t sell right away. I can’t explain it, but I’ve noticed this for years.
How to see it for yourself
You don’t have to take my word for any of this. Stop shipping inventory in to Amazon and see what happens to your Amazon disbursements in a short 30 days, no matter how diligently you reprice (hint: You won’t like it).
Then ship in 250 units and watch it rain.
That’s how it works.