Blog: Amazon Marketplace Strategies | SupplyKick

How to Forecast Your Amazon Inventory | SupplyKick

Written by SupplyKick | Sep 9, 2020 8:49:08 PM

A big part of succeeding on Amazon is the ability to develop an effective inventory strategy. What does an optimized inventory management strategy accomplish? It ensures you have enough stock on-hand without purchasing more than you’re able to sell. This may sound simple enough, but the reality is that inventory forecasting is a balancing act and a real challenge—especially during a global pandemic that has interrupted supply chains and changed buying habits all over the world. 

The only way to expertly forecast how much inventory to purchase is to gain a better perspective on what might impact your inventory stock levels:

  

1) Understand the different types of demand 

We’ve all learned about supply and demand. When forecasting how much inventory you’ll need, understanding the demand of your products is crucial. Demand for certain products can fall into several different categories. Some products are always in demand and sell at a regular, steady pace that never rises or falls too dramatically. For example, the BetterVent Indoor Dryer Vent is a constant best seller on Amazon.

For other products, demand is seasonal. Christmas ornaments, for example, might not sell very well at all for most months out of the year but then begin selling extremely well October through December. On the flipside, outdoor swimming gear may sell year round, but the seasonality of the product will come around in early spring and summer.

Lastly, there are products for which there is year-round demand but that demand fluctuates dramatically in a way that appears unpredictable. 

In order to create an accurate inventory forecast, you need to understand which of these demand types your products fall into and then plan accordingly.

  

2) Always be on the lookout for trends 

Logistics experts have noted that in order to successfully plan ahead, you must be able to spot trends in the way your products are selling. When you review your sales data, you are likely to notice the sales of some products are trending up while the sales of others are trending down. Ask yourself, “Is something happening in the context of the world which might lead to the sales of my products rising or falling?” Some examples of trends in the Amazon marketplace that are worth looking out for are seasonality, advertising, and promotion trends. Trends tend to continue—at least for a while—allowing you to make predictions about your future inventory needs. 

It’s also worth noting that trends don’t always have answers; sometimes they’re just random. But in the long run, you’ll benefit from proactively uncovering these patterns and analyzing their significance on a consistent basis.

  

3) Consider leveraging inventory optimization software

If you’re looking for a little help predicting how much inventory you need to have on-hand, you'll be happy to know there is some excellent inventory optimization software on the market designed to do just that (Feedvisor, Jungle Scout, Google Trends, and Helium 10 are just some of the options available). Inventory optimization software makes use of AI and machine learning in order to provide accurate predictions about future demand for your products based on current data and trends. It's a very effective and useful technology that really can take all of the guesswork out of inventory forecasting.

  

4) Inventory forecasting during COVID-19

It’s difficult to forecast how much inventory you’ll need during normal times. Throw in a pandemic that's messed with receiving times and supply chains, and forecasting your inventory gets a little trickier. Here’s what I suggest paying attention to as you forecast during COVID-19:

  • Be aware of Amazon’s fluctuations in receiving times. Amazon is currently taking almost twice as long to fully receive products into their facilities compared to early March. Be prepared for longer receiving times and plan accordingly when creating your forecast.
  • COVID-19 sent ripples all the way down the supply chain. Be proactive and reach out to your suppliers to make sure they have inventory available and no production or personnel issues within the next couple of months. Also, build in longer lead times for your manufacturers as they’ll likely have production issues of their own. 
  • Pay attention to the promotions you’re offering and manage your advertising so that you can either slow or increase your sell-through depending on your product availability. 

  

Create an optimal inventory strategy with SupplyKick

Whether you’re selling yourself or selling direct to Amazon, accurately forecasting inventory levels is an important part to being successful on the Amazon marketplace.

At SupplyKick, we work hard to ensure our partners always have the right amount of inventory on-hand. Connect with us to learn how we can help you develop an optimal logistics strategy.