When a container arrives, it’s tempting to send as much as you can to Amazon. It feels efficient, and it’s one less decision. For established sellers, though, sending everything in often creates new problems. Storage fees go up. You bump against capacity limits. Slower SKUs start to age. And most of your stock ends up in one place you don’t control.
Holding everything back causes the opposite problem. You send small, rushed shipments, and you run out of stock while they check in.
The right answer is somewhere in between, and it’s easier to find than it looks. This post walks through the method I use with sellers. It shows how much inventory belongs at Amazon, how much belongs in reserve, and when to move more.
The inputs you need
You need four numbers for each SKU. Most sellers already have them. They just aren’t in one place yet.
Daily sales velocity by channel. This is the average number of units you sell per day. Track Amazon separately from each other channel. Use the last 30 to 60 days, and adjust for any expected seasonality.
Replenishment lead time to Amazon. This is how many days it takes from deciding to send more until those units are available for sale. It includes pick-and-pack time at your reserve warehouse, transit to the fulfillment center, and check-in. Check-in is the part people underestimate. Use your own recent history, not a best case.
Your FBA capacity limit. Amazon sets a monthly capacity limit for each storage type, measured in cubic feet. You can see it in the Capacity Monitor on your FBA dashboard, along with estimates for the next two months. Inventory on hand counts against the limit. So do shipments you’ve created but haven’t delivered yet.
Supplier lead time. This is how many days it takes from placing a purchase order to receiving the inventory at your reserve warehouse. For overseas goods, that includes production, ocean or air freight, customs, and drayage.
Step 1: Set a target for weeks of cover at Amazon
Weeks of cover is how long your Amazon inventory would last if you stopped sending more. Your target should cover your replenishment lead time plus a safety buffer. It shouldn’t be much longer than that.
More isn’t better past that point. Extra weeks at Amazon mean more storage fees and more of your capacity limit used up. They also increase the risk of aged inventory surcharges and concentrate more of your stock in one place. Amazon charges monthly storage fees per cubic foot. They also rise significantly from October through December. A target that makes sense in spring may be too high for Q4.
For most established sellers, four to eight weeks of cover at Amazon is a reasonable starting point. Fast, steady sellers with short lead times can go lower. Seasonal or lumpy SKUs may need more before a peak.
Step 2: Calculate a reorder point for Amazon
The reorder point tells you when to send the next shipment from reserve to Amazon. Here’s the formula:
Reorder point = daily Amazon velocity × (replenishment lead time + safety buffer)
When your Amazon inventory for a SKU drops to that number, it’s time to ship more. Send enough to bring it back up to your weeks-of-cover target.
Step 3: Everything else is your reserve
Once you know what Amazon needs, the rest of your inventory is reserve. Your reserve does three jobs. It replenishes Amazon. It supplies your other channels. And it keeps your business running if anything interrupts one channel.
Your reserve also tells you when to place your next purchase order. Start with your total daily velocity across all channels. Multiply it by your supplier lead time plus a buffer. Then compare that number to your total units across all locations. When your total inventory falls to that level, reorder from your supplier.
A worked example
Here’s how this works for one SKU, using round numbers.
| Input | Value |
|---|---|
| Amazon velocity | 40 units per day |
| Other channels velocity | 10 units per day |
| Replenishment lead time to Amazon | 12 days (2 days to ship out, 3 days in transit, 7 days to check in) |
| Safety buffer | 14 days |
| Target weeks of cover at Amazon | 6 weeks (42 days) |
| Supplier lead time | 90 days |
| Supplier buffer | 21 days |
| Total units on hand across all locations | 12,000 |
Amazon target: 40 units × 42 days = 1,680 units at Amazon.
Amazon reorder point: 40 units × (12 + 14) days = 1,040 units. When Amazon inventory drops to about 1,040 units, send about 640 units from reserve. That brings it back to 1,680.
Reserve: 12,000 total units minus 1,680 at Amazon leaves 10,320 units in reserve. That covers Amazon replenishment. It also covers 10 units a day for other channels.
Supplier reorder point: Total velocity is 50 units a day. So 50 × (90 + 21) = 5,550 units. When total inventory across all locations falls to about 5,550, place your next purchase order.
In this example, about 14 percent of the inventory is at Amazon. The other 86 percent is in reserve. The split will look different for every SKU. But running the numbers usually shows sellers they can keep much less at Amazon than they thought, without risking a stockout.
Keep it current
These numbers change, so your plan has to change with them. Review velocity, lead times, and inventory by location every week or two. Update your targets whenever Amazon publishes your next month’s capacity limit.
Your plan is only as good as the counts behind it. You need to know how many units are in reserve and where each pallet and carton is. Without that, every number above is a guess. Accurate counts and recorded locations at your reserve warehouse are what make this method work.
Let the planner do the math
We built a free overflow inventory and replenishment planner that runs these numbers for every SKU. It’s a Google Sheet, with an Excel download if you prefer. You enter your velocity, lead times, and inventory by location. The planner shows your weeks of cover at Amazon and in reserve. It also shows your Amazon reorder points, how much to send, and when to place your next purchase order.
Download the overflow inventory and replenishment planner
If you need a place to keep that reserve inventory, PrepIt Logistics stores palletized inventory at our warehouse in Colton, California. Every pallet and carton is counted and located. We forward inventory to FBA, AWD, Walmart, wholesale buyers, or your own customers on your schedule.