This 1 Mistake Can Kill Your Amazon Business. Are You Making It?

mistake-that-will-kill-your-business

Amazon likes to sell products – lots of products…

…so when you have a hot seller, they reward you with higher ranking so that you sell more and they make more.

However, the quickest way to kill your rankings and sales… and possibly even your Amazon business…

…is to run out of stock.

So what happens to your listings when you run out of stock?

Well, not only can your Best Seller Ranking plummet, Amazon may even “ghost” your listing, meaning that your listing will not show up at all, even if you have the direct URL.

After all, Amazon does not want to show listings with no inventory, because they lose potential sales to customers leaving Amazon completely instead of visiting another listing they make a sale from.

Not only will your listing drop, but you’re now giving your competitors a huge advantage by taking over your rankings, as well as getting the sales you might normally have received.

Even worse, for every day you’re not in stock is lost revenue, and for many sellers, that could mean the end of their Amazon business since they have no cash flow coming in.

Now you might be asking, if you run out of stock, how quickly can you get your rankings and sales back?

Well, I’ve seen rankings come back in a matter of days, but it took running a lot of promotions and giveaways, which cost a lot of money in terms of lost margin due to having to give up a lot of money in discounts. That lost revenue really hurt, but I had enough cash flow to make it happen.

You have to be careful with these today though since Amazon has changed their policies on giveaways, so make sure you’re read through their current policies and attitudes on promotions first before you start any new campaign.

Another way is to run Amazon Sponsored to jumpstart your sales again and to start working on improving your sales rank again.

The best way to deal with this issue though – is to never run out of stock in the first place.

The bad news is that this can happen pretty easily, especially if you have a hot seller on your hands.

The good news though is that you can avoid it with proper inventory management.

So, if you have a hot seller and you’re worried about running out of stock, how can you make sure you don’t run out?

First, you need to determine your selling velocity, which looks at how many units you’re selling per day and how much stock you have left, to calculate how many days of stock you have left.

As a quick example, let’s say you have 1000 units of your product in stock, and you’re selling about 50 per day.

That means you’ll have about 20 days worth of inventory.

Then you need to know how long it takes to get new inventory in. If it takes you less than 20 days to have new inventory arrive and be ready for sale in Amazon’s system, you should be fine.

If it takes that amount of time or longer, you’ve got a big problem on your hands. However, I’d want to make sure I never got this close to running out in the first place.

So, if it it looks like you may run out of inventory before new stock arrives, what can you do to avoid running completely out and plummeting in the rankings?

There are a few ways:

  1. If you are running any Sponsored ads – stop them right away. These ads are helping you sell faster (and costing you money), and we want to slow down your sales so that you keep inventory in stock. There is nothing worse that a self-inflicted outage that could have been prevented, especially if you’re paying extra for it.
  2. Raise your prices sharply. Seriously, raise the price to something nobody would buy it for and that should stop new sales in their tracks until you can get your new stock in there.

Yes, it hurts not to get more sales during this time, but it’s way less painful and way less costly than running out of stock.

Moving forward, the 2 best ways to be prepared and always makes sure you have enough inventory is to always know how many days of stock you have left and how long current fulfillment times are running for new inventory to arrive, and then build in a generous window of time that if your inventory ever reaches a certain point, you immediately place a new inventory order.

An easier way to manage your inventory and be alerted as to when it’s time to order new inventory is to use an inventory management software that will constantly monitor your sales velocity for you.

There are quite a number of these inventory management companies out there, but the one we’ve used is http://www.SellerActive.com.

At the end of the day, do whatever you can to make sure that you’re always in stock. And the best way to do that is to use automation software to do it, because the alternative is much too costly to get wrong.