Effective inventory management is pivotal for a successful Q4. If your product is out of stock, shoppers won’t hesitate to jump over to the next best option, thanks to Amazon’s infinite product selection. The last quarter of the year is the most lucrative for most Amazon sellers. If they are not able to meet the customer demand during the period, they’re missing the highest sales opportunity of the year.
In the article, we will discover how brands can streamline their inventory management process during the holidays and keep their catalog in stock throughout the season.
Importance of being in stock
It is absolutely essential to maintain an adequate level of stock throughout the holiday season. Sudden stockouts can cause a drop in sales, click rate and sales rank. Once your product inventory reaches its bottom, your sales momentum is completely lost. Your products stop appearing in the search result pages and the decrease in click-through rates and traffic translates into low organic ranking.
2022 Holiday storage limits
Like every year, Amazon has imposed restrictions on how much inventory sellers can send to FBA centers ahead of the holiday shopping season. In the seller forum, sellers have been whining about their restock limits being slashed by up to 40%. Amazon advised creating room for more products by “creating removal orders for products that are unlikely to sell, or canceling non-urgent shipments to fulfillment centers”.
Before sending in any inventory to FBA centres, make sure to check your restock limits.
What data brands should be looking at to forecast inventory
Making an accurate inventory prediction can be tough, but taking a good look at your last year’s sales data and reviewing current industry trends can help you get an idea of the holiday rush. Brands that’ve been selling on Amazon for more than a year can leverage past year’s data to study sales trends and forecast inventory requirements for this year.
Here are some of the data points to consider when you evaluate inventory requirements and sales potential:
- Q4 sales for the past 2-3 years
- Year-to-date sales
- Top selling SKUs during past Q4s
- Overstocking or understocking issues over the past Q4s
Even after you get your hands on these numbers, it might be difficult to get an accurate estimate of how much inventory you’ll need because the numbers keep on soaring. We suggest brands to look at Prime Day data because it is expected to greatly resemble your Q4 sales patterns.
Rule of thumb (% lift on August unit demand):
- Oct: 10%
- Nov: 40%
- Dec: 70%
Tips to manage inventory for holidays
#1: Plan ahead
Although Q4 has already officially begun, big sale days like Black Friday, Cyber Monday and holidays are yet to come. Before the Q4 shopping begins to pick up steam, brands need to have a watertight inventory plan in place.
Start planning today, schedule a meeting with your Amazon management consultant and assess the opportunities and potential mishaps to streamline the process as much as possible.
#2: Get in touch with your manufacturer
In order to send products to the Amazon warehouse in advance, you need to have them FBA ready at your manufacturing unit. You’ll want to factor in the days’ worth of inventory you already have in the FBA warehouse and the time taken by your manufacturer to send them to you.
As a pre-emptive measure, check your FBA storage limits before ordering inventory.
#3: Send inventory in smaller shipments
Don’t put all your eggs in one basket. Send your top-selling SKUs in small shipments and more frequently. If a big shipment gets lost or delayed in transit, it could really set you back, especially when the sale is running. Smaller shipments reduce this risk and ensure your products stay in stock throughout the season.
#4: Make sure to order buffer stock
It is advisable to receive more inventory from your suppliers vs. less. After you’ve forecasted the inventory, you’ll need to add a 10% buffer inventory for FBM. This stock can be utilized if you run out of stock during the holidays.
However, take into consideration the long-term storage fees that Amazon implements when inventory is slow moving and sitting in the FBA centers for long periods of time.
#5: Factor in your advertising efforts
There is a fine line of difference between overstocking and replenishing just the right amount of inventory to meet the demands. Things can get complicated when you add marketing and promotions to the mix.
If you’re running deals and/or promotions on your products, order enough inventory to last during the promotion period and immediately after. Going out of stock right after deals and promotions are over kills the momentum and limits long-term upside.
Ensure that your Amazon advertising manager and inventory management team work in sync, so your products have enough inventory to meet the potential uptick in sales.
#6: Utilize dual fulfillment
While you may have done everything to project the spike in demand, you might find yourself in a pinch where an item that you thought would perform well turned into your bestseller or your top sellers outperformed and are flying off the shelves.
That’s why it is not advisable to entirely rely on FBA. A great stopgap solution would be to switch to FBM when the need arises. Make sure to check inventory levels daily, so you know when to switch.
Important: Enable FBM only if you have the operational capacity to do so. This would include shipping the product on time, handling returns and more. Failure in fulfillment could result in poor account health and negative reviews.
#7: Have a contingency plan in place
As soon as it’s September 1st, Amazon sellers should be mentally prepared to firefight issues, come what may. It is almost impossible to predict what may come, so you must always have a backup plan in place. Ask your Amazon selling consultant to be prepared for anything that may not go as planned during the tentpole events like Black Friday and Cyber Monday
How to get rid of access stock after the holidays are over?
If you find yourself with excess stock at the end of Q4, here are some of the ways you can get rid of it:
- Run Lightning Deals and buy one get one promotion.
- Leverage PPC to bring in more traffic and generate further traction on overstocked items.
- If you still can’t seem to get rid of access inventory, create a removal order, so it all comes back to your warehouse.
- Go to the Manage Inventory Health page in Seller Central for useful recommendations on managing aged inventory.
- Donate excess inventory to charitable organizations.
Q4 can be the most wonderful time of the year, only if you have adequate inventory
It is quite apparent that sudden inventory stockouts are a definite disaster. Brands looking to cash in on the uptick in traffic must be on top of inventory management. Put the tips in this article to work and make accurate inventory forecasting this Q4.
If you have a generous catalog, it can be tedious to go through each report and manually analyze information. Our Amazon marketing specialists have been helping brands make informed restocking decisions for the past 6 years. We also help our clients navigate fulfillment methods, forecast inventory, create shipments and so much more. Contact us if you would like to efficiently manage inventory and maximize sales over the next three months.