Effective inventory planning is crucial for success on Amazon. Balancing supply and demand, choosing the right fulfilment method, and leveraging Amazon’s latest tools can significantly impact your profitability and customer satisfaction. This guide dives into advanced forecasting strategies, replenishment frameworks, fulfilment decisions, and Amazon’s newest logistics programs to help experienced sellers stay ahead.
1. Advanced Forecasting Techniques
Forecasting is no longer about gut instinct or simple spreadsheets. Amazon now offers advanced tools that sellers must integrate into a structured demand planning process:
- FBA Inventory Tool: This dashboard gives insights into historical sales, seasonality, restock recommendations, and estimated days of cover. Pro sellers pair this with custom logic to layer in promotional periods and competitor activity.
- FBA Restock Tool: Amazon’s updated restock algorithm now weighs both short-term velocity and IPI score trends. If you’re not syncing replenishment to this forecast, you risk misalignment with Amazon’s capacity planning.
- Forecasting Enhancers:
- Use models like XGBoost or Prophet for more nuanced prediction, especially for products with volatile or launch-phase demand.
- Monitor external signals (social, ad engagement, influencer events) as predictors for demand spikes.
Tip: Forecast each SKU individually, not as a category. Then aggregate to detect overlapping storage and replenishment thresholds across your catalogue.
2. Replenishment Strategies That Protect Margin
Replenishment isn’t just about maintaining stock levels. It’s about doing it efficiently — without overpaying for storage or losing sales to gaps in availability.
- Just-In-Time (JIT): Helps control FBA storage fees, but requires ultra-precise forecasting and quick supplier response. Best for fast-moving SKUs.
- Min-Max Reordering: Establish thresholds for each SKU (e.g., reorder at 20 units, restock to 80) based on lead time and sell-through. It’s simple, scalable, and Amazon-friendly.
- Amazon Warehousing and Distribution (AWD): As of late 2024, AWD expanded its automation capabilities. It can now:
- Auto-forward inventory to multiple FBA FCs.
- Sync with restock limits.
- Consolidate prep and shipping for 30–40% lower handling costs compared to third-party logistics (3PLs).
AWD is ideal for brands with high-volume, low-seasonality SKUs or those wanting to scale without the complexity of managing multiple 3PLs.
3. FBA vs. FBM: When to Switch, and Why It Matters
Amazon now supports more hybrid strategies than ever before, and knowing when to use FBA or FBM can impact not only your logistics cost but also your Buy Box win rate.
Fulfilment by Amazon (FBA):
- Pros:
- Prime eligibility.
- Simplified returns and customer service.
- Increased visibility in Amazon search (especially for mobile shoppers).
- Cons:
- Long-term storage fees.
- Limited control over how units are handled.
- Greater risk of stockout penalties.
Fulfilled by Merchant (FBM):
- Pros:
- Higher flexibility in bundling, customization, or fragile goods.
- Often better for oversized/low-volume items.
- Cons:
- Not eligible for Prime (unless using SFP).
- Requires top-tier fulfilment infrastructure.
Using FBM with Seller Fulfilled Prime (SFP): For merchants who want the control of FBM without giving up Prime benefits, Amazon offers Seller Fulfilled Prime (SFP) — a program that allows sellers to deliver directly to Prime customers from their own warehouse. After a pause in enrollments, SFP was re-opened in 2024 with new performance requirements, including:
- Delivery coverage of 1–2 days across contiguous U.S. regions.
- Strict on-time shipment and tracking standards.
- Weekend pickup and delivery support.
SFP is ideal for experienced sellers with logistics capabilities that can meet Amazon’s high bar, and it offers an alternative route to Prime access without storing in FBA.
Pro Tip: Use FBM as a backup during peak or constrained periods. Amazon’s latest restock policies (Q4 2024) favour sellers with redundant fulfilment coverage.
Want help setting up or managing a hybrid FBA/FBM strategy? Explore our Amazon Management Services.
4. FBA Replenishment Algorithm: What We Know So Far
In late 2024, Amazon introduced several changes to its restock and capacity logic, impacting how sellers plan inventory:
- Lead Time Buffers are now weighted more heavily — Amazon prefers shipments that match their internal predictions and penalizes those that send inventory too early or too late.
- IPI Score Penalties are stricter. Overstocking now drags your score faster than before, which can throttle your inbound limits.
- Inbound Shipment Splitting is now more common, which can result in delays. Ensure you’re sending inventory in case-packed, Amazon-preferred formats to limit disruptions.
This system rewards brands with precise, SKU-level forecasting and penalizes sloppy or overly aggressive restocking.
5. Inventory Reconciliation: The Profit Leak Most Sellers Miss
Amazon inventory reports are often assumed accurate — but that assumption can cost you. Every account experiences 3–5% monthly shortages, usually spread across:
- Unreceived Inventory
- FC Transfers Lost or Damaged
- Returned Items Not Credited
- Overcharges in FBA Fees or Dimensions
Smart brands perform monthly or quarterly inventory audits, cross-referencing shipment reports with actual units received and reconciled. The difference? Often thousands in lost margin.
→ Want help recovering those profits? Learn more about our Amazon reimbursement and reconciliation support or contact us.
6. Best Practices for Inventory Planning in 2025 and Beyond
- Forecast Based on Contribution Margin, not just sales volume. Focus your restocks on SKUs with the best ROI.
- Use Inventory Turn Rate Benchmarks: Aim for 8–12 turns per year. Less than 4 = overstocked. Over 15 = stockout risk.
- Align Ad Strategy With Inventory Availability: Stop pushing products about to stock out. Link your advertising and inventory dashboards.
- Monitor Your IPI Weekly: Treat it like a credit score. Anything under 400 should trigger a red flag analysis.
- Review TACoS by SKU Group: If a product’s TACoS is rising while inventory velocity is dropping, you’re either burning cash or not ranking organically. Read our blog on TACoS optimization.
- Enable Out-of-Stock Notifications: Use tools like RestockPro or SoStocked, or build alerts via Amazon SP-API.
- Pair Forecasting With Keyword Momentum: SKUs rising in organic rank typically experience compounding demand. Learn how to track keyword rankings here.
Final Thoughts: Inventory is a Profit Center — If Managed Well
Inventory isn’t just an operational necessity — it’s a profitability lever. Smart inventory planning aligns every facet of your Amazon strategy: ads, SEO, margins, and customer trust.
Brands that treat forecasting, replenishment, and fulfillment as interconnected levers outperform those that silo operations. Whether you’re looking to build a forecasting model, audit your IPI blind spots, or decide when to split between FBA and FBM, the goal is the same: margin-first, long-term growth.
Looking to optimize your inventory systems or implement a hybrid fulfilment strategy? Get in touch or explore how our Amazon channel management services can help.