[Case Study Part 7] I’m Running Out of Stock on Amazon!

Ok guys, time to be honest; I messed up.

My Q4 results for the case study product were amazing but I did not pay enough attention to my stock! Right now I have 200 units left at the Amazon FBA warehouse. But I have sold 224 units in January. This means I will be running out of stock in less than 1 month!

case study 2019 sales

January 2019 Sales Report Case Study Product

What Happens If I Run Out Of Inventory On Amazon?

Running out of stuck sucks. Obviously, you are going to miss out on all the sales you would have made if you just had stock. However, I think there is a more important problem when running out of stock: Your Best Seller Rank (BSR) will drop.

No Stock = No Sales

If you are a regular reader of the blog you will know that I am a big believer in the theory that Amazon will rank your products based on sales history. As Amazon wants to make money, so it will place the best selling products on top of the rankings. Makes sense right? Now from the moment I launched this product, my main goal has been to increase the sales velocity for this product. This strategy has worked very well as it started to increase in rank soon after.

No Sales = Rankings Drop

Running out of stock means that my sales history / BSR will drop and so will be rankings for this product. If you are out of stock for only a couple of days you probably won’t see any difference. However, this product will be out of stock for about a month. So there is a good chance that once I replenish my stock, it will rank lower than it is ranking now.

How I Try To Delay Running Out Of Stock

As soon as I forecasted that I would run out of inventory I took these steps to delay this as much as possible:

1). Re-order directly

I was planning to re-order before Chinese New Year anyway. However, once I found out about my low stock levels, I directly re-ordered. The production is already done and has been loaded onto the container. I made sure that my supplier knew that I was in a rush, so hopefully she could decrease the lead time.

2). Stop PPC

For me, PPC is a great way to supplement my organic sales. However, right now I want to do as much as possible to slow down my sales. So turning off my PPC campaign is an easy fix.

3). Slightly Increase price

This is a difficult one. As you can make a little bit of extra profit when you increase your price. However, increasing your price will also lower your sales velocity, something we definitely don’t want to do. A higher price might also lead to more negative reviews. Because customers will expect more from the product when they pay a higher price.

So when you are increasing your price to prevent running out of stock, I would advise you to be careful with this and only slightly increase it.

Should I Close My Amazon Listing When Out Of Stock?

I know some sellers close their Amazon listing when running out of stock. The theory behind this is that Amazon will not see the product as out of stock, but as unavailable. Which will hopefully retain the BSR & rankings when the product stock is replenished.

I have tried this method myself but did not see any difference compared to just running out of stock. So yeah, I will not close my Amazon listing.

Amazon Low Inventory Alert

Honestly, this mistake should have been avoided. I have completely been sleeping on the job and should have re-ordered way earlier. I feel stupid about this, as this will cost me a bunch of money.

I always try to learn from my mistakes, so I have set up an Amazon Inventory Alert. Amazon Seller Central has this feature by default. It’s very easy to set up and it will hopefully help me with my Amazon inventory management.

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