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October 04, 2022
The year's final quarter is by far the most critical time of the year for any online and offline retailer and, most importantly, Amazon sellers. It is an exciting time when every e-commerce seller expects to make the most sales. But that is only possible if you prepare well in advance. Running from October to the end of December, Q4 or simply the holiday season encompasses several significant holidays that play an important role in the e-commerce calendar. This is when most people spend the most money on themselves or others, making it crucial that you are prepared for the season.
As the end-year rush fast approaches, your ad budget, marketing strategy, limited-edition product drops, member-only sales, and even influencer marketing flash sales are all vital in increasing sales when Q4 hits. But only one thing separates the winning brands from the rest – inventory management. Simply put, you need to evaluate your whole inventory plan to not just win during Q4 but also better control any damage that may arise from supply chain disruptions so you can keep winning beyond Q4.
So, what can you do better to manage your inventory during this end-year rush? Keep reading to find out.How will Q4 impact your Amazon store?
The events of the Q4 period create a ripple of effects that will impact your business in the following ways:
Here's the thing; Q4 isn't something you should start thinking about as October approaches. Q4 planning should begin during Q3 to give your business the best chance of succeeding. Planning means not finding yourself behind at the end of the summer or scrambling to make a good profit once Q4 hits.
When Q4 hits, orders are bound to increase. How will your online store handle the sales pick-up and velocity increase? Will you be ready with the proper inventory to ship to the Amazon fulfillment centers, or will you be the seller dialing up your pricing to slow sales and buy yourself enough time to purchase the inventory needed?
Getting your store ready also means avoiding any changes Amazon may make to handle the increasing supply chain demands. Inventory Performance Index (IPI) changes, increased storage fees, and endless supply chain disruptions are all too common when selling on Amazon. The last thing you want is these changes impacting your bottom line.
Preparing your online store before Q4 hits gives you the best opportunity to test out new products. A reliable Amazon full agency can help you find the best Halloween inventory, Christmas gifts, or Thanksgiving presents to increase your profit margins and expand your customer reach.
Fig. 1.0 Inventory storage limits Jan 2022
If you sell through Amazon FBA, you may be subjected to inventory storage limits making it difficult to ship more inventory to the Amazon fulfillment centers. Amazon is always making policy changes to optimize its logistic process, like imposing inventory storage space limits. The e-commerce giant, before 2020, was always lenient with FBA sellers regarding storage issues.
However, the unprecedented impact of covid-19 forced Amazon to become more stringent with policies that affect FBA inventory storage limits. The summer of 2020 was significant for many FBA sellers as Amazon made significant changes that limited the ASIN-level quantity to only 200 units, and in the Canadian marketplace, as low as 20 units per ASIN. This made it difficult for most sellers to launch new products on the platform.
By the following year, Amazon removed the ASIN-level limits to the relief of many FBA sellers but not for long. In its place, Amazon introduced storage-type level inventory limitations where each inventory type had a maximum inventory storage space available. While it was good news to some sellers, it meant losing precious storage space for others.
Amazon's FBA quantity limit ensures that inventory shipped to their fulfillment centers will sell. Amazon evaluates storage limits quarterly and uses your Inventory Performance Index (IPI) score to determine if your limit needs adjusting. IPI measures a seller's ability to drive sales by stocking popular products and efficiently managing inventory stored in fulfillment centers.
If the products in your inventory have a high sell-through rate, Amazon will allow you to send more stock to their fulfillment centers because you already have proven sales. On the other hand, if you send products that don't sell, your IPI score will take a hit, forcing Amazon to decrease your storage limits.
As of January 1, 2022, Amazon's policy dictates that sellers with an IPI score of less than 400 (previously 450) will be subject to storage space limits. Seeing that we are heading to the last quarter of the year, where demand and supply are likely to conflict, you want your seller account to be in good standing to avoid falling victim to storage space limits.
To avoid inventory space limits ahead of the peak selling season and improve your IPI score:
The secret to a successful Q4 sales strategy is finding ways to manage your inventory correctly. You'll miss out on potential sales if you fail to stock the right products. But, at the same time, overstocking could leave you with obsolete inventory that will likely incur high storage fees. To better manage your inventory before the Q4 period, here's what you need to do:
The Q4 period is one of the most exciting periods for any Amazon seller because it means registering more sales. However, this period can be equally stressful, especially if you are not prepared to handle the increasing demands of this period. Pay close attention to inventory management, prepare and optimize your digital shelf in advance of the holiday rush, level up your customer service for high-volume periods, and dedicate extra staff to support your operations. It’s not a bad idea to consult an Amazon full agency to unfold a comprehensive Q4 Overall, your digital Inventory management is the most crucial factor determining your brand's success throughout Q4.
Don’t struggle with operations during the peak of Q4. Ecomcy is here to help. Reach out today for a FREE 30-minute consultation with one of our Amazon experts, and we’ll help you prepare your Amazon business for the holidays and beyond.
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