The Importance of Inventory Forecasting for Amazon Sellers
As an Amazon seller, there are countless things that can make or break your success on the platform. However, there is one mistake that I have seen hold people back time and time again: not ordering enough inventory and going out of stock. This can be a death sentence for your business, as it can be difficult to re-rank your product once you come back in stock. In this article, I will go over exactly how to inventory forecast to ensure that you don't make this mistake. I will cover how many units to order for your first order, and what to do if you do go out of stock.
The Flawed Amazon Algorithm
Before we dive into inventory forecasting, it's important to understand why going out of stock can be so detrimental to your business. The Amazon algorithm works on rolling averages of sales, such as a 30-day rolling average or a 60-day rolling average. If you make 300 sales in 30 days, Amazon will rank you at 10 sales per day. However, if you go out of stock for 30 days, they will look at your whole period and see that you only made 300 sales in 60 days, which averages out to 5 sales per day. This means that they will rank you where 5 sale per day products are ranked, which can drastically affect your ranking when you come back in stock.
The Importance of Inventory Forecasting
Now that we understand why going out of stock can be so detrimental, let's talk about how to avoid it. The key is inventory forecasting. You need to know how many units to order for your first inventory, and how to make sure that you don't run out of stock.
How Many Units to Order for Your First Inventory
A lot of people are hesitant to order too many units for their first inventory, as they don't want to be stuck with excess inventory if their product doesn't sell. However, ordering too few units can be just as detrimental. If you order 250 units and sell 10 units per day, you will run out of stock in 25 days. If you order 500 units, you will last 50 days.
While it may seem like ordering fewer units is the safer option, it can actually hinder your business in the long run. If you run out of stock for an extended period of time, it can be difficult to re-rank your product once you come back in stock.
What to Do If You Go Out of Stock
If you do go out of stock, there are a few things that you can do to make sure that you re-rank successfully. First, you need to move quickly. As soon as your inventory becomes available for sale, you need to ramp up your PPC and throw your budget back up to where it was, if not higher. You also need to bring your price down drastically, even below what you were selling before, just to start to re-rank quickly. Then, you can slowly raise it again from there.
You can also add coupons to your listing, which can increase conversions and help you re-rank more quickly.
Conclusion
Inventory forecasting is crucial for Amazon sellers. By ordering enough inventory and avoiding going out of stock, you can ensure that your product stays ranked and profitable. If you do go out of stock, there are steps that you can take to re-rank successfully.
Remember, the worst thing you can do for your Amazon business is to not order enough inventory and go out of stock. Don't fall for the misconception that ordering fewer units is the safer option. Order enough inventory to last you for an extended period of time, and you'll be in a much better position to succeed on Amazon.
Highlights
- Going out of stock can be a death sentence for your Amazon business
- The Amazon algorithm works on rolling averages of sales
- Inventory forecasting is crucial for Amazon sellers
- Order enough inventory to last you for an extended period of time
- Move quickly if you do go out of stock
- Add coupons to your listing to increase conversions and re-rank more quickly
FAQ
Q: What is inventory forecasting?
A: Inventory forecasting is the process of predicting how much inventory you will need to order to meet demand.
Q: Why is inventory forecasting important for Amazon sellers?
A: Inventory forecasting is important for Amazon sellers because going out of stock can be detrimental to your business. It can be difficult to re-rank your product once you come back in stock, and you can lose sales and profits in the meantime.
Q: How many units should I order for my first inventory?
A: It's important to order enough units to last you for an extended period of time. While it may seem safer to order fewer units, it can actually hinder your business in the long run.
