• Forecastly• Hundreds of Amazon

seller accounts analyzed• Sold on Amazon for

almost 10 years

Goal of the Session

Make you

more revenue

profit

• Excess Inventory

• Stock-outs

• Replenishing Inventory

• Forecasting Best Practices

Sections

Excess Inventory

WHAT IS EXCESS INVENTORY?Low inventory turnover is related to overstocking, excess inventory, and the presence of non-moving inventory. Low turns also creates liquidity problems, putting increased pressure on working capital.

High inventory turnover is typically positive because it indicates goods are being sold rapidly. It may result from good inventory management, but may also signify insufficient safety stock.

Wait… No stock-outs can be a bad thing?

Cumulative Profit

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

20% Excess 5% ExcessMonth 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12$0

$2,000$4,000$6,000$8,000

$10,000$12,000$14,000$16,000$18,000

Sold Excess

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12$0

$2,000$4,000$6,000$8,000

$10,000$12,000$14,000$16,000$18,000

$11,475

Inventory Value

Excess Inventory Example

Why do we care?

Why do they happen?

Stock-Outs

3 Days vs. 1 Day Per Month

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

3 Days/Month 1 Day/Month

3 Days / Month 1 Day / MonthProfit / Day $200 $200

Missed Profit / Month $600 $200

Total Profit* $64,800 $69,600

$4,800

*Assumes 30 days per month

Stock-Out Example

FBA Replenishment

How many units do I send? PREVENTS EXCESS

When do I order/ship more units? PREVENTS STOCK-OUTS

Not all items are created equal.

Item Prioritization

What are your most profitable items?

Forecasting Inputs

• Lead Time• Sales Velocity

• Stock-outs• Costs• Current Inventory• Inbound/In-Process Inventory• Safety Stock

Costs

• Manufacturing/Purchase• Taxes, Duties, Import Fees• Processing (Bagging, Labelling, etc.)

• Your time is money!• Inbound Freight• Advertising• FBA Outbound Fees• Amazon Commission• Storage Fees

http://bit.ly/prosper-forecasting

Simple Example

• Safety Stock• Reorder Point

• RP = Safety Stock + (Lead Time * Velocity)• Days Until Reorder

• DUR = (Current Inventory – Reorder Point) / Velocity• Number of Units

• Units = ((# of Days + Lead Time) * Velocity) + Safety – Current – Inbound

bit.ly/prosper-forecastingEXCEL TEMPLATE

• Options• Differences

• Time is money!• Real-time Data

• Velocity• Profit• Inventory Quantities – Fulfillable/Reserved/Inbound

• Typos (one number can throw everything off)• Safety Stock• Stock-out Days• History (Graph)

Amazon/Excel vs. Software Tool

Jeremy Bironweb: www.forecastly.comemail: jeremy [at] forecastly.com

Questions & Contact Info