What You Need To Know About Restocking On Amazon During The Holidays
There’s certain similarities brick and mortar retailers have with their digital counterparts. But perhaps the most consistent one is inventory management.
Even for Amazon FBA sellers, inventory management can be far from seamless. A surplus in inventory can frequently lead to limitations on orders, while too little can lead to buyer frustration and eventual abandonment.
But during the holidays, it can seem like anything goes. You might find yourself completely out of stock one week only to discover your merchandise languishing in storage the next. And to make matters worse? Amazon can actually penalize FBA sellers with fees if they’re not following specific restocking guidelines.
Holiday Inventory Turnovers And Selling On Amazon
Generally speaking, inventory projections should be based on sales velocity as well as seasonality. Unfortunately, many sellers tend solely to rely on Amazon’s measurement of 30 - 90 days; and that’s not necessarily an accurate gauge during the holidays. What sellers don’t necessarily know is that Amazon provides a specific forecasting tool that can help give a more accurate overview of seasonal sales: Amazon Selling Coach.
Amazon Selling Coach is a built-in tool available to vendors with a professional selling plan which helps track sales based on current stock and automatically notifies you of the need to replenish inventory based on a seven day projection. Not only does Selling Coach help you forecast accurately, it can also help you match competitive product prices, review sales trends and notify you of available product lines not currently offered through FBA.
But while a seven day projection may be a more conclusive measurement during the holidays, what about planning for the holiday rush? Typically, most sellers plan their inventory based on both trends and performance at least two to three months in advance of the holidays. And under normal circumstances, that’s a good rule of thumb. But 2020 is not a normal circumstance. Forrester Research recently predicted an estimated 18.5 percent growth for holiday eCommerce sales. But that growth can be as much a detriment to online sellers as it is to traditional retailers.
Amazon’s Inventory Performance Index
Your Inventory Performance Index (IPI) is a metric that’s used to gauge your sales performance and history on Amazon calculated on your effective management of inventory as well as sales.. And in theory, your IPI can point out just what some of your product performance strengths and weaknesses are. But Amazon recently announced changes to the minimum IPI threshold which would effectively limit storage space for FBA sellers with a rating below 500.
Amazon insists that few sellers will be affected by the changes. But these changes also include a minimum quantity limit of 25 cubic feet and 200 units per order on initial product launches. Which means that smaller and more specialized vendors may ultimately find themselves into the blue.
It’s a bit of a Catch 22. How do you keep your IPI up to Amazon standards if you can’t predict holiday sales accurately?
Tips On Improving Your IPI
Review your Inbound Performance Report (IPR) regularly to identify any potentially recurring problems. These can be based on any number of circumstances, including service errors as well as both your own and buyer mistakes. Persistent issues in your IPR should be addressed immediately.
Minimize the number of available SKUs in FBA to include only products with significant customer demand. Amazon permits both merchant fulfilled orders and orders delivered through alternative third party logistic providers for FBA sellers if you want to keep your current product line as is. Just note that Amazon does not currently sell storage space.
Your IPI is affected by your handling of both slow moving and top selling inventory. While the 2020 holidays will be impossible to predict, there’s a strong chance you will wind up seeing an increase in sales. If you’ve seen a steady uptick in sales for at least six months, don’t wait to replenish your stock. A surplus is always better than a deficit.
Stranded inventory (inventory that’s currently stored at an FBA warehouse without an active Amazon listing) is a recurring problem for many sellers; one which negatively impacts your IPI. Amazon allows you only 30 days to fix any issues with stranded inventory before its removal from FBA warehouses. If this presents a recurring issue, either create a removal order or edit your listing to provide further information.
Leverage sales and promotions to help move stagnant merchandise. Not only will this have a positive effect on your IPI, but will actually help boost your overall sales ranking and visibility.
While Amazon’s IPI does make recommendations on their Restock Inventory page, many sellers have reported they’re not always helpful during an unpredictable holiday season. It’s suggested that you may want to discourage them during Q4 by choosing the “Hide Recommendations” action for products you anticipate may receive higher traffic as a result of specials and promotions.
In many cases, FBA may be one of the best gifts a seller could treat themselves to during the holidays. It’s effective. It’s a time saver. And it reduces strain on both your inventory management as well as your overall business operations.
Just make certain you read the owner’s manual first.
Color More Lines provides white glove, global account management of your ecommerce platforms so mission-driven companies can focus on new product development, branding and growth strategies. Find out more at Color More Lines.