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The Amazon stockout. Arguably the most detrimental AND most easily avoidable hurdle you can face as an Amazon seller. 

What Are Stockouts?

A stockout is an out-of-stock event that causes inventory to run out. Stockouts can occur along an entire supply chain but often have the biggest impact on the fast-moving consumer goods industry. Stockouts on Amazon can have major repercussions for sellers.  Not only are the consequences dire, but a lot of your time spent investing in sales will also go to waste. 

Amazon Stockout Consequences 

  • Lost Sales: You’ll lose sales today and in the future since your SEO rank suffers and your listings aren’t as searchable.
  • Added Expenses: Since you’ll likely be desperate to replenish your stock ASAP, your suppliers might need to charge added rush fees to your order.
  • Suspension Risk: Amazon could pause your selling privileges, or take them away entirely.
  • Wasted Efforts: Remember all that time and effort you put into finding the right keywords, sourcing the right products, and promoting your listings? Well, it’s back to square one after you stockout.
  • Increased Competition: As your listings ultimately disappear from view, your competitors get the advantage and could win the Buy Box, which means it’ll be even harder for you to stand out when you’re back in stock.

How To Prevent A Stockout

All in all, you want to prevent a stockout before it happens, that way you can avoid all this fallout and instead focus on growing your business. Follow these five tips to always stay in stock, even if your numbers are already dangerously low:

1. Order More Inventory — Plus A Buffer

Get on the phone with your suppliers and place a resupply order NOW. And be prepared to pay a rush fee depending on how long it’ll take for the order to process and ship.

In addition to your regular inventory order, consider investing in buffer (or safety) stock. Buffer stock gives you just that — a buffer of inventory so when your stock starts to drop, you have an extra supply to fall back on as you wait for your resupply order. How much buffer stock you order depends on your sales volumes — it could be a few hundred units, a few thousand units, or a percentage of a typical order. Regardless, you should only use this supply to fulfill orders when your regular supply hits zero. Just don’t forget to replenish it so it’s always there in case of stockout emergencies in the future.

2. Slow Your Sales

Slow sales are better than lost sales. When you stockout, you lose your listings and Amazon SEO rank. When you slow your sales — by raising prices or pausing marketing campaigns, for example — you get to remain active and can avoid losing all of your competitive edge. Just don’t forget to reset your prices, marketing, etc. once you’ve restocked.

3. Know Your Numbers

We get it. Stockouts can happen even if you do everything right. While you can’t predict every unexpected spike in demand, you should have an understanding of when a spike is likely to occur so you can adjust your order quantities accordingly. To figure this out, look at your sales history over the last year or so to see when your busy and slow seasons are. If you’re new to selling, research your product’s selling history to give you this information. Not only will it help you understand how much inventory, at a minimum, to have on hand at a given time, it’ll also help things run smoothly with your suppliers, which brings us to our next point…

4. Communicate With Your Suppliers

When your suppliers know when and how much your orders will be, they can better prepare on their end, which means fewer surprises or delays in production and shipping. So keep an open line of communication with them, providing updates as needed throughout the year. And make sure to stay apprised of their production cycles and lead times as well so you can find a schedule that works best for you.

5. Maximize Cash Flow

Whether you need to order inventory to prevent a stockout, want to cover a resupply order, or have the opportunity to buy in bulk and at a discount, you need cash. But when you sell on Amazon, you don’t always have cash. To overcome their two-week payment delay and actually have daily access to your income, consider a service like Payability.

Payability is a financing company that helps marketplace sellers maximize cash flow and grow their businesses. They offer three solutions depending on your needs:

  • Instant Advance: Payability buys a certain amount of your future receivables (up to a month’s worth) at a discount, giving you a large lump sum of cash to draw from daily/as you need it.
  • Instant Access: Payability pays you your Amazon income one business day after making a sale, giving you daily infusions of cash.
  • Seller Card: Get your Instant Access payments even faster, including on weekends and holidays, and earn up to 2% cash back on your purchases.

Since 2016, Payability has helped more than 2,500 marketplace sellers grow their businesses — in fact, they’ve been able to grow 2.5 faster than their competitors. But don’t just take our word for it. Jump City Toys used Instant Access to triple the size of their business and Gina Goldring saw a 50% sales increase after one month with Instant Advance. To learn how Payability can help you find similar success — and always stay in stock — visit http://go.payability.com/ZonGuru to receive a $200 sign-on bonus and a 1.5% Instant Access fee.

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