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Sales and Inventory Forecasting for Amazon Sellers

Jan 12

You can anticipate how much inventory your business will need by using Amazon inventory forecasts based on previous sales data. It would help if you had accurate forecasting for your ecommerce company's success to avoid overbuying or running out of inventory, which could lead to storage fees or losing inventory. 

Saving time and preventing guesswork is possible by using tools that predict your inventory needs automatically. A good inventory forecasting management system, like Inventooly, does just that: it calculates how much inventory you should reorder and when helping you analyze metrics and boost sales.

Inventory forecasting on Amazon

Several factors must be considered to forecast your Amazon FBA inventory properly. Estimating the amount of stock you need based on past sales and consumer trends, as well as your suppliers' lead times, will help you determine how much inventory you need. 

Each time you reorder from your supplier, you merely guess how much you will sell if you don't accurately forecast your future sales volume. You will face financial problems as a result. 

  • Excessive ordering. The more inventory you order, the more capital you will bind to FBA warehouses, and the longer the stock sits, the more storage fees you will incur. 
  • Insufficient ordering. Having too much stock can negatively affect your ranking on Amazon, making it more difficult to sell more inventory in the future. In the case of under-ordering merchandise, you will not have enough products to meet customer demand and may lose potential customers because of this. 

The good news is that Amazon provides professional sellers with numerous seller reports that detail product sales history, sell-through rates, and inventory health. If you use your spreadsheets to forecast your inventory needs, they can be useful. Despite this, using your spreadsheets can be confusing and error-prone. Utilizing inventory management software designed to handle all that data is the best way to forecast and manage your inventory.

Understanding Your Demand on Amazon

Compared to your DTC (Direct-To-Customer) website, Amazon's selling and forecasting demand are less straightforward. A platform's many variables, including changing ranks, can complicate demand forecasting. Over 80% of all sales occur on the first page of search results, so your sales will be drastically different if your product moves from page 2 to page 1. 

Seasonal Demand

Seasonality plays an important role in forecasting and can be defined as a regular occurrence due to recurrent seasonal events. Furthermore, you need to be aware that not all of your products will have the same demand, and some variables will impact your business more than others. All products in your warehouse may not sell the same way all year round. There can be seasonal and month-to-month fluctuations in the sales of certain products. Summer sales of sunscreen, for example, are significantly higher during sunny summer months. 

It may seem obvious that seasonal demand affects business, but many companies still have trouble forecasting seasonal changes in order, even though it is clear every year. Stockouts can occur during peak seasons for companies that fail to predict the seasonality of demand properly. This results in sales loss and damage to their Amazon seller history.

Demand generated by an event

A demand resulting from an event is different from the demand generated by a standard sale. Likewise, retail events like Prime Day are considered event-based demand (not seasonal demand like other holidays like Christmas) since they occur at different times each year. Event inventory can be very unpredictable, just like seasonal holiday inventory. Unexpectedly high demand from customers can cause supply chain problems. Your suppliers may also experience increased demand from other retailers, affecting their ability to meet your inventory requirements.

The importance of ad demand is just as important as event demand. You should closely monitor the promotions you're running and your advertisements. Your sell-through can either be decreased or increased based on the availability of your product.

Identification of market trends

Your Amazon sales data should be reviewed frequently as an Amazon seller. Most likely, you will notice that some products' sales are increasing while others' sales are declining. Next, explore what external factors may have contributed to the increase or decrease in sales of your product. Trends in the market are happening immediately, regardless of the calendar. Trends in the market will also affect your competitors. During a comprehensive market trend analysis, all aspects of your market are examined, not just demand fluctuations.

Understand geographical demands 

A geographical market trend analysis, which examines variations in trends across geographical regions, is the last type of trend analysis we'll discuss. Comparing the markets in different geographical areas is intended to understand better how they are developing in each.

Last but not least, monitor for changes in market demand associated with triggers such as new technologies, environmental factors, and pandemics. A shift in government priorities or new regulations and social changes.

Make sure you know your Amazon inventory limits.

The inventory limits on Amazon are essential for FBA sellers to know to manage their inventory effectively. Storage limits are set by Amazon and are based on volume (measured in cubic feet) for each type of storage. Storage volumes, which can be viewed on the Inventory Performance dashboard and Shipping Queue, show the seller's current and potential storage limits.

Several factors are considered when calculating storage limits, including:

  • Your sales volume (including periods when your sales are seasonal)
  • Scores from your historical IPIs
  • The capacity of the fulfillment center

Manage and forecast your inventory with Inventooly

Inventooly is inventory forecasting software. In addition to optimizing inventory and providing you with all the insights about your business, it will also alert you to any opportunities that arise. Its features include: 

  • Procurement Management as a Strategic Initiative
  • An easy way to manage orders
  • Superior business insights
  • Integrated sales channels
  • Notifications delivered in real-time

Sales are boosted, and business operations are made easier with these features. Many small and corporate business owners are benefitting from this software currently.