How much does it cost you to go out of stock on Amazon?

As Amazon sellers, we all hope to receive numerous orders every day, but we are also afraid of inventory going out of stock too soon. The shortage of inventory supply indicates that you are not in control of your supply chain, and because you are out of stock, all the traffic you used to get are all going to others’ listings now. The sellers who used to rank behind you now have the chance to surpass you. If it happens during the busy holiday season when it takes longer than usual for Amazon fulfillment centers to receive inventory, then you certainly will be out of stock for that whole period. Just because of that, your listing seller rank/page rank that has been created with so many efforts put in could be possibly taken over by others.

According to the rules of the Amazon platform, the most important factors affecting the quality of the listing include sales volume, conversion rate, review star rating and quantity available, total sales, etc. Therefore, to restore the sales and ranking of the listing, the seller needs to reboost the listing according to the above factors.

How much can you lose from inventory out of stock?

How big is the loss from your bestselling product being out of stock? This is a subjective question, which is a bit complicated to calculate because the determinant business factors are difficult to record in a table, such as profit, expenses, transportation costs, ordering lead time, delivery time, physical inventory, operating costs, capital costs…

For the estimating of the loss of inventory out of stock, the simplest method is to calculate all costs, and finally find out how much the cost is!

The stocking itself is also a money drain, which goes deeper as the business progresses. Why? Because keeping inventory in stock requires a lot of money, and your listing must be In Stock. If your listing is out of stock, please translate it automatically as “Your listing ranking is going to slump.”

Compared to FBM listings, the impact of stock out on FBA listings would be much greater. Just think about the FBA replenishment process: sorting, labeling, packaging, shipping, waiting, Amazon processing. It takes a lot of time to complete the whole process, which could be doubled when it happens before and after the holidays. If the new sellers are not skillful in playing with FBA, they definitely will go through a painful and tortuous learning process.

Some sellers believe that ‘anyway, my product is a hot seller, it’s no big deal to have several days of out of stock for when I once replenish the stock, the high sales volume would make my ranking top again. Don’t be silly anymore, just at the time you are busy preparing the packages, your competitors also get their sales increased. It takes at least 2 weeks for you to replenish the inventory. During the period from shipment arrived at a fulfillment center until sales volume comes back to normal, it is possible that your competitor already knocked your listings out of the first page. It is very difficult to boost up your page rank back to where it was when your best player(seller) was out of the game for that long time. In addition, the most obvious disadvantage of long-term goods supply shortage is the loss of many customers.

Don’t even think that “Inventory temporarily out of stock” could lead to “hunger marketing.” The product itself may be a hot seller, but it is not that you as the seller being hot in this business. Frequent out-of-stock can lead to instability in the customer base. If the seller is always out-of-stock, his customers will not hesitate to turn to the other comparable products, and that is the greatest loss a seller can suffer for a long time.