Learn Amazon stock skills and bid farewell to the risk of out of stock and backlog


01  Ten million pieces of operation, the first piece of inventory

Amazon selling is a heavy asset project, which is mainly reflected in inventory. If sellers want to make a lot of money on Amazon, they must use FBA distribution, that is, fulfillment by Amazon Amazon logistics distribution, in order to obtain more traffic support and enjoy Amazon's various preferential policies for FBA sellers. Amazon DDP sea shipping

However, in 2017, I changed from distribution to fine distribution and selected some products that sell well to be transferred to FBA. At the beginning, the order growth was really wow. After several months of turnover, I found that there were less and less available funds and more and more inventory.

If you don't stock up, you'll be out of stock; Stock up. Amazon's inventory presses capital, the floating goods by sea press capital, and the goods in its own small warehouse also press capital.

The money earned for a year has been taken to stock. The money earned is either in the FBA warehouse or on the way to the FBA warehouse. Sometimes it is even more painful to encounter inventory shortage and backlog

Later, after careful analysis, the reason why the inventory is overstocked and out of stock is that when placing an order, it is either very radical and crazy to place an order; Or very conservative, dig and search; Without good accounting data, I decided to place an order

If the goods are not prepared well, the operation can only cry and faint on the way to clear the warehouse or run out of goods

How to ensure the healthy turnover of inventory? Amazon DDP sea shipping

02  Stock formula

The common practice is to review the inventory every week with the calculation formula

Formula: days available for sale of inventory = {FBA inventory in stock + FBM Inventory (medium warehouse inventory) + FBA inventory in transit + overseas warehouse inventory} / daily average sales volume

If the number of days available for sale is more than 90 days, it is necessary to speed up consumption and do not need to prepare goods

If the number of days available for sale is less than 45 days, you need to return the order. Look clearly, everyone, here is the return order, that is, you can place an order with the supplier.

Because each process takes time from order placement - Supplier receiving - Supplier scheduling - acceptance - shipment - Amazon listing. The total time is the lead time for goods preparation, that is, if the current inventory can only consume 45-90 days, you must place an order with the supplier in advance. Calculate the time to arrive at Amazon after adding the lead time for goods preparation

Take chestnuts for example: our household products have a high turnover rate. The 45 day inventory is safety inventory, that is, if it is lower than 45 days, we default that this product needs replenishment; 90 days is the over age inventory limit, that is, over 90 days is over age inventory. The turnover rate of this product is poor. We need to find ways to improve the turnover rate. Amazon DDP sea shipping

Sellers of different categories and sizes can set the turnover days of safety stock according to their own strength. For example, large companies have strong funds and can deposit more money. It is no problem to put 45 days of safety stock in Amazon warehouse. Small companies can be appropriately reduced to 30 days. These are basically based on the assumption that the transportation mode of fast sea and common sea is set.

If your product has a high profit margin and can afford air transportation, you can also reduce the safety stock to 20 days.

The inventory mentioned here is Amazon FBA's inventory in transit (if there is a VC account, add Po orders in transit; if you have an overseas warehouse, add inventory outside Shanghai). It is not stock inventory. Don't confuse the concept

Take chestnuts for example: I have a skate. At present, the inventory is only 1500. According to the calculation of No. 1.1, the average daily sales is 30 orders, so my inventory can only consume 50 days. My preparation lead time is: 1 day for placing an order - 2 days for the supplier to receive the order - 5 days for the supplier to schedule production - 10 days for the supplier to produce - 2 days for acceptance - 30 days for delivery - 10 days for Amazon to put on the shelf = 60 days

Then start to push back. According to the current order quantity, I will face the risk of out of stock on February 20 in 50 days. For the sake of insurance, my next batch of goods must be put on the shelves on February 10. For the goods put on the shelves on February 10, push back 60 days, which is the date when I must place an order, that is, I must place an order at the inventory meeting of the week of December 10.

Some students said, you're a little messy. It's already 1.1. Your reasoning is good to place an order on 12.10. Is it too late

This example is to tell you that we use the stock preparation and pick-up logic when reasoning about the inventory situation. Since we review the inventory every week, this generally does not happen, because this problem can be checked out when we go to the check on December 10

This backward pushing method is to let everyone arrange orders in advance. Once there is a risk of out of stock due to the best-selling inventory, you can also take the finished product inventory of the supplier who has placed an order for delivery; At the same time, if the turnover inventory days are high, adjust the sales strategy as soon as possible to improve the turnover rate

03  Returned quantity

After confirming the need for goods preparation

Quantity returned = estimated 30 day sales * 1.5-3

1.5-3 there is no minus sign in the middle. This number range is a multiple range. The appropriate range can be adjusted according to the strength and amount of funds

For example, I estimate that between February 20 and March 20, the total number of orders needs 1800. I am not rich in funds, so I will carefully prepare the goods by 1.5 times, that is, 1.5 * 1800 = 2700

This is the order quantity, i.e. the prepared quantity, and the finished product inventory, not the delivery quantity. The delivery should be arranged according to the actual sales volume and inventory days

Someone asked, why do you need 1800? Instead of preparing 1800, you should prepare the goods according to multiple?

In fact, when we return the order, there is a theory called JIT theory, that is, just in time, the preparation time and quantity are just as good as the theoretical card.

In other words, only when needed, produce the required products according to the required quantity, and pursue no inventory or inventory minimization

This theory is not desirable here, because in recent years, cross-border e-commerce has not heard of any company that can sort out the supply chain process without any defects Amazon DDP sea shipping

If you place orders as much as you need for all products, when you encounter problems such as shortage of raw materials, extended production line scheduling, shortage of workers, logistics delay and so on, it will lead to insufficient stock and failure to deliver, resulting in the risk of out of stock.

In the process of goods preparation, the method of 1.5-3 times of goods preparation can alleviate these problems and sharp contradictions

For example: I actually need to stock 1800, but I have 2700; In the next preparation cycle, I need to prepare 3000, but the supplier needs to delay 10 days to produce the finished products because of the shortage of chips. Then I can take the 900 extra in the previous preparation cycle and deliver the goods first. The remaining 2100 are delayed for 10 days, which has little impact.

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