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5 Last-Minute Actions to Optimize Your Amazon Q4 Inventory
This blog has been updated and republished to keep you up to date on this year’s Q4 inventory trends and tips.
Amazon is experiencing its best holiday shopping season yet, with 2021 forecasted holiday sales seeing the most substantial growth in 20 years, according to eMarketer. The imminent rise in demand means one thing for Amazon sellers – inventory optimization.
Whether ordering from suppliers, preparing listings, refining operational logistics, or optimizing replenishment, as a seller, you need to identify and focus on your crucial inventory drivers. Using prior-year Q4 data and applying the 80/20 rule is a good start. If you have historical data on your side, you will be better positioned to implement an effective inventory strategy, as one of the most important directives in Q4 is never running out of stock.
By concentrating on the 20% of your catalog, which generates 80% of your profits, you can cherry-pick the winning items and determine each SKU’s life cycle. Your Amazon inventory can be categorized into the following groups:
Each item category requires a different action and strategy to accelerate Q4 success.
1. Create a Solid Replenishment Plan for Ongoing Items
Develop a healthy range of pricing for your top-sellers and increase the ceiling price. This will help to boost your profit margin and increase your replenishment times to keep up with the Q4 momentum. If you replenish every two weeks, consider replenishing each week or every couple of days.
Want exclusive Q4 growth projections and expert tips to drive sales on Amazon this holiday season? Download the 2021 Holiday Readiness Guide.
2. Create an Estimated Days in Stock Template for Seasonal Items
There will be a more significant demand for seasonal items for a limited time, so you’ll need to establish a more accurate out-of-stock estimate template.
To measure your stock coverage accurately, divide the quantity of items in stock by the last seven-day velocity. It might even be three- or four-day velocity.
To keep your inventory levels balanced, run weekly checks on estimated out-of-stock days and evaluate the next step. If it’s after the second week of December, and you’re calculating the estimated days of coverage, you’ll need to be more aggressive compared to how many units you’re selling. Alternatively, if your stock is about to run out, you’ll need to raise the price to slow down the velocity.
3. Create Competitive Floor Prices for Long-Tail Items
Now is the time to clean up your catalog of any items that don’t generate profit. Try to test and see if these items sell on other marketplaces, like Walmart or eBay.
Consider the cost involved with disposing of stale items or paying long-term storage fees, even if it means reducing the item to a rock-bottom floor price.
Further Reading: Defining Inventory Cleanup and Tips
4. Capitalize on Key Q4 Dates
Feedvisor’s study of annual sales versus profit margin trends shows that Black Friday and Cyber Monday are peak sale days.
Due to Lightning Deals and promotions Amazon runs, your profit margins can reduce by up to 20%. Prices and demand begin to rise right after November 26, the most profitable time for sellers. December 12 is typically the ultimate peak for inventory optimization as holiday orders flood in.
By December 22, the demand starts to decrease with fewer orders coming in. This is an excellent time to sell unwanted stock at a competitive price against other sellers trying to sell items at a profit.
5. Identify Opportunities for Your Products
Using comprehensive data like Feedvisor’s sales and traffic report can help you drill through the inventory and profile your ongoing, seasonal, and long-tail items, and identify the conversion rate for each one.
Please note that sessions are represented by the average number of unique buyers that look at an item, showing demand. Here’s how to identify the opportunity by item:
- High sessions and high conversion rates: You’re hitting your goals without reducing prices.
- High sessions and low conversion rates: How can you turn around any missed potential? Are you at your floor price? Is there another ASIN selling at a lower price?
- Low sessions and high conversion rates: The pricing is accurate, but the discoverability is low. Run more promotions, use keywords, and optimize listings to increase traffic.
- Low sessions and low conversion rates: This tends to require a lot of work on the seller’s behalf. Check the product listing quality, reduce prices, and consider using Amazon Sponsored Ads to boost discoverability.
Review your inventory and evaluate your strategy at least twice, at the beginning of Q4 and then on December 1. By then, you’ll know which items need to be replenished when, how aggressive you need to be, and which price you need to sell at.
There is always time to optimize your Amazon selling strategies, especially during the all-important holiday season. This year, make it a priority to optimize and then optimize again to stay on top of your e-marketplace competition.
For more holiday season planning resources, check out our free Holiday Hub with actionable advice, tips, and tricks for sellers and retailers on Amazon.