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Why You Should Automate Your Inventory Forecasting

Keeping track of your Amazon inventory might sound like a chore, and a very difficult chore at that. It usually entails poring over spreadsheets upon spreadsheets on your laptop and making harried calls to your suppliers. It could be stressful and time-consuming, but ultimately, it’s essential to your business.

 Inventory management keeps your warehouse organized, allows you to manage your time efficiently, and helps you plan better. With that said, good inventory management also helps you take in more revenue and get more loyal customers.

 Inventory management is a full-time effort for every business owners out there. It’s part of the process of managing your ecommerce business. It eats up a lot of time and energy, so it’s quite prone to problems too.

 There are a lot of problems that Amazon sellers could face when managing their inventory. There could be missing orders, backlog orders, or unpaid orders.

 Don’t even let us get started on stockouts. Stockouts are one of the major problems of Amazon sellers everywhere. Inventory stockouts affect your Amazon ad campaign and gets you behind on competition.

 If you’re a constantly stressed Amazon seller, this article is for you. Find out how to solve your inventory problems with an automated solution you deserve.

Why are stockouts bad for your business?

Stockouts cost businesses a lot. They aren’t that obvious, but they happen. Aside from losing a lot of productivity, potential sales, and customers, there are several other reasons why stockouts are bad for your business. Here are some of the ways how stockouts hurt your Amazon sales:

 ●     Your customers become unhappy

Unhappy customers are even worse than lost potential customers. Why? Most of the people in this category could have been loyal customers to your business, and grew dissatisfied with your stockout/s. When they move their business somewhere else, you not only lose potential sales, but also repeat sales.

 ●     You incur greater warehouse and freight costs

When you have stockouts, the warehouse fees don’t wait for you. You’ll keep paying them even though you’re still waiting for your supplies to arrive. Speaking of arriving deliveries, you’re also paying for increased freight costs for expedited deliveries, ordered during a time of panic caused by stockouts.  

 ●     You overstock as a consequence

During the panic period that stockouts cause, most sellers start to stock up in excessive amounts in order to anticipate the increase in demand. And then, after the smoke clears up, they’re left with too much stocks stuck in their warehouses with no one to sell to. Overstocking leaves you with a variety of issues like increased warehouse costs, shifting demand, and warehouse clutter.

 These are the not so obvious costs of stockouts and overstocking. You may not notice it, but these problems actually hurt your business big time.

You might be scratching your head wondering how to solve this problem. But there is one solution most entrepreneurs use.

Here’s where inventory forecasting comes in.

What is inventory forecasting?

 Inventory forecasting is a strategy based on the Goldilocks Principle. The Goldilocks Principle  refers to making sure you’re neither overstocked nor understocked.

 When you’re neither overstocked or stocked out, this is called being in the “Goldilock zone”. The Goldilock principles is all about striking the perfect balance in inventory management and winning at the same time.

 This is an ideal situation for all Amazon sellers, considering that it gives you your much-deserved peace of mind and organization. Inventory forecasting is the number one tool to  you get to the Goldilocks zone, or so these experts say.

 Here’s how inventory forecasting works. Inventory forecasting involves choosing the best forecasting technique. After you’ve selected the most apt forecasting technique for you, it’s an array of calculations and spreadsheets from then on.

 Oh, and did we mention it also involves formulas you need to use?

 While inventory forecasting is a necessity for your Amazon business, that might not be the case for many very busy Amazon sellers. With things to consider like marketing, customer service, and product research or production to deal with, inventory management and forecasting takes up a lot of time and energy.

 Plus, it’s also quite boring.

 This is where automated inventory forecasting comes in.

 Automated inventory forecasting uses software that automatically calculates demand for your products and the amount of goods you have to stock. It’s a software that easily integrates to your Amazon shop and then takes all important data.

 This comes handy for Amazon sellers especially when your product is in demand season. It helps you prepare for sky-high demands during holidays and other peak seasons. Aside from that, it helps you avoid overstocking because it gives you the exact time when and how much you need to stock up.

 What’s the deal with automated inventory forecasting? Is it something that you should invest in?

Why automate?

There are several reasons why you should take advantage of automated inventory forecasting. Number one, aside from keeping you in the Goldilocks zone without much legwork on your part, investing in automated inventory forecasting brings about a huge number of benefits for your Amazon business.

We’ve compiled some reasons for you to consider investing in an automated inventory forecasting software. From reducing costs and building better relationships with your supplier, automated inventory forecasting presents a lot of viable solutions to help you win in your Amazon business.

Remove the guesswork

Automated inventory forecasting allows you to take a closer look at the status of your business with sharp precision. It removes the guesswork out of inventory replenishment, which helps you make smarter decisions in managing your inventory.

Plus, most automated inventory forecastingsoftwares also calculate how much demand you should expect at a given time. This way, you encounter less seasonal crunches and gain more efficiency during peak and low seasons.

Also, you’re given more accurate data, which helps you make more accurate decisions. See a pending stockout? Replenish your inventory at the right time. Peak season is coming up? Order new supplies beforehand. There’s no more guessing and second-guessing yourself when it comes to inventory management with automated inventory forecasting.

Another thing is automated inventory management digs up the anomalies in your inventory. Automated inventory management and forecasting lets you know about where your orders stream in and out. There’s no more guesswork on how many unpaid orders you have and unfulfilled orders. It’s all right there on your dashboard now.

Keep revenue flowing

Stockouts have a habit of halting sales when they happen. Your revenue goes into a screeching halt, you have to wait for the new supplies to get to you, and worse, your customers go away and buy your products somewhere else.

That sucks, right? When you’re in inventory zen, your revenue doesn’t have to stop coming in. Aside from having moments of less sales, and worse, no sales at all, you’ll have the advantage of continuity in your sales, which translates to continuity in revenue.

With effective inventory replenishment, you also build a stronger and reliable relationship with your repeat customers. Repeat customers offer higher lifetime valuecompared to one-time customers. Aside from that, keeping great relationships with your repeat customers eventually turn them into your brand advocates, giving you more sales in the long-term.

More time in your hands

As discussed a while ago, inventory management and forecasting takes up a lot of time in managing a business. With automated inventory forecasting, you have less time poring over spreadsheets and more time to focus on the other aspects of your business.

Another reason why automated inventory forecasting gives you more time also lies in its quick execution and results. It’s easier to move on from one business process to another when you have accurate and fast data. You get lightning-fast results and eventually make quicker business decisions.

 Scale your business faster

Now that you have more time in your hands, you can have more time in scaling your business faster. With more time in your hands, you’re in the position to prioritize more important business processes without the hassle of having to work on day-to-day inventory management and forecasting.

Your Amazon sales process gets even more efficient and less complicated. Imagine not having to call your supplier every now and then just to verify the status of your inventory or double-checking your calculations for what seem like hours. Everything that you need to know about the status of your inventory is on the dashboard and it appears quickly too!

Growth also becomes more predictable with the increasing reliability of business processes. Automated inventory forecasting builds reliability in your data and accuracy in demand. When you know what to expect, you make efficient time-based and qualitative decisions. Such predictability then boosts your Amazon sales.

Reduce costs

As mentioned earlier, you incur greater warehouse costs when your inventory isn’t optimized. Greater warehouse costs drain your cash flow.

How does automated inventory forecasting reduce costs? Because most automated inventory forecasting softwares have built-in demand forecasting, you don’t have to worry about stockouts or overstocking anymore. And we know how overstocking and stockouts affect your warehouse costs.

Finally, because your inventory is now optimized, there’s no need to expedite orders and pay for greater freight costs especially during high demand seasons.

 Build solid relationships with your suppliers

Supplier relationships are tricky. Sometimes you get along with them, sometimes you don’t. It’s often tested especially when one side doesn’t deliver well.

Harassing your supplier during high peak seasons that you weren’t prepared for or getting on their nerves with your uncertain decisions can also fare badly for your Amazon business.

How does automated inventory forecasting solve your supplier problems? First, you don’t look to them helplessly most of the time. Because you have a tighter grip on your business, you build better communication bridges with your supplier. It makes for easy compliance and better understanding of your needs. It also sets realistic expectations for both you and your supplier.

 Second, an organized Amazon business builds trust with your suppliers. You don’t want your supplier walking out on you when you’re making unrealistic demands. Worse, you could be building a non-profitable relationship with your supplier. As a seller, the lifeline of your business are your products. You don’t want to cut off your relationship with an otherwise effective supplier just because you are disorganized.

Automated inventory forecasting is the future

With more and more people taking to e-commerce to satisfy their buying needs, expect that Amazon will eventually have more and more customers by the day. According to a survey, Amazon isn’t going away anytime soon.

This means that innovation is the way to go. In order to run a successful Amazon business, getting on with the trend should be your number one priority.

This is why more and more businesses are taking up the option to use automated inventory forecasting softwares and have reported impressive massive results with the product.

While this may seem daunting for some, most automated inventory forecasting softwares are actually easy to use and install. You can easily set it up with your Amazon shop and the software will take it from there.

 These tools have dashboards where every data that you need to manage your inventory could easily be scanned. They also often include features like demand predictions, automatic inventory replenishment, and customized solutions.

 On the other hand, this type of software could be costly too. On the other, other hand, it’s a great trade-off that’ll help you manage your Amazon business better, and yes, bring in more sales as a result.

 Interested in investing in your own automated inventory forecasting software? Try AiHello.