The Profitability Trap: Understocking vs. Overstocking on Amazon

The Upside

Navigating the complexities of Amazon's FBA system can be daunting for brands, especially when it comes to managing inventory levels. In this episode, Ali and Zamir explore the critical balance between being overstocked and understocked.

With Amazon's increasing storage fees, especially during Q4, it's vital to carefully manage your inventory to avoid hefty charges while maintaining sales visibility. Hear about the importance of having at least 30 days of stock on hand, ideally pushing to 45 days for a safer margin. But beware of the hidden costs of understocking, such as increased advertising expenses and lost sales opportunities to competitors.

This episode offers valuable insights for brands striving to optimise their inventory strategies in the competitive Amazon marketplace.

Key Takeaways:

• Amazon charges fees for storage, and there are penalties for both overstocking and understocking.
• To maintain visibility and sales on Amazon, it's crucial to manage stock levels effectively.
• Being understocked can lead to higher advertising costs and loss of competitive position.
• Having a clear understanding of your rate of sale helps avoid costly stockouts.
• Increased storage fees during Q4 create a challenging balance for sellers managing inventory.
• It's essential to estimate both storage costs and potential advertising costs when planning inventory.

For more strategies for managing Amazon FBA stock, balancing storage fees, and optimising visibility to boost sales and profitability, visit https://www.thiswayup.online