All wholesalers and high-volume sellers need to have a stock replenishment process in place in order to sustain long-term success. Sellers who do run out of stock are unable to capture sales and may suffer even more if their manufacturers cannot fulfill the supply order quickly. The most successful Amazon sellers understand that winning the Buy Box is directly related to maintaining adequate stock levels. If you don’t want to run out of your consistent sellers, be sure to maintain enough days of coverage at all times.
Amazon Values Inventory
Sellers who maintain consistent levels of inventory and successfully avoid untimely fluctuations are typically favored by Amazon. Ideally, Amazon sellers should strive to develop a steady and stable positive gain in their inventory levels over time. Sellers who have enough inventory in stock to fulfill sudden increases in demand generated by Buy Box typically receive priority in the results listings. Amazon usually awards the most Buy Box shares to sellers who have a strong stock history, consistent sales and a large inventory at the time.
In order to keep the most popular items in stock, Amazon sellers need to focus on adhering to inventory best planning practices. Many sellers are surprised to find that effective inventory management can be just as profitable as sourcing for new products. Consistently turning inventory over for a profit without delay should be the foremost priority of any Amazon sellers interested in sustaining their venture long-term. Ideally, high-volume Amazon sellers should work towards developing an in-stock strategy that allows for 30-60 days of coverage.
Some of the largest challenges involved with managing FBA inventory replenishment are incorporating lead time, anticipating sales spikes and getting accurate sales velocity calculations. Properly incorporating lead time is crucial to preventing stock outs from occurring. Successful sellers are able to anticipate and compensate for potential discrepancies in projected lead times that could result in a stock out. In addition, the more frequently sellers experience stock outs, the further out of touch they are with how to accurately restock their inventory for the upcoming cycle.
Sales and Stock Outs
Sellers who can effectively anticipate spikes in sales volumes are better suited to avoid potential stock outs. These sales spikes can be caused by external factors like Amazon seasonality or the everlasting impact of special promotions. It’s important that sellers include these factors in their equations when assessing inventory management for the next cycle. Understanding how to calculate sales velocity, or the dollar amount and number of seller transactions during any given month, is also helpful for sellers attempting to avoid early stock outs.
There are currently automated solutions that already incorporate sales velocity into the forecasts, analyze sales rank and accurately predict days of inventory for each product. Some of these applications are designed to help high-volume sellers restock based on profitably rather than inventory levels. These systems can also help FBA sellers identify potential restocking opportunities based on the potential profit margin. There are a variety of approaches to inventory management, however, the most successful sellers on Amazon rarely suffer from a stock out, if ever.