How Inventory Stockouts Harm Your Business on Amazon

July 20, 2022

Don’t let a sudden inventory stockout lead to wasted ad dollars. We break down how good inventory forecasting can protect your Amazon advertising campaigns.

Have you ever clicked to purchase an item on Amazon, only to find out that the product is out of stock? It can be frustrating to say the least, especially if you’ve spent time looking through similar products and categories; combing through customer reviews, checking seller ratings, and reading product descriptions to find the item that is best suited for you. 

This is just one of the reasons why Amazon FBA sellers need to prioritize their inventory management.

Inventory Forecasting: Why It (Really) Matters

Good inventory forecasting is all part of optimizing your online Amazon business. If you opened your first Amazon store over the past few months, then you know that good keywords, images, videos, and customer reviews are just some of the principal aspects to focus on for your business to stay competitive in the e-commerce space. 

Another important part of managing your store is good marketing - more specifically, Amazon PPC ads. We at Mayan use expert analytics to help give our clients the best ROAS. And with Amazon investing more in ads everyday, then a solid marketing and advertising plan is key to succeeding on the platform.

If you happen to run out of stock on any item in your store it will not only hurt your sales, but also your credibility as a seller, your customer service, and yes, even affect your Amazon PPC ad campaigns. When there’s nothing in stock, then all the clicks you pay is money down the drain.

So, What Happens When Your Product Goes Out of Stock?

In Amazon Seller Central, you'll see in your Restock Inventory report whether you are out of stock

A few things happen that follow an inventory stockout (that you’ll want to fix as quickly as possible!). When a product goes out of stock, here’s what happens to your listing:

Your Sponsored Product Ads Are Disqualified

And, it happens instantly. When looking at your ad campaign in your Seller Central account if an item goes out of stock, your campaign might still be marked as “running” but your product will be “ineligible”.

In other words, any Sponsored Product ad that you have set up for your listing won’t work until physical items of that listing are back in stock and registered in Amazon’s system. Until then, it’s just wasted ad dollars on your end.

Loss of Sales

Stating the obvious here, but running out of stock will directly affect your product sales. As an Amazon seller, it’s essential to prepare for any potential inventory stockouts to avoid a sudden drop in your product sales.

Any loss of profits will throw off your monthly numbers and sales targets, which means you’ll have to spend some extra time to recalibrate in order to get back on track.

Your Best Seller Rank Drops

Amazon’s Best Seller Ranking (BSR) is directly derived from the sales rate of a product. According to Amazon, it’s updated every hour and also considers how well the product does in its category. This means that if you have at least a few days of lost sales (in other words, people are clicking to buy your product but it’s out of stock) your BSR will be affected.

See how it’s all connected? Don’t let bad inventory management affect every aspect of the Amazon business you’ve worked so hard to build.

Inventory Stockouts Also Hurt Your SEO

Many experienced FBA sellers will tell you about the challenges of organic ranking. Getting the right keywords in place and working to optimize your Amazon store takes time. Not only is there a lot of prep work involved, it’s also a bit of a waiting game to see what keywords and phrases work best to help drive traffic to your Amazon store and eventually boost sales.

The hard work that you put into your Amazon store’s SEO will take a hit if your business constantly suffers from inventory stockouts. But with some good forecasting tools and inventory management, you can avoid a sudden stockout that will hurt your FBA business and void your Amazon ad campaigns.

5 Easy Inventory Management Tips for Amazon Sellers

Don’t let wasted ad and marketing dollars be your daily reality! Apply these five simple steps so you can avoid any sudden inventory stockouts going forward in 2022.

Find the Right Inventory Forecasting Formula

Finding the right inventory forecasting formula with the tools available to you is the best way to avoid a potential stockout. While there are third-party apps available on Amazon Seller Central for just about any service you may need, including inventory and order management, FBA sellers can start by keeping it simple and track their inventory manually.

Start by downloading your product sales history from your Seller account on a weekly basis as well as at the end of the month. You can also look up your items by UPC to see the sales data of the year before so that you can better prepare for any potential spike in sales.

These free tools are there to help you get to know your peak sales times, what types of customers you’re connecting with, and what you should prepare for when looking to take your Amazon business to the next level.

Invest in an Inventory Management Tool

If you find that your business is really struggling with its inventory management, it might be time to invest in an inventory management tool.

On top of the resources that Amazon provides FBA sellers like you, an extra inventory management tool will give you more detailed data to help you avoid a stockout; from forecasts months ahead to consumer demands by location, as well as other important sales data.

Know Your History (Sales-Wise)

While many sellers tend to focus on the peak sales times, it’s also essential to look at your weekly and monthly numbers throughout the calendar year if you want to really get a grasp on how your brand is doing on Amazon.

That’s why you should analyze your historical data as much as possible. Even though the holidays are very important for Amazon sellers, it’s those little details in between bigger buy times that will give you a better sense of how your business is performing (and how to better manage your inventory month by month).

Connect With Your Supply Chain

Keep the flow going. When striving for success on Amazon as an FBA seller, you have to always be proactive to make sure all aspects of your business is going well.

In order to avoid the effects of running out of stock, work with your supplier and distributor to create a plan of action during the sales year in the possibility of a stockout. Are there any holidays on their end coming up that might affect production? Have there been any recent glitches in the operating system? Always be one step ahead of the game.

Connecting with your co-creators on the regular will help you better manage your inventory and keep your business running at its best. Don’t underestimate the value of good communication with your team!

Prepare For Holiday Times Months Before

If it’s August, then you should already have your Amazon inventory prepped for the holidays.

Experienced FBA sellers know that they need to get everything set up a few months in advance if they don’t want to run out of stock during the November and December rush. Which is why another important part of Amazon inventory forecasting is to manage your stock for peak buy times like Prime Day, Black Friday, and the December Holiday period. For instance, if you made a ton of sales during Black Friday 2021, then use those numbers to help you estimate what to expect for Black Friday 2022.

Sellers also need to make sure that enough of your inventory is allocated towards Amazon. But, this is only something to make note of if your products are also registered on other e-commerce channels.  

My Inventory Is Out of Stock: What Do I Do Next?

Suffering from an inventory stockout? Here’s how to minimize risk in the case of a sudden stockout.

Stop All Advertising Campaigns

We’ve learned that inventory stockouts directly affect your Amazon advertising campaigns, so the first step after you’ve run out of stock is to stop all marketing campaigns with the platform.

Because ads on Amazon help boost your products visibility, pausing all PPC marketing campaigns will decrease the amount of traffic to your Amazon store and therefore, decrease the amount of customers clicking to buy your products only to be disappointed to find out they are out of stock. This strategy will help minimize the risk of damaging your brand’s reputation with your customers.

Other strategies such as changing your settings to ‘out of office’ (this is only possible for non-FBA sellers on Amazon) and even going so far as to increase prices on your product listings can help temporarily drive sales away from your Amazon store while you work to get items back in stock. Basically the goal is to pause sales so that your brand’s reputation, ranking, SEO, and ad campaign budget doesn’t take a big hit.

How Mayan Can Help You With Your Next Amazon Ad Campaign

If you’re interested in seeing what Mayan can do for your Amazon FBA business, sign up today. We’re excited to show you our platform and run an audit to show you the opportunities our platform can provide. Once we’re aligned on your goals, we can get started bringing your business to the next level. Ready to see how Mayan can help?

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