Inventory Management & Cash Flow for Amazon Wholesale in Europe

Cash flow is the number one reason wholesale businesses fail. Not bad products. Not bad suppliers. Cash flow. You buy €5,000 in inventory, wait 3 weeks for it to arrive, another week to prep and ship to FBA, then 2-4 weeks for sales to trickle in, and another 2 weeks for Amazon to pay you. That's 8-10 weeks between spending money and getting it back.

Meanwhile, you need to reorder because your first products are selling. And you found two more suppliers with great products. But your capital is tied up in inventory that hasn't sold yet and payments that haven't arrived yet.

Managing this cycle is what separates growing wholesale businesses from ones that stall out at €3,000/month in revenue and never scale.

The Cash Flow Cycle: Understanding the Timeline

Let's trace €1,000 through the wholesale cycle:

Day 0: You pay your supplier €1,000 for inventory.
Day 7-14: Inventory arrives at your location (or prep center).
Day 14-21: You prep, label, and ship to Amazon FBA.
Day 21-28: Amazon receives, processes, and makes your inventory available for sale.
Day 28-56: Products sell over 2-4 weeks (depending on velocity).
Day 42-70: Amazon pays you (every 14 days, with a 2-day processing delay).

Best case: 6 weeks from payment to payback. Realistic case: 8-10 weeks. Worst case (slow-selling products): 12-16 weeks or more.

This means your working capital needs to cover at least 2 inventory cycles simultaneously. If you're buying €2,000 in inventory per month, you need roughly €4,000-5,000 in working capital to maintain continuous stock without running dry between Amazon payouts.

Weeks of Cover (WOC): The Key Metric

Weeks of Cover tells you how many weeks your current inventory will last at the current sales rate. It's the most important inventory metric for wholesale sellers.

Formula: WOC = Current Units in Stock / Average Weekly Sales

If you have 80 units and sell 20/week, your WOC is 4 weeks.

Target WOC: 4-6 weeks. This gives you enough buffer for supply chain delays while not tying up too much capital in stock.

Under 3 weeks: danger zone. You'll probably run out of stock before your next shipment arrives. Place a rush reorder now. 4-6 weeks: sweet spot. Enough buffer, not too much capital tied up. 6-8 weeks: acceptable if the product sells consistently. Start watching it. Over 8 weeks: too much stock. Your capital is locked up and storage fees are accumulating. Don't reorder until WOC drops below 5.

Reorder Points and Timing

When to reorder? Here's a simple formula:

Reorder Point = (Average Weekly Sales × Lead Time in Weeks) + Safety Stock

Lead time for wholesale in Europe: typically 1-3 weeks (order to supplier + delivery to you + prep + ship to FBA + Amazon processing). Safety stock: 1-2 weeks of additional buffer.

Example: You sell 30 units/week. Lead time is 2 weeks. Safety stock is 1 week. Reorder when you hit 90 units (30 × 2 + 30 × 1).

Set calendar reminders or use inventory management software to check your stock levels against reorder points weekly. Running out of stock is expensive — Amazon's algorithm penalizes listings that go out of stock, and it can take weeks to recover your sales velocity and Buy Box share after restocking.

The Aged Inventory Trap

Amazon's aged inventory surcharge is designed to prevent sellers from using fulfillment centers as permanent storage. It escalates over time:

0-180 days: Regular monthly storage fees only.
181-270 days: Regular storage + aged inventory surcharge (additional fee per unit).
271-365 days: Higher surcharge.
365+ days: Significantly higher surcharge (€170+ per cubic meter).

For wholesale sellers, the 180-day mark is your critical threshold. If inventory hasn't sold within 6 months, it's costing you money to keep it in Amazon's warehouse.

How to avoid aged inventory: order conservatively (4-6 WOC, not 12), monitor sell-through rate monthly, drop the price if products aren't selling as expected (taking a small loss is better than paying aged inventory fees for months), and create removal orders for dead stock before the 180-day surcharge hits.

Capital Allocation: How to Divide Your Budget

When you have €5,000 in available capital, don't put it all into one supplier's products. Diversify:

60-70% on proven products. Products you've sold before, with predictable demand and stable margins. These are your bread and butter — lower risk, reliable returns.

20-30% on new products. First-time orders from new suppliers or new products from existing suppliers. Test with small quantities (2-3 WOC). Some will become proven winners; others won't work out.

10% reserve. Keep cash available for opportunities. A supplier might offer a bulk discount, a competitor might run out of stock on a high-demand product, or you might need to rush-order inventory for a seasonal spike. Having a reserve means you can act quickly.

Negotiating Payment Terms With Suppliers

The single biggest cash flow improvement for wholesale sellers is getting net-30 or net-60 payment terms from suppliers. Instead of paying upfront, you pay 30-60 days after receiving the goods. By then, some of your inventory has already sold and Amazon has paid you.

How to get better terms: Start with prepayment for your first 2-3 orders (build trust). After 3 consistent orders, ask for net-15. After 6 months of reliable ordering, request net-30. If you're ordering €2,000+/month consistently, some suppliers will offer net-60.

Payment terms can effectively double your purchasing power. With €5,000 in capital and net-30 terms, you can have €10,000 in inventory working for you — €5,000 already paid and €5,000 due in 30 days (by which time the first batch has generated revenue).

Amazon's IPI Score and Storage Limits

Amazon's Inventory Performance Index (IPI) measures how efficiently you manage inventory. Scores range from 0 to 1,000. If your IPI drops below Amazon's threshold (currently around 400-450, but it changes), Amazon limits how much inventory you can store in their warehouses.

What affects IPI: excess inventory percentage (too much stock relative to sales), stranded inventory (products listed but not for sale due to listing issues), sell-through rate (how fast inventory sells), and in-stock rate for popular products.

To maintain a healthy IPI: remove slow-moving inventory before it becomes "excess," fix stranded inventory listings within 48 hours, and don't send more than 6-8 WOC of any product. A high IPI gives you more storage capacity, which gives you more flexibility to stock up before peak seasons like Q4.

3PL Warehouses: The European Buffer

As you scale, shipping directly from supplier to FBA isn't always practical. Sometimes you need a buffer — a place to receive large supplier shipments, inspect quality, prep products, and feed FBA in smaller batches.

Third-party logistics (3PL) warehouses in Europe fill this role. Popular locations for Amazon sellers: western Germany (close to multiple Amazon FCs), northern France, and Poland (lower costs, close to Amazon's growing Polish fulfillment network).

3PL costs vary: receiving and storage typically €5-15 per pallet/month, prep and labeling €0.30-1.00 per unit, and shipping to FBA at negotiated carrier rates. Total 3PL cost per unit: €0.50-2.00 depending on product size and services needed.

When a 3PL makes sense: when you're ordering containers or pallets from suppliers and need to break them down into FBA-sized shipments, when you want to inspect products before they go to FBA (catching quality issues before customers do), when you need to store overflow inventory outside of Amazon's warehouse (to avoid storage fees and IPI impacts), and when you're doing multi-country MCI and need a central hub for distributing to different country fulfillment centers.

Seasonal Cash Flow Management

European Amazon has strong seasonal patterns that affect cash flow:

Q4 (October-December): Highest sales but also highest storage fees and maximum cash commitment. Start planning Q4 inventory in August. Order extra stock in September to avoid being out of stock during Black Friday and Christmas.

Q1 (January-March): Sales dip after holidays. Returns spike in January. Cash from Q4 sales is still arriving. Use this period to clear remaining Q4 inventory and reinvest profits into spring stock.

Q2-Q3 (April-September): Steady baseline sales. Lower storage fees. Good time for testing new products and building supplier relationships while capital pressure is lower.

The biggest cash flow mistake in Q4: ordering too much based on optimistic sales projections. If your November sales projection is 500 units but you actually sell 300, you're stuck with 200 units in Amazon's warehouse during the most expensive storage period. Order conservatively for Q4 and reorder fast if you're selling well — it's better to briefly sell out than to carry excess holiday inventory into January.

Scaling: When and How

The common scaling path for wholesale sellers in Europe:

€0-5,000/month revenue: You're learning. Focus on process, not volume. Keep 5-10 active SKUs. Reinvest all profits into inventory.

€5,000-15,000/month revenue: You have proof of concept. Start optimizing: better payment terms, more suppliers, expanding to 2-3 EU marketplaces. Maintain 20-40 active SKUs.

€15,000-50,000/month revenue: You need systems. Inventory management software, automated repricing, possibly a prep center. Your time should be on finding new suppliers and products, not packing boxes.

€50,000+/month revenue: You're running a real business. Consider business financing for inventory (many European banks and fintechs offer Amazon seller loans), hiring a virtual assistant for operational tasks, and possibly a 3PL warehouse for non-FBA fulfillment or as a buffer between supplier deliveries and FBA shipments.

The scaling mistake most sellers make: trying to grow revenue by buying more of the same products. True scaling comes from adding new profitable products and new reliable suppliers, not from ordering 500 units of something you used to order 100 of. Diversification is growth. Concentration is risk.

Frequently Asked Questions

What IPI score do I need to avoid storage limits on Amazon?

Maintain an IPI (Inventory Performance Index) score of 400 or above to avoid storage restrictions. An IPI of 500+ puts you in the safe zone with maximum storage capacity. Below 400, Amazon reduces your storage limits and may charge a Storage Utilization Surcharge. Check your IPI in Seller Central under Inventory Performance.

How do I avoid Amazon aged inventory surcharges?

Monitor your inventory age weekly in Seller Central. Products stored for 181-365 days incur the aged inventory surcharge (EUR 0.50-1.50 per unit). At 365+ days, it jumps significantly. Create removal or liquidation orders before the 180-day mark for slow-moving products. Price aggressively on slow stock at day 120-150 to avoid the surcharge entirely.

How much inventory should I send to Amazon FBA?

Target 30-60 days of supply (also called "weeks of cover" — aim for 4-8 weeks). Less than 30 days risks stockouts and losing the Buy Box. More than 60 days ties up cash and risks aged inventory surcharges. Use the formula: Weekly Sales x Target Weeks of Cover - Current FBA Stock = Reorder Quantity.

How much capital do I need for Amazon wholesale in Europe?

Budget EUR 3,000-10,000 to start. The cash flow cycle for wholesale is typically 60-90 days: you pay the supplier (day 0), ship to FBA (day 7-14), products sell (day 14-60), Amazon pays you (every 14 days with a 14-day hold). You need enough capital to cover 2-3 reorder cycles before revenue starts flowing consistently.

What is a good sell-through rate for Amazon FBA?

A good sell-through rate for wholesale products is 3-5 units per week per ASIN for standard products. Higher is better for cash flow. Below 1 unit per week means the product is too slow and may incur aged inventory charges. Calculate sell-through as: Units Sold (30 days) / Average Units in Stock.

When should I use a 3PL warehouse instead of sending directly to FBA?

Use a 3PL when: your IPI score is below 400 (limited FBA storage), you need to prep or label products before sending to FBA, you want buffer stock close to FBA warehouses for quick replenishment, or your supplier ships full pallets that need breaking down. 3PL costs in Europe range from EUR 0.50-2.00 per unit for storage and prep.