Start With Demand, Not a Reorder Guess
Estimate average sales velocity using a period that reflects the product's current behavior. For stable products, recent weekly or monthly averages can be useful. For seasonal or rapidly changing products, a simple historical average may be misleading.
Map the Complete Lead Time
Lead time is more than supplier production or shipping. It can include supplier processing, transit, prep-center work, freight into Amazon, appointment or delivery delays and Amazon receiving time. The reorder decision should cover the entire period during which inventory cannot yet be sold.
Use a Reorder Point
Reorder Point = Expected Demand During Lead Time + Safety Stock
If a product sells 10 units per day and the realistic end-to-end lead time is 20 days, expected lead-time demand is 200 units. Safety stock is added to cover normal uncertainty rather than to replace planning.
Choose Safety Stock From Risk
Safety stock should reflect how uncertain the product is. Consider sales volatility, supplier reliability, transportation variability, Amazon receiving delays, seasonality and the cost of stocking out. A fast-selling product with unpredictable inbound timing may need a larger buffer than a slow, stable product with a reliable domestic supplier.
Track Days of Cover
Days of cover translates inventory into time. A simple version is available sellable units divided by average daily sales. For operating decisions, also consider inventory already in transit or inbound to Amazon, while keeping those stages separate so delayed inbound is not treated as available stock.
Watch Both Stockout and Overstock Risk
Stockouts can lose sales, weaken ranking momentum and make replenishment more expensive. Overstock ties up cash, increases storage exposure and can force price reductions. The same product can move from stockout risk to excess risk quickly when velocity changes, so the plan should be reviewed regularly.
Use Different Rules for Different Products
Not every SKU deserves the same service level or reorder frequency. High-velocity, high-margin or strategically important products may justify tighter controls. Slow-moving or uncertain products may need smaller purchase quantities even if the supplier offers volume discounts.
A Practical Weekly Inventory Review
- Available FBA inventory.
- Inbound inventory by shipment stage.
- Inventory at supplier or prep center, if applicable.
- Recent sales velocity and unusual demand changes.
- Days of cover and estimated stockout date.
- Open purchase orders and expected arrival dates.
- SKUs with excess inventory or falling velocity.
- Reorder decisions and responsible owner.
As the number of suppliers, POs and inventory stages grows, see When Should an Amazon Business Move Beyond Spreadsheets?.