Inventory Matters now and well into Quarter One
It’s November, and Black Friday is approaching. Only many box retailers are changing their pre-game holiday shopping tradition. Some are no longer waiting for Black Friday to begin their incentives: Toys-R-Us, for example, is opening on Thanksgiving Day.
Last year on Cyber Monday, more than 16 million units were ordered worldwide from Amazon sellers, and units sold by Amazon sellers during holiday deals grew more than 400% year-over-year. Of course, the online marketplace never closes, which gives online retailers excellent access to customers, but you’ve got to be ready.
One of the biggest challenges online sellers face is managing their inventory. If an item reaches out-of-stock status, not only does a merchant miss out on holiday sales, but out-of-stock will turn off customers through the first quarter.
Just skimming The Amazing Seller’s Facebook feed, sellers report that when they run out of inventory, they see activity tank over the long term. That kind of downward trend negatively affects your bottom line and can decrease traffic to your product over time.
The best way to ensure enough inventories through the holidays is by using historical sales data from the past 90-180 days. Calculate sales curves and project outwards with the same model to understand what you can expect. If this is your first holiday sales season, then a good rule is to ensure you carry at least 45-60 days of coverage in FBA. You can also run the Recommended FBA Inbound Quantities report from the Amazon Seller Coach.
Amazon has these Holiday tips for sellers, too. If you haven’t used an inventory management system before, it might be a good idea to try one out this year. Even if it feels too late, having a plan in place, this season will help you better prepare for the next season. This year’s data is next year’s inventory.
If you’re a new seller or have let your inventory run low, use a Holiday promotion to drive traffic to your product.
The best way to convey holiday specials is to utilize the promotions feature in Seller Central. From the promotions tab, you can create four types of promotions: free shipping, money off, Buy-one-get-one, and external benefit.
Free Shipping allows you to offer free shipping on a portion of your catalog or your entire catalog. Money Off will give you the option to offer a percentage or dollar discount on your entire catalog or a subset of your catalog. Buy One Get One is exactly as it sounds; you can apply it to your entire catalog or a specific portion. External Benefits allows you to offer a post-order benefit on qualifying purchases from your entire catalog or a subset of your catalog. For example, spend $100 and receive ten loyalty points.
Another solid tactic is to use Amazon’s sponsored product tool. Of course, running a promotion means you have to be on top of inventory. Focus on one or two top sellers in your portfolio so you can effectively manage those sales.
FBA and Inventory
In the Golden Rule blog ( hyperlink to blog), I talked about winning the Buy Box and how that can make or break a seller’s storefront. You’ve got to have a competitive price and good reviews, and you must manage negative feedback. Customers are more likely to convert from a shopper to a buyer if your product has the Buy Box. One requirement to win the Buy Box is using fulfillment by Amazon or FBA. This signals the buyer that you are a legitimate seller and that their item will arrive quickly.
With FBA, your products are eligible for Amazon Prime’s free two-day shipping, which tends to be a faster, more dependable shipping option than most independent retailers can provide. Amazon now has more than 10 million Prime customers, and 50% of new Amazon sellers are immediately adopting FBA for at least some of their products.
During the holidays, Amazon emails its Prime customers, assuring them of a December 25th arrival. Sellers who fulfill orders don’t get this customer care via Amazon.
Also, in terms of making sure your stock is plentiful, you must remember that. During November and December, it might take 4-5 days for products to be received in FBA (compared to the usual time of 1-2 days).â€ This is why it’s so important for sellers to stock well in October and prepare for possible low stock issues. You may need to replenish your stock; do so earlier than usual. Another reason why managing your inventory well pays off is.
Here are some tips:
- Review inventory at least every two days
- Try to buy enough inventory to keep you going through February
- Use an inventory management system
- If you don’t have an inventory management system, use Set Replenishment Alerts through Amazon
- Stock more via FBA and deal with the added fees; the return is worth it
If you aren’t using an inventory management system, it’s not too late to implement software now. Maybe it feels too late, but with tools like the StoreAutomator, you can upload your inventory easily from several channels and participate on a month-to-month basis. Of course, there are many others, but not all offer such low-risk entry.
Maybe you’re on top of your holiday inventory, but even seasoned sellers know that each quarter four is different. Amazon quarter four sales have grown each year exponentially. It can be impossible to predict best sellers overall and which products in your lines are your best bet. If you are wondering if you’ve miscalculated, remember your sales data is your best resource for making solid predictions. Inventory management will affect your Q4 success and 2017’s quarter one. No matter your bottom line, it’s a learning opportunity that’s a gift that data keeps on giving.