Amazon Demand Forecasting for Inventory

Introduction

• Demand forecasting is challenging for many Amazon inventory sellers.
• Two categories: Current Sellers and New Sellers.
• Longer selling duration provides more data for forecasting.

Current Sellers

Data Usage:

• Sellers with at least two years in the business can analyze 12-month summaries.
• Add year-over-year growth to understand inventory needs.

Inventory Dashboard:

• Navigate to Inventory > Inventory Dashboard > Restock Inventory.
• Provides sales summary for the last three days.
• Shows recommended ship dates to maintain 30-60 day inventory.
• Avoids low inventory fees by adhering to Amazon's inventory recommendations.

Forecasting Tool:

• Historical and future unit demand forecast.
• Compare past and current sales to predict future needs.
• Consider manufacturing cycles (e.g., 3-month cycles) in planning.

Key Recommendations:

• Maintain 60-90 days of inventory at Amazon to avoid fees and support growth.
• Consider seasonality and adjust forecasts accordingly (e.g., winter vs. summer sales).

New Sellers

Initial Forecasting:

• Research competitors in the desired category.
• Use tools like Helium 10's X-ray to understand sales velocity and market share.
• Start with a conservative market share estimate (e.g., 5%).

Inventory Planning:

• Calculate initial inventory based on estimated market share (e.g., 5% of competitor’s sales).
• Plan for 1-5% of marketplace entry and adjust based on initial sales data.

General Advice

• Align inventory with advertising and sales growth plans.
• Avoid excess inventory which ties up funds.
• Utilize demand forecasting tools after 30 days of sales data.
• Consider manufacturer and shipping lead times in inventory planning.

Tools and Strategies

• Amazon's algorithms help with growth potential predictions.
• AWS and other services can help manage inventory levels and prevent stockouts.

Conclusion

• Always plan for 60-90 days of inventory considering production and shipping lead times.
• Use available tools to maintain steady inventory flow and support sales growth.
• Adjust forecasts regularly based on sales trends and external market conditions.