The effect of an FBA stockout on an Amazon business is often underestimated by sellers. Obviously, you’ll miss out on product sales if you don’t have inventory in stock. That’s the most evident problem, but you need to consider the effect that out-of-stock event will have on your inventory forecast moving forward.
Sellers will often underestimate their forecast if they have had a recent out-of-stock event on an item. This is problem intensifies when the stockout event has happened for an extended period of time. Let’s look at a very basic example.
Historical Lookback Period: 30 Days
Units Sold: 30
If you look at this example, you’ll assume that you sold one unit per day. If you are buying 30 days of inventory, then you would buy 30 units. However, this may not be true. Now we’ll incorporate one other important piece of data.
Days In Stock: 10 Days
When we combine this third piece of data with the original example, we’ll see that we sold 3 per day and not 1. Your replenishment order is doomed before it even gets started. Without the right data you will order 66% fewer units than you should order. This will most likely cause you to place another order in approximately 10 days instead of 30.
It is also important to remember that a forecast based on 30 days of sales data will be more accurate than a forecast with 10 days of data. Too few days of historical data will increase the likely that you order too few or too many units of the product.
Inventory replenishment for FBA products is difficult, but you’ll do much better when you consider all of the factors at play when building a forecast. Good luck!