As an Amazon seller, accurate and active inventory management is crucial to climbing ahead of the competition.

Not only will stock-outs lose you sales you had otherwise secured, but under Amazon’s new fulfillment policies, overstocking will jeopardize your bottom line with added fees and storage limits. Moving forward, successful Amazon sellers are going to have to master walking the delicate tightrope between under- and overstocking. So, what are the keys to effective inventory management?

Back to Basics

There are some best practices that all Amazon sellers should make a regular part of their inventory management.

Knowledge is power, and nowhere is that more true than in regards to your inventory. Regularly checking your inventory levels and sales rates will empower you to quickly spot demand fluctuations and short-term market trends, which can save you from an unexpected stock-out and help you recognize an effective (or ineffective) marketing strategy.

By setting smart inventory minimums for your items based on sales rates and the lead times of your suppliers, you can avoid accidental stock-outs. Inventory minimums insure that, even with long lead times, you can restock a product before you fall behind demand. The last thing you’d want is to miss out on a sudden spike in demand while waiting to restock your inventory.
Of course, these basics can only account for so much. Items that have significant seasonal demand spikes will require special preparation; sticking to your restocking routine will leave you with an empty inventory and wallet.

Keep Track of Promotions

Crashing into a stock-out during the demand spike of a successful ad campaign or promotion is like burning gas by idling your car. Make sure you aren’t spending money on promotions that are just going to put you into an inventory dead-end. Luckily, demand spikes due to ad campaigns and promotions are the easiest to plan for.

If you’ve run similar campaigns or promotions in the past, you can use that preexisting data to account for demand spikes this time around and meet demand without worry. For example: use a prior “buy one, get one” promotion to forecast demand for your upcoming promotion (adjusting for your enterprise’s growth if needed, of course!).

Even without preexisting data, you can successfully prepare for your promotional offers by setting aside an amount of product specifically for the promotion and adding that amount to your normal expected demand at the time of ordering inventory. This way, the demand spike caused by your promotion won’t cut into the inventory you require to meet normal demand.

Demand Planning Using Amazon Seller Tools

A variety of Amazon seller tools exist that can provide you with accurate demand forecasting for all of your products. The Amazon Seller Coach is the most readily available of all these options, and can be found right on your Seller Central account homepage. The Seller Coach provides information about the best times to restock your inventory (among other suggestions to increase your success as a seller) on a convenient and easy-to-read platform. However, the Amazon Seller Coach is not the most robust or accurate of the available demand planning tools.

Likewise, the DIY option of charting out complex rows and columns of data in Excel is better at providing migraines than accurate demand forecasts. Why sink huge chunks of your time and energy into inventory management when those resources could be spent seeking new selling opportunities or improving your current ones?

Purpose-built seller tools such as ForecastRx provide the most accurate demand forecasts with the least amount of work on your part. For sellers in the U.S., Canada, and Mexico (EU Amazon integration coming soon), ForecastRx will predict future demand with an accuracy no amount of tinkering in Excel can match. But that’s not to say all that hard work will go down the drain—your CSV data can be easily integrated into ForecastRx, allowing you to get the most out of the software right away. Robust predictive analytics are the most accurate and efficient way to forecast demand and manage your inventory, which is why we packed ForecastRx with algorithms that work together to predict future sales and handle of hassle of generating purchase orders.

By establishing good practices like regularly checking sales rates and setting inventory minimums, Amazon sellers can mitigate the issues of stock-outs and overstocking. For sellers that have basic inventory management skills mastered and want to take their business to the next level, ForecastRx offers all the predictive analytics tools you could ever need. We recommend trying out a free trial of ForecastRx to see if it’s the solution that works for you.

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