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How to Better Manage Your Amazon Inventory Before Q4 Hits

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:

Higher order volumes: An increase in orders is always a welcoming relief for any business because it means more sales. But this increase in sales can also pose a logistical challenge. During Q4, you will likely receive, sort, and fulfill more orders than you usually do. Therefore, your whole supply chain will come under pressure, and there is a higher chance of errors and delays. We’ve already seen Amazon implement strict inventory restrictions just ahead of Q4 this year, which may impact how you manage inventory during the rush of Q4. An experienced Amazon full agency can help you navigate inventory management so that your Amazon business isn’t left in the lurch.
Possible shipping delays: The fourth quarter usually sees many shipping companies overwhelmed by the number of orders coming in. If you sell through Amazon FBA, getting your stock to the Amazon fulfillment centers might be more challenging. Organizing a 3PL far in advance of quarterly rushes can be beneficial.
Marketing cost rises: Q4 is a peak season for everyone, including the advertising world. This is when most businesses are keen on attracting more customers to make the most sales. What that means is that advertising costs will increase. Companies will start bidding more competitively for keywords and ad visibility.
Conflict in supply and demand: The fourth quarter sees online shoppers buying more holiday and trending items. Such items tend to fly off the shelves faster than you can re-stock. It, therefore, pays to have more than one supplier during this period to keep up with the demand for some seasonal items.
Challenges in customer service: In a perfect world, your business can make on-time deliveries during Q4. But that's easier said than done. Expect your customer service to be busier than ever, handling customer inquiries regarding delayed packages and delivery times.

Why do you need to get your online store ready for Q4?

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.

What are FBA inventory storage limits, and how will they affect your inventory management during Q4?

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:

Keep tabs on your inventory and slow-moving items, and identify ASINs that have been in the fulfillment centers for more than 90 days.
Find ways to get slow-moving ASINs to sell faster, like offering discounts and promotions.
Resolve unfulfillable or stranded inventory issues, so you don't pay excess storage fees.
Make sure to prioritize the timelines Amazon gives for getting inventory inward for significant holiday events.

What can you do to better prepare for Q4?

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:

Forecast your inventory requirements early on. If you've been selling through Amazon FBA for a while, then you have the benefit of experience on your side. Analyze data from previous sales to see the trends and history of your top-selling products and determine how much inventory is needed for the holiday sale season.
Work on removing dead and slow-moving stock from Amazon fulfillment centers to avoid being victim to Amazon storage space limits. You might also want to work on improving your IPI score so your storage space isn't limited when you need it the most. It will also be best if you deactivate any inactive listings.
Find a reliable third-party storage facility you can use for pre-fulfillment before you send the products to Amazon. It can be a great way of reducing storage space fees.
Consider leveraging Q4 product bundles where you sell your items in bundles during the Q4 period. Doing so will help lower your storage and shipping fees since Amazon treats each bundled product as a single ASIN.
Adjust your pricing and ad rates for when you might run out of stock, whereby you can keep prices competitive when you need to sell them and increase them when your inventory runs low.
Lastly, have enough cash on hand to place large orders as demand sores during the Q4 period and maintain operations. You also need a way out when you need to re-stock fast-moving products before your next payout.

Summary

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.