Utilize forecasting to make smarter and better-informed decisions about the future of the business! Combining your expertise in business, existing sales, past data, and predictive analysis, a seller can anticipate future sales figures for any length of time – whether it’s days, weeks, months, or years. Forecasting the sales can also help in giving the key insights that can help you realize your business ambitions and make sound strategic moves!

Focus on Forecasting and Inventory

Accurate sales forecasting is important for maximizing Amazon product sales. Key principles include making sales forecasts as accurate as possible, planning inventory based on those forecasts, and understanding Amazon’s supply chain operations and how they impact inventory management. Amazon’s supply chain operations are its largest expense, and its exposure algorithms can impact supply chain operations. Going out of stock on a particular SKU can lead to Amazon penalizing the seller and losing the buy box.

Accurate sales forecasting is crucial to avoid the Amazon algorithms’ view of your account as not worthy of increased demand. It’s difficult to predict sales accurately manually as there is a lot of data to look at and it is expensive to build the automation needed to do this at a larger scale. 

The reason why experts are not hitting accurate sales forecasting and inventory planning percentages is that the incentives are not aligned. Amazon sellers’ incentive is to maximize their upside, while Amazon’s incentive is to minimize their downside.

On the Amazon marketplace, data is spread across the detail pages and in the buy box and we need to find ways to collect all of this information and put it in one place.

There are three types of data to consider: inputs, outputs, and competitive landscape data.

Inputs – everything that an amazon seller gives to the system whether it’s what products the seller is going to sell, the number of units a seller is going to put in the amazon fulfillment center, or what’s the price of the products.

Some of these inputs metrics are:

• Average sales price
• Periodic shifts
• Buy box win rates
• Inventory position
• Marketing and promotions impact
• Product detail page quality
• Number of images on the product page

Outputs – what are the responses in the market to the given inputs, how many page views are my products receiving, how many units are being sold from each of those page views, what is the conversion rate for our customers, what are they writing in their reviews of my product, how are they rating my product.

Some of the outputs are:

• Recent demand trends
• Periodic up or down
• Historic seasonality
• Sales last quarter versus the rest of the quarters of the year 
• Conversion rates and page views, average rating
• Customers’ subscriptions to the products

Competitive context – data help to understand where your product is in comparison to the customer’s other options in the category and competitively. It includes the seller’s rank, price per unit, total asp, and competitors’ prices.

Competitive context front

• Category ranking
• Top products in a category
• Advertising performance
• Using a combination of hostile and protective words

Planning inventory

Though ultimately predicting sales is only half the battle after we predict sales we still need to plan our inventory in accordance with those predictions 

Key principles to plan inventory on amazon for a seller 

Targeted weeks of cover

Weeks of cover means how many weeks of inventory sellers have at amazon assuming the demand for products. Amazon has one month’s worth of inventory and sells it during that month, being constantly replenished.

Storage fee management

If a seller maintains 4-6 weeks of coverage, they will not have their products at Amazon for more than a month, avoiding storage fees.

Sending inventory to amazon’s fulfillment centers

Sending in inventory on a weekly cadence allows the seller to maintain the four to six weeks of the cover of the product storage.

Skew level optimizations

Amazon inventory and storage fees can limit you, so you should optimize your most profitable 20% of inventory first. If you get limited by Amazon, this will hurt only minority customers, not the majority. Sales forecasts are made more accurate by considering automation tools, which help with targeting certain weeks for sales, managing storage fees, optimizing inventory, and preventing volatility in the business.

This can either be done manually, by building in-house automation, or by using automation software.

Manual method

A seller can acquire a large number of excel spreadsheets and they may be overburdened while attempting to collect and review the data. Although the cost of acquisition may be low, the accuracy may be questionable, making the task challenging and time-consuming.

In-house automation

Building In-house automation can be expensive, however, it is necessary to maintain whatever we create and often necessitates external expertise that is hard to find internally in a changing environment.

Automation software

There is an abundance of sophisticated software available for purchase at a reasonable price, which can provide accurate outcomes and be easily incorporated into existing systems used for the operation of an Amazon business.

Tips to plan inventory

Planning inventory for the very first shipment of a new product

An important part of product research is estimating how many units you sell. Typically, this is between 10 and 100 units. After you send in your first product, you’ll start getting data on customer interaction, conversion rates, page views, and sales. This data is used to define your average weekly demand and optimize your campaign.

Planning inventory for holiday times like Christmas

Managing Amazon inventory is tricky but important. Sending inventory ahead of the holiday season and setting up overstock is one solution to dealing with storage fees. The best way to manage inventory is to hit key metrics, such as having four to six weeks of coverage, sending weekly shipments, and prioritizing best-performing SKUs over others.

So being perfect year-round is the best true way to tackle uh Christmas planning.

Checking seasonality trends

The sales data for the past 12 months is analyzed to determine how much the sales increase each month.

Focus on more accurate sales forecasting for Optimizing key metrics, inventory planning, unlocking growth doors, decreasing cost, improve advertising performance.

You can always count on us for assistance if you have questions or issues. Simply send us an email at support@staffcloud.net or give us a call at +91-9326811779.