How to Successfully Manage Amazon Inventory and Avoid Stockouts
The consequences of a stockout on Amazon can be dire: you lose sales and Amazon SEO rank while your competitors achieve success and increase their Amazon sales. It’s a lose, lose, lose situation, and you want to do everything in your power to avoid it.
Here are just a few of the things that can happen when you run out of stock:
- Lose sales & competitive advantage to competitors who have inventory
- Jeopardize your product sales rank—no matter how hard you’ve worked to build it
- Upset customers who have plenty of attractive options in the marketplace
With the right plans in place, you can avoid running out of stock and falling into these traps. Below, we’ll talk through tried and true ways to avoid stock outs and successfully manage your Amazon inventory.
Avoiding the Amazon Stockout
The good news is that you can avoid an Amazon stockout, so long as you have a solid inventory management strategy. Here are a few ways to ensure you’re making smart “in stock” decisions:
Manage Supplier Relationships
Whether you have a longstanding relationship with your suppliers or are looking for a new one, you should make sure that you understand their production cycles and that they understand your sales cycles. You don’t want to be blindsided by a delay on their end so communication is key.
You should be communicating with your suppliers about the following:
Lead Times
How long does it take for your manufacturer to produce a new supply? Do production times vary depending on how many units you order?
Terms
Can you negotiate better terms with your suppliers? For example, if you can guarantee a minimum order each month, or offer to pay upfront. What else could you offer that they want?
Respective Sales Cycles
When are their busiest times of year? Are there any holidays that affect production timelines or demand projections? This is especially important if you order product from overseas and need to navigate around holidays like Chinese New Year.
Pro Tip: David Marshall, Jr., Payability customer and Amazon seller, keeps an open line of communication with his suppliers to ensure that his inventory is replenished in a timely fashion. “I made an arrangement with my supplier so when I order stuff, he has some in stock and on supply for me,” he says. “I also let him know in advance how much I’m going to order and when so they can start to make my product. Then when I wire them payment, they can ship it immediately.”
Know Your Sales Cycle & Sales Velocity
Chances are, you have a busy season or two throughout the year — for example, if you sell grilling tools, you’re going to make most of your sales in the spring and summer. As a seller, you should also keep the busy holiday season top of mind. The holiday rush can start as early as September when customers are essentially glued to their Amazon Prime accounts and apps buying everything from decorations to gifts to wrapping supplies.
It doesn’t matter when your busiest sales season is, you just have to know when it is so you can plan accordingly by bulking up on inventory. If you’re a seasoned business owner, take a look at your sales trends over the last year to get a sense for your high sales velocity days, weeks or months. And if you’re new to Amazon, look up the sales history for a product you might start selling so you have a general sense for its high demand days.
Related Post: 10 Tools to Analyze the Market and Stay Ahead of the Curve on Amazon
Manage Your Cash Flow from Amazon
A lot of sellers struggle to keep up with inventory because of Amazon’s 2-4 week payment delay. When you don’t have cash-on-hand from your sales, you can’t reinvest in inventory when you need to—or take advantage of any other opportunity in front of you.
Some sellers rely on outside funding or even credit cards, but there’s a better way to always have cash available from your Amazon sales. With Payability’s Instant Access program, you wake up every morning with up to 85% of yesterday’s sales already in your account.
Take Extreme Measures—If Necessary—to Avoid Stockout
We normally wouldn’t recommend that you purposefully slow your own sales, but this is a smart way to prevent yourself from going out of stock while you replenish inventory — all without losing your listing or rank. So keep tabs on your inventory levels, and when they’re running low consider these two strategies:
- Pause any marketing or advertising campaigns you may be running online. This way less people will be driven to your listing.
- Increase the price of a product to decrease its demand.
- Change your listing setting to “on vacation” (though keep in mind this will only turn self-fulfilled listings inactive; if you are an FBA seller, the listings will remain active).
Never Deal with a Stockout on Amazon Again
When you understand your business cycle, successfully manage your cash flow, and communicate effectively with your suppliers, you are well on your way to avoiding dreaded Amazon stockouts.
Cashflow is the key, though. Having next-day access to your Amazon funds allows you to purchase more inventory at a faster rate, and could give you leverage with your suppliers. In other words, you could negotiate better terms with them if you can guarantee more or larger orders. This, in turn, could lead to higher margins for you — and more cash flow.
Follow these steps and say goodbye to stockouts forever.