A major reason why many ecommerce businesses thrive and do well is optimizing their inventory management. In layman’s terms, knowing exactly how many and where to restock an item. What to stock, how much to stock and where to stock are the three pillars of a successful ecommerce business and if one of those pillars are disturbed it will affect the business’ profit margins and revenue. Knowing how much to stock lays the foundation and the rest and do what a human does best – running a business. You let the AI do the heavy lifting of how much to restock, where to restock etc.
Here I will show you how the AI informs you how much to restock during the holidays. The holidays are generally a period in which an ecommerce seller will either makes a killing with a high profit margin or does not sell well and get bombarded by extremely high warehouse fees. You need to be prepared months in advance because there is are lead times, shipping times, and the closure (or backlog) of Amazon warehouses during the holiday periods to receive inventory. This is where we help you do just that.
You can choose which product to focus on. Personally, I look at sales velocity the most, the average amount of product sold per day, and the sales trend. So for this product, we can see the forecast for the next year and we can see any changes or anomalies in its sales which could be a holiday. What I’m interested in is October 1st to around January 15th and what anomalies that might be present. As you can see, the worst days are Christmas day and new years day. With this information, you will know the total amount of sales for this particular SKU during these 3 months. You can also put in the shipping time, lead time and cycle time.
Another tip is almost always choose shipping across the ocean rather than through the air as there are higher profit margins however it takes more time. You can see that this product is well stocked. We can see there are products that aren’t so well stocked. Since this product is a variation of the previous item, the forecast also shows that the worst days are Christmas and new years. This product needs a more immediate restock than the previous one and the AI provides a date for you to do so. To recap, holidays need to be planned really well in advance how much to stock. And don’t over or understock because if you understock, customers won’t be able to buy your item and Amazon will penalize your best selling rank which is hard to recover after that. If you have Amazon’s choice label you will lose that as well if you understock.
Overstocking will result in those monstrous warehouse stocking fees we talked about in other videos. The best solution is to predict well in advance what is going to happen so you can prepare as early as possible. Christmas is coming up. Load up your Amazon inventory. But how much? It’s well know that ecommerce sales go through the roof How to plan your inventory around holidays. Send more during holidays but how much? Holidays also has higher warehouse fees so you must be very precise. Gut feeling: you will either be lucky or wrong. Business should be run as science not art. Which holidays matter? does it matter to your product? How much it matter for each sku? Complicated questions which machine learning can easily help
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