How Amazon Sellers Can Learn from the Overstocking Mistakes of Large Corporations
Large corporations like Target, Walmart, and Amazon are facing the consequences of maintaining pandemic-level inventory in a post-pandemic world. While some are overstocking, others are buying too much inventory at the cost of sellers.
The Washington Post reports that Target stock dropped more than 25% after their first-quarter financial reports. In maintaining their pandemic-level inventory, they have collected more inventory than they can sell, which has caused a 52% year-over-year drop in profit during Q1.
Brian Cornell, Target’s chief executive officer, said the following when asked about the drop: “While these decisions will result in additional costs in the second quarter, we’re confident this rapid response will pay off for our business and our shareholders over time, resulting in improved profitability in the second half of the year and beyond.”
In a recent Target news release, the company stated that to combat the losses and overwhelming amount of inventory, they will be “pursuing aggressive options to control costs” and “planning for continued strength in frequency categories like Food & Beverage, Household Essentials and Beauty.”
With inflation costs rising by the day, sitting currently at 8.58%, consumers’ spending habits are changing. In the post-pandemic world, consumers are leaning away from spending on discretionary products and tech, and spending more on services and experiences.
As a merchant, what can I do?
There is not much a seller can do about the changing habits of consumers as we climb out of a global pandemic, but you can monitor your inventory and selling trends in order to properly prepare for your customers’ needs.
Below are some recommendation for data in Amazon Seller Central to look out for described in Reason Automation’s Seller Central Help Center to analyze your inventory and selling trends:
Manage FBA Inventory: If participating in FBA, this report provides information on listing, condition, disposition, and quantity for items in the Amazon Fulfillment Network (AFN). This will allow you to take a look at your current inventory and plan accordingly based on your consumers needs.
Inventory Age (FBA): If you participate in the FBA program, this report will allow you to take a look at inventory age and how long certain products have been in the warehouse. You can examine products with an older inventory age and consider decreasing shipments or increasing shipments with products with younger inventory age.
Sales and Traffic by SKU: This gives insight into sales and traffic by SKU number, allowing you to analyze and consider products based on traffic and sales trends.
Restock Inventory: This table shows thresholds for how much inventory can be shipped to Amazon. One can use this to plan accordingly when increasing or decreasing product inventory volumes.
With rising inflation and costs in a time where consumers and merchants are transitioning out of a global pandemic, it becomes more important and relevant to adjust with the times. To avoid reaching a point similar to Target’s, you should keep in mind your current inventory and sales trends and adjust.
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