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FBA Seller Success Series: Part 1, The Meteorologist

  • Aug 28, 2015 | Marcus DeHart

What do a meteorologist, a cryptanalyst, and a therapist have in common? Though it may seem strange, they possess overlapping skills vital to successful selling with Fulfillment by Amazon (FBA).

Cultivating professional skills that come second-nature to these types of individuals can help you succeed as an FBA seller. My next three posts will take a closer look at these tendencies and help you identify how you can understand, leverage, and cultivate them to greater success as an Amazon seller.

The Meteorologist

Just like a meteorologist, FBA sellers need to be able to understand how to read the data they have available and properly forecast future events. While a meteorologist is concerned with forecasting the weather, you must be able to forecast demand for products over time.

Meteorologists have knowledge and a fleet of tools to help them analyze atmospheric conditions to plot out weather fronts and low pressure systems. Likewise, you must be able to leverage a variety of reports Amazon Seller Central makes available to help you identify future demand for products by analyzing potential buying behavior.

Inventory Health Report

One report I highly recommend becoming proficient with is the Inventory Health Report. This report can be daunting at first--it has almost 50 fields detailing every listing in your FBA inventory. But the report comes in both an online version with fewer fields and a downloadable .csv format you can open with your favorite spreadsheet application to slice and dice the data.

The online version is best for looking up a single product at a time. Just enter the ASIN or SKU and the report will show you a modest 22 fields, two of which will be most helpful for forecasting sales:

  • Units Shipped Last 30 Days: The number of units sold within the last 30 days.
  • Weeks of Cover Trailing 30 Days: The number of weeks before you run out of inventory based on sales over the last 30 days.

The online version of the Inventory Health Report gives you a snapshot of the forecasted demand of one product at a time measured in weeks. From this you can determine whether you have enough inventory available in your Amazon fulfillment centers and--by factoring in the amount of time to prep and ship inventory to a fulfillment center--you can forecast how soon you will need to restock your inventory.

That’s great for one-off replenishment, but if you have dozens or hundreds of products in Amazon’s fulfillment centers, exploring them one at a time is not a practical solution. That’s where the downloadable .csv file comes in handy.

FBA Inventory Health

FBA Inventory Health Report

Open the file in Excel or whatever number-crunching program you prefer, and you can get a line item for each product you sell and fulfill through Amazon. Plus, you get a varied range of data for more accurate forecasting. Instead of just looking at the last 30 days, you get a snapshot of the past 24 hours, 7 days, 30 days, 90 days, 180 days, and 365 days. And instead of forecasting coverage in weeks, you can see weeks of coverage based on your sales for those same time periods.

Understanding the Data

There are many factors that influence demand for products. Seasonality is an example of a variable that plays an important role in forecasting, both for the weather and for sales. Understanding your products and knowing your buyers is critical. It’s not difficult to figure out that shoppers are more likely to buy games and toys during the holidays and that swimwear is more in demand during spring and summer. However, other products that are needed year round may have subtle variations in demand that you’ll only see by looking at the big picture and comparing year-over-year data. To spot these trends, be sure to pull data on a routine basis and compare your findings with historical data.

Lastly, don’t forget that shipping your inventory to an Amazon fulfillment center and getting it checked in for sale can take time. The process could take weeks depending on your shipper and how far you have to send your products. You can bet that during the holidays every other Amazon seller is going to be scrambling to get their products shipped to warehouse in time for Black Friday, which means you’ll be competing with them to get in line to unload your shipment. Be smart and plan ahead.

In the Pacific Northwest where I live, meteorologists have an especially challenging job. With two mountain ranges, vast foothills, the Pacific Ocean, and Puget Sound influencing our climate, forecasting the weather is exceedingly difficult and updates are frequent and ever-changing.

Forecasting your sales can be tricky too depending on your products, but if you are familiar with the tools available to you, learn how to leverage them to your advantage, and understand how to make use of data to help your decision making, you can avoid the storms and droughts of selling on Amazon and optimize your FBA business for success.

In FBA Seller Success Series: Part 2, we'll take a look at how to cultivate the skills of a cryptanalyst to introduce continuous improvement to your business on Amazon. Stay tuned!

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Avalara Author
Marcus DeHart
Avalara Author Marcus DeHart