Amazon Vendor Central Business Value
Amazon Vendor Central Catalog Management
Replenishment of your Catalog
Understanding the Replenishment Cycle
• Replenishment is the process of maintaining your Amazon storefront to ensure that business continues in a timely manner, such as restocking to anticipate the needs and demands of your customer.
• Replenishment is also a part of a larger sales cycle which includes demand and lead time forecasting to anticipate sales.
• Success in replenishment can ultimately lead to controlled inventory levels and minimise lost sales.
• Replenishment means that you always have stock on hand for when a consumer orders it.
• The basic Replenishment Cycle is therefore:
* Order stock to keep inventory on hand;
* Sell stock but re-order before inventory runs out; and
* Maintain this cycle.
Understanding the Replenishment Codes
• Amazon internally assigns different codes for each item listed, so that the order system can recognize whether the product is orderable and should be ordered.
• If an article has a wrong code, Amazon no longer orders it from you, it is not available directly from Amazon on the Amazon website, visibility decreases, fewer customers click on it, this leads to less demand -> the downward spiral is in full swing.
• Fortunately, Amazon has since revised their previously extensive list of codes to make it less confusing and the following are now currently being used by Amazon:
* Greenlight – this means that the product is currently available from you, the supplier;
* In Stock – this means that the product is in stock at the supplier and readily available for Amazon to re-order as required;
* Temporarily unavailable – this means that product is currently not being ordered by Amazon; and
* Permanently unavailable – this means that the product can no longer be ordered at all.
• As a Vendor, you would obviously like to maintain your product listings in your catalog at the “In Stock” replenishment code at all times unless you are delisting or discontinuing a product.
• In order to amend the availability of a product in your catalog, you can do so by going to the “Edit Products” page located in the Drop Down Menu of the “Items” tab on the top menu of Vendor Central, select which products you would like to amend the availability of and click the “Update Availability” link in the top left hand side of the page.
• You will then be able to choose an availability status of “In Stock”, “Temporarily Unavailable” and “Permanently Unavailable.”
• Your item will then reflect the new availability immediately.
Understanding Forecasting and Planning Models
• Forecasting is when you try to predict how many units of each of your products listed on Amazon you are going to sell in a given time frame.
• Once you have this prediction in place, you then proceed to plan for this inventory to be in your warehouse available for Amazon to purchase from you immediately as and when they need it.
• There is an immense amount of work that goes into planning inventory replenishment, especially as most products are manufactured and need a variety of components to assemble a completed product.
• This is a course best left to your Operations and Production Managers and your Planner.
• For the basis of this course, we will look at how you can use Vendor Central to assist you in your forecasting to ensure that you are never out of stock.
• While your Planner will no doubt have their own models for predicting what stock will be needed for Amazon sales, you can assist them by sending them the models available from Vendor Central’s Amazon Retail Analytics Dashboard located under the “Reports” tab on the top menu of Vendor Central.
• Your Forecasting and Inventory Planning Model off of Amazon’s Vendor Central can greatly assist you in forecasting and planning your inventory to supply Amazon and thereby reduce the risk of being unable to supply Amazon with certain ASINs, especially if you are outsourcing your product and rely on it to be shipped by sea or air to your own warehouse from where you ship to Amazon or its customers.
• The Ordered Units shows you what ASINs were ordered in the past and can give you an overview of a trend when compiled over several months to a year, for example, you may find that the red version of one of your products tends to sell better over the festive season whereas throughout the rest of the year it doesn’t seem to do well at all.
• You can then know to build in a seasonality percentage into your forecasting and planning model for that ASIN.
• The Mean Forecast is Amazon’s best estimate of customer demand for each particular ASIN and is probably the forecast you would most likely use in your own forecasting model, especially if you are using Amazon’s forecasting report for the first time.
• The P70 forecast is Amazon’s estimate of a 70% probability that the customer demand will be at or below this value. This is an important option to look at as it will most likely apply more strongly to your slow moving ASINs in your planning and forecasting model.
• The P80 forecast is Amazon’s estimate of a 80% probability that the customer demand will be at or below this value. This is an important option to look at as it will most likely apply more strongly to your consistently moving ASINs in your planning and forecasting model that rarely tend to dip or spike at all.
• The P90 forecast is Amazon’s estimate of a 90% probability that the customer demand will be at or below this value. This is an important option to look at as it will most likely apply more strongly to your fast moving ASINs in your planning and forecasting model that are most sought after by consumers.
• The forecasting model that Amazon provides can offer you an indepth look at each one of your ASINs as they perform on Amazon and can provide you with vital intel as to how consumers engage with your brand overall as well as each individual ASIN, thus assisting you to better plan your inventory holding for Amazon sales specifically, and greater alleviate shortages or unfulfilled units to Amazon’s Fulfillment Centers.
Maintaining Available Inventory
• With the use of the Forecasting Models available off of Vendor Central’s Amazon Retail Analytics Dashboard, you can be sure to be able to maintain your inventory for all products on your catalog.
• It would probably be best to rather oversupply your warehouse than undersupply and you can then always dial back the next order if the forecasting model shows less stock needed.
• It is also vital to include seasonal trends when planning your inventory replenishment as some months you may only need to order 20% of what you
normally would while other months where your product is more relevant to any seasonal events or activities in that month, you would need to ensure you have 80% of what inventory the model predicts or even 120% thereof.
• The best way to work on seasonality is to run average percentages across several months, usually a quarter of the year.
• In this case, you would do best to work your inventory planning quarters to match those of Amazon’s, that is, first quarter is 1 January to 31 March, second quarter is 1 April to 30 June, et cetera.
• Once you have gleaned a trend in the average percentage of a forecast model for a quarter or season, you will be able to maintain your available inventory far more accurately.
• For example, over the first quarter when your product of Velvet Pink Heart-Shaped Cushions sells best over the Valentine’s Month, you will find that 130% of your forecasting model is actually what ends up being sold.
• Therefore, when planning your inventory holding or availability for the first quarter, and your forecasting model says you will need 10,000 units of these velvet cushions, you will order 13,000 units instead.
•But when fourth of July comes around in the third quarter and your cushions are not selling well, with the forecasting model predicting 7,000 units needed and your seasonality percentage saying 20% of this, then you would order 1,400 units instead.