What is Inventory Value?
Inventory Value represents the total value in dollars (or the marketplace currency) for all (FBA) items in Amazon’s Fulfillment Center right now. The valuation is based on the costs incurred to acquire the inventory and prepare for sale, also referred to as the cost of goods sold (COGS).
Inventory value shows you how much capital is currently tied up in inventory and helps you to evaluate your overall profitability. Holding a high amount of inventory for too long could result in cash flow issues, additional storage fees, and depending on your product category you may run the risk of products spoiling or becoming unsellable. Conversely, holding too little inventory prevents you from being able to meet customer demand.
How to Use Inventory Value
Viewing this metric at the SKU level allows you to see exactly where your investment lies, a metric you cannot see in Amazon and will help make decisions about your advertising strategy.
Viewing this metric at the account level allows you to evaluate trends in your overall profitability when measuring against your estimated gross profit.
To maintain a healthy inventory value, determine a tight valuation window of what is acceptable for your business. Having a good understanding of your inventory minimums (aka minimal valuable stock) for each product will help you determine inventory value thresholds that apply to your business.
Be sure to update your COGS in Flywheel each period you evaluate your costs, doing so will enable you to see trends in COGS and make decisions on product pricing.
Note: This does not include inbound inventory.
COGS * Quantity