Amazon Guides: Q4 readiness - stock and inventory
By Michael Dan, Amazon Director
Managing your inventory to have stock available for all of your listings, all of the time is challenging enough. Couple that with demand spiking in Q4 too often the combined sales volume of Qs 1-3 and staying on top of your inventory becomes almost impossible. How to do balance not overstocking so much that when January rolls around and the peak has ended you aren't left with mountains of stock in FBA, but also don't sell out early in November that you miss out on lots of sales that could have made a big difference to your entire year's performance.
Our Amazon Director takes you through some of his top tips to prepare for Q4.
Plan in advance
Q4 should be a time for minor tweaks and optimisations, not wholesale changes to any aspect of your account. With regards to stock, make sure you have completed your upstream ordering by June/July at the latest (or earlier if you have a really long lead time) so that you can be sure stock is in your warehousing or FBA in plenty of time for Q4. This is particularly important this year when all stages of the supply chain have been impacted by COVID 19, so you may want to allow for even longer than usual.
Have more than one fulfilment option available
Just relying on FBA during Q4 is a risky strategy. When the network reaches capacity Amazon diverts resources from inbound (i.e. receive associates at the dock) to outbound (being the Customer-centric company it is) to keep delivery promises as close to normal as possible. This means that when the docks get full courier vans can get turned away and asked to deliver days later, extending your product receive times and prolonging potential out of stock situations. Avoid this by either inbounding nice and early (as above) or having an alternative merchant fulfilled option (ideally shipped via Seller Fulfilled Prime to keep your selection Prime-eligible, but regular shipping is better than having no stock available at all.
We would recommend you have an FBA and MFN SKU available at all times as good practice anyway. This is because it means you can quickly respond to any FBA out of stock situations by populating the quantity figure in your Manage Inventory and shipping available stock in your warehousing or a 3PL directly to Customers. It's also beneficial because if you only have an FBA offer, the non-Prime shipping fee is £4.49 in the UK (that's a non-Prime customer buying an item in FBA regardless of size, 99p from the Small and Light Programme), but could be free if you are able to offer that when merchant fulfilling. This should improve conversion for your non-Prime Customers.
How do I know how much inventory to ship in?
Look at your previous Q4 sales to give you an idea of expected % uplift vs. normal run rate in Qs 1-3 and purchase stock accordingly. We would generally recommend a 4-6 weeks of cover level, sending top up shipments when stock reaches that 4 week amount to ensure you don't run out. Be aware FBA storage fees are approximately 50% more in Q4 than in Qs 1-3 so using a 3PL to trickle stock into FBA may be a cheaper option.
Monitor stock closely
If you ship in too much stock you'll always have residual sales in the new year so you could stop sending in stock until that level reduces. To help increase your rate of sell through if it is looking like you will have a lot of stock by the end of December you could consider increasing spend on your PPC advertising and/or running a deal, voucher or sale on your ASIN(s).
If running a sale or other stimulants to selling don't work your last option is either to remove or destroy stock. If you need to create a removal order it will cost you from £0.25 per unit, removal and disposal fees here).
What should you do if you sell out early?
If you know you are close to selling out and are not going to be able to replenish your stock before it runs out you may want to consider increasing your price to maximise revenue and profit per unit. This will also throttle demand to keep you in stock as long as possible. Be mindful that conversion decreases and being out of stock affect your sales ranking so, if you can, try to limit doing either.
To find out how to prepare your listings for Q4, read our guide "How to prepare your listings for Q4 on Amazon"