Amazon Inventory management is a critical yet underrated factor for advertising on Amazon. Surprisingly, not so many take it into account while running or analyzing their Amazon PPC campaigns. The inventory level for the advertised products is the Achilles heel of Amazon advertising. So Making sure you have the right amount of stock on hand and keeping your inventory current is essential.
This blog post will discuss how Inventory Management can impact your Amazon PPC campaigns and offer some tips to help you improve your results. Stay tuned!
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What is Amazon inventory management, and why is it important?
Inventory is the product stock you have and plan to sell through your Amazon business. Its process includes tracking and storing products to meet customer demand as quickly and efficiently as possible. That applies to how you source, store, and process products to prepare them for selling on Amazon.
Inventory is an investment, and the results of poor Amazon inventory management may not be visible for weeks or months. But finally, it pops up in the form of bad products, deadstock, high storage costs, expired stock, and incomplete customer orders. Besides, storage fees and holding costs can reduce your profitability.
Amazon Inventory Management software is specialized for tracking your inventory levels, deliveries, sales, orders, and replenishment forecasting.
The purpose is to reduce your shipping cost, reduce fees, and integrate inventory across all of your product listings. This results in less hassle. But you can maintain a better and more accurate balance between having too much stock or too little.
Amazon inventory management systems become even more critical if you sell using Fulfillment by Amazon (FBA). Amazon FBA gives sellers access to Amazon’s extensive distribution network. An inventory management software is also crucial for advertising on Amazon because stockouts mean total failure for any ad campaign.
In exchange for paying the fee, Amazon takes over the responsibility of shipping your customer’s order, guaranteeing that it will reach the customer’s doorstep just on time. If you don’t have a fulfillment structure to offer two-day or one-day shipping, Amazon FBA will handle it.
Using this excellent service requires Amazon warehouses to have sufficient inventory. But it should not be so much that Amazon may charge you late collection fees.
How does inventory level impact your Advertising on Amazon?
Stockouts lead to frustrated loyal customers and the loss of potential customers in your sales channels. On Amazon, however, stockouts don’t just frustrate customers: They practically make your listings disappear.
Here’s how it happens. When your Amazon brand starts investing more money in advertising a product, you generate more traffic to that product listing, hoping for shopper clicks. Increased traffic through advertising means you will sell faster. And if you have good conversion rates, you’ll most probably have to deal with stockouts on your bestselling products. Here’s what happens when that happens:
1- Wasted advertising costs
Your product is so likely to be out of stock if you don’t adapt to an automated Amazon inventory management. Every minute that you don’t pause the advertising on that product, you’re wasting the advertising dollars, adding up quickly. Low advertising inventory in stock can be problematic because your ad may be what drives sales to push the product out of stock. That wastes an advertising budget that could have been used elsewhere and causes an item to go out of stock, lose its rank, and force customers to buy other brands.
2- Lower rank in organic search results
Amazon has no information on when a product will be restocked. As a result, traffic and sales flow out of the listing. Also, marketplace algorithms will push that product listing down into search results. That makes your product invisible to customers, even if it is back in stock.
Not only do you lose a sale on the day your item isn’t available to buy, but when it comes back online, it might be selling out. For example, let’s say you were selling 100 units per day before running out of stock. But because your product’s ranking is lower than before and it’s on a different part of the page after restocking, it’s probably only selling 30 units a day now. So even if you are back in stock, you are essentially losing 70 units a day.
But using an intelligent Amazon inventory management software like Eva will notify you days before going out of stock, so you can easily prevent all these troubles.
Clearly, when you’re out of an item, you can’t sell it. But if you think you can use backorder, it’s not that easy. For example, Amazon doesn’t support back-ordered products, so it will affect your listing when your stock levels expire. What’s more, you won’t be able to make a profit until you restock the inventory.
4-Lack of customer reviews
Everyone knows how important customer feedback is. Feedback affects both the seller’s profile and the product listing. But you’ll struggle to get positive feedback or none if customers can’t buy what they need in the store.
This is additional evidence of the importance of proper stock maintenance. If you want to collect positive feedback and reach steady profits and consistent sales, make sure you have stock.
Can you recover the ranking of your Amazon advertising after going out of stock?
Try your best to prevent going out of stock because that might not be the first priority when you start advertising on Amazon, but if you fail at inventory management. But sometimes, things might get out of control, and you have to deal with stockouts on the products you’ve selected for advertising on Amazon.
But what should you do after restocking to regain your ranking? Many Amazon sellers have reported running promos and giveaways to help them recover the previous ranking up to a point. This can cost a bunch but will get you back to where you were fast. However, this only works if you have enough cash flow to cover lost revenue and pay for all the ads and free items during the stockout. Additional Sponsored Products ads are also recommended to recover the lost ranking. Amazon PPC is known to boost organic rankings on top of increasing visibility by putting your listings in prime spots.
Tips on boosting both Your Amazon inventory management and the Amazon Advertising
Optimized Amazon inventory management is essential for several reasons. That’s because if you keep too much inventory, you lose money. If you move too little, you lose money too. This is a good enough reason to clean your system. So here are some tips to help you come up with an efficient Amazon inventory management:
Use an automated system to monitor your inventory
Amazon will not consider inventory available for purchase for a few reasons, although the most common are pricing errors, missing listings, and suspended listings. Even though Amazon cannot sell these ASINs, you have assessed a monthly storage fee, a long-term storage fee, and an overage fee.
Eva’s Amazon Inventory Management will keep you updated with regular reports to tell you which items have been suspended by Amazon. Moreover, if the suspension is due to a violation of Amazon’s Fair Pricing Policy, Eva’s AI-powered Amazon repricer will automatically resolve the suppression with the most profitable price for you.
Forecast Your Inventory Needs correctly
This is a rather critical tip with several little sub-tips. By correctly forecasting inventory needs on Amazon, you avoid excess inventory, stockouts, a bad sell-through rate, and a negative IPI rating.
Eva’s AI-powered Amazon inventory management is ideally designed to help you come up with the most profitable replenishment plan with any budget and a real-time calculation for the required budget. This inventory management software is also integrated with our 3PL logistics and Amazon advertising, taking the ACoS and all the fees related to third-party fulfillment.
Calculate Your Inventory Turn Rate
Amazon sellers should know how fast their products are selling on Amazon in order to manage their inventory. The Turn rate reveals how much inventory you need to maintain stock levels between inventory shipments in your supply chain. You can easily avoid stockouts and overstock situations when this calculation is correct. The good news is that Eva’s Amazon inventory management software takes these rates into account to precisely calculate the interval days for each item. That also helps her develop the best replenishment scenario for your Amazon business.
Minimize Excess Inventory
Old inventory makes you pay high fees and hurts your IPI score. Amazon considers any ASIN with over 90 days of age, and any ASIN with more than 90 days worth of supply as an excess inventory. This is also the main contributing factor to a poor IPI score. In such cases, you can use Eva’s scheduled pricing to liquidate the old inventory in no time and protect your IPI score.
Don’t miss the seasonal demand
Every Amazon seller should consider market trends and seasonal demand, either because of the nature of your product or the time of year. That’s crucial for properly forecasting your inventory needs. This is a crucial factor that many Amazon inventory management tools in the market don’t consider. You should look back at your inventory performance year over year and consider anything that led to a speed-up or slow-down in sales. Eva’s dynamic pricing knows well how to harness the maximum profit out of the seasonal demands by adjusting the price regarding the sales velocity.
Amazon advertising can be a great way to increase your product visibility and drive more sales. However, if you’re not careful with your inventory management, you could quickly find yourself out of stock and losing money. Luckily, we’re here to help.
Besides AI-powered Amazon inventory management that is fully integrated with our Amazon advertising panel, Eva is also offering a free PPC audit so that you can make sure your campaigns are running as efficiently as possible. So don’t miss out on this chance and get your free audit today!