When launching a new product or a new brand on Amazon, the ultimate momentum killer is running out of stock. We recap our CEO’s thoughts on the top 5 mistakes brands make that lead to running out of stock on Amazon.
1. Launching everywhere at once
One of the reasons why we encourage our clients to launch new products on their DTC first is so that they can have a general idea of the demand for their catalog or for their new products. The same goes for new emerging brands. If you are just launching, it can be beneficial to start on your DTC site first before branching out to Amazon.
2. Not reserving inventory for Amazon specifically
It is not uncommon for brands that are emerging or established brands with new products to have all of their inventory in one system. As a result, when a brick-and-mortar contractor PO is placed, that inventory is pulled and suddenly there is not enough inventory to replenish Amazon. Because of this, inventory and sales go to 0. It can take months to recover momentum, and in some cases that momentum is never regained. This can lead to competitors gaining market share, organic rankings, and in some cases even stealing your loyal replenishment customers.
3. Not building in delays into your supply chain when reordering
The 2020 pandemic is a perfect example of why you should have a flexible supply chain and always plan for the worst-case scenario. This past year we saw closed down factories, backed up shipping ports, and many other issues. There are plenty of other unforeseen events that cause supply chain upheaval, read more from IBM on building a smarter supply chain.
4. Not having a warehouse that can meet the demand to get product out and to FBA
If possible, we encourage our clients to have inventory sent directly from manufacturers to FBA. It is also beneficial to negotiate within the contract for the manufacturers to meet the prep requirements for FBA. If you own your own warehouse and are preparing and sending your inventory to FBA yourself, do not get cheap with staffing your warehouse or who you hiring your 3PL partner. I’m a firm believer that you get what you pay for and if you continue to run out of stock because you cannot meet the demands it could cost your business tens if not hundreds of thousands of dollars in missed revenue
5. Not using Amazon partnered carriers
In our experience, using Amazon partnered carriers gets FBA shipments into Amazon and available for purchase faster. One possible reason for this is that when it comes to an LTL drop-off, the logistics company has to schedule a drop-off time with Amazon’s warehouse. Amazon likely prioritizes the drop-offs of the partnered carriers rather than other third-party logistics companies. As a result, third-party drop-offs can be delayed because they are often at odd hours. Therefore, it can take much longer for your product to become available for purchase for those replenishment shipments.
Having too much inventory is a bad thing, and so is not having enough. Because of this, it is wise to get that initial data on demand from your DTC site. When inventory levels are healthy and sustainable, that is when you should launch on Amazon.
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Stay tuned for our next episode and blog recap of Common Mistakes by Envision Horizons!