How to deal with supply issues as Christmas looms
Updated: Feb 14, 2022
Struggling with supply issues is one of the biggest problems that can hit Amazon Sellers, and especially at peak times like the imminent festive season.
Being overstocked, understocked or unable to get your product to customers can significantly impact not only your short-term cash flow, but your long term reputation and standing on Amazon.
Whether you sell via Fulfilled by Amazon (FBA) - which helps achieve Prime deliveries but has higher costs and less control - or by Fulfilled by Merchant (FBM), there are pitfalls to avoid.
Many Amazon Sellers encounter at least one of four main issues at some stage - here Thompson and Holt senior case handler Holly Sloan identifies them and looks at ways to resolve those problems, so they don’t ruin your Christmas income.
1 Running out of inventory
Thompson and Holt’s Holly Sloan: “This is an issue that can cause two main problems for Amazon Sellers. The first is the obvious one - you’re missing out on immediate business if you’re not able to supply what you’ve advertised. But there is a long-term effect too, in that it can lead to negative reviews, which in turn hurt your seller ranking and further sales down the line. To avoid it keep a good track of your sales velocity so you can anticipate when stocks are running low and act accordingly. Factor in events like Amazon Prime Day and Black Friday and attempt to forecast how sales might spike during those periods. If you can see yourself running low on a particular product and know that you can’t re-order them immediately from your suppliers, get your sales velocity under control by pausing any active marketing and adverts until you’re better place to supply. Increasing your prices is another way to do that - it might cost you some sales in the very short term but it’s better than not being able to meet demand and risking negative reviews.”
2 Having too much inventory
Thompson and Holt’s Holly Sloan: “The flip side to running out of your product can be just as expensive if you’re paying storage costs through FBA. Even if you're shipping yourself, it costs you money by blocking up store rooms that could be used to store saleable products. And it also affects your IPI (Inventory Performance Index) score with Amazon - a 12-week rolling average used by Amazon to determine how well your inventory is performing. A poor IPI score will lead to Amazon reducing your FBA inventory storage limits and charging you long-term storage fees. While over-pricing items to stem sales can work if you’re under-stocked, the opposite is true here - sale promotions and reductions can help move on stock that would otherwise be clogging up storage space. As a last resort you could even look at a removal order if you really need that space for other items.”
3 Having poor supply chain management
Thompson and Holt’s Holly Sloan: “You might think this is something that is outside of your control and completely in your supplier’s hands, but it starts with you researching and choosing the best ones to fit your business. It’s not only stocking that’s crucial here but the quality and reliability of a supplier, so make your decision carefully. If having done that, you have any concerns at any point, it’s better to raise those before they start having an impact on your business rather than waiting until they already have. Clear and regular communication is vital here - look at it as working as a team together. To avoid delivery delays, set realistic lead times after taking into account all the factors that manufacturing and shipping processes have to consider.”
4 Making pricing or description mistakes
Thompson and Holt’s Holly Sloan: “Incorrectly entering price and product information can lead to big losses on Amazon. Pricing too high or too low can be damaging - they can lead to the over or under stocking mentioned above. And poorly written or inaccurate descriptions can lead to both bad SEO or negative user reviews. Regularly check your rivals pricing and thoroughly check through all of your own listings consistently, while reacting immediately to any complaints that might occur.”
If you have found yourself suspended while selling on Amazon, contact Thompson and Holt for a free LiveChat to get your Seller business back online as quickly as possible.