Congratulations! Your best-selling product has gone viral on social media. Your influencer campaigns are paying off, and there’s a rush of shoppers lining up to buy your products. Everything is perfect!
Not exactly. Like many FBA sellers, you might notice that as your sales increase, your Amazon inventory diminishes. Replenishment is weeks away and eventually, it happens — you’re out of stock.
When the notification hits, you’re going to feel it where it hurts. Obviously, you’ll lose sales, but Amazon can also take away your Buy Box positions and even suspend your seller account if this situation becomes a trend.
But don’t panic. With a proactive attitude, iron-clad strategy, and a dash of creativity, you can keep your Amazon inventory in line, starting now.
Running Out of Stock on Amazon
- What Happens When You’re Amazon Out of Stock?
- Out of Stock on Amazon — What to Do When Your Worst Nightmare Comes True
- How to Avoid Running Out of Inventory on Amazon
What Happens When You’re Out of Stock on Amazon?
As an Amazon seller, you already know that when you’re out of stock — you’re out of luck and out of Amazon’s good graces.
It’s an unfortunate reality in the life of an FBA seller. Even for well-established stores with a long-running reputation for success, going out of stock on Amazon can be dangerous to your bottom line.
This is because Amazon sees a seller going out of stock as a sign that there may be a bigger problem with your store. With its ultimate goal of protecting the customer, going out of stock can cause Amazon to take action to protect shoppers.
These actions include:
- Removing your Buy Box position
- Delisting your products
- Suspending you for multiple infractions
But perhaps the single most significant issue you’ll face comes from a loss of momentum.
If one day you’re moving inventory left and right, then suddenly there’s no more inventory for shoppers to purchase, this gives your competitors a prime opportunity to catch up or even outrank you on Amazon. With 69% of shoppers saying they will gladly head to another store if something they’re looking for is out of stock, that could lead to a whole lot of missed opportunities.
If the worst has already happened and you’ve run out of stock on Amazon, don’t worry. It may take some time but with a clear plan, you’ll be able to get your sales back on track.
Out of Stock on Amazon – What to Do When Your Worst Nightmare Comes True
First, don’t panic. There are steps you can take to rectify the situation and return to Amazon’s good graces. Here’s what to do.
Call in Reinforcements from Your Suppliers
As soon as you get the “out-of-stock” notification, you know you need to act fast. The first step is to try to accelerate your replenishment order.
Call your supplier directly to express the urgency of the situation and ask if they can produce your goods quicker without compromising quality or safety standards.
To get your items into Amazon’s warehouse faster, you can also send some of your inventory by air. But be careful — this can get expensive.
The amount you air cargo should be enough to cover the maximum shipping time of your chosen transport method, plus an extra two weeks’ worth of buffer stock in case any further delays occur.
This will bridge the inventory gap while the bulk of your order makes its way to Amazon by sea until the time that Amazon processes it.
Temporarily Increase Your Prices
After you’re back up and running, you can raise your prices so that they’re slightly higher than your competitors’ to help slow sales while still selling. To avoid being flagged by Amazon for price gouging, ensure the change is significant enough to be noticed but not enough to make a shopper’s jaw drop.
A week or so before your goods arrive at Amazon’s warehouse, reduce your prices. Do this in small increments spaced out over time.
A listing with significant drops in price can trigger Amazon’s alarm bells if done over a short period. This can lead to a price alert problem and result in Amazon removing your listings from featured product promotions. Like all things Amazon selling, you’ll want to proceed carefully and with a clear plan.
Switch to Fulfilled by Merchant (FBM)
If your FBA inventory is out of stock, you can switch your account to FBM and start fulfilling orders yourself.
Seek help from an external fulfillment center or your internal team. Be sure to give your staff a realistic end date and explain that this is an all-hands-on-deck moment. This will help you avoid issues with your team, which can further delay your recovery plan.
It’s important to remember that even if you make the switch quickly, your rankings may slip slightly. Amazon favors FBA sellers with swift delivery times and solid customer experience. But even with the potential drop in rankings, you will at least have a clear path for getting revenue back into your Amazon business and you can avoid being entirely out of stock.
Set a Restock Date or Apply the “Holiday” Setting in Your Store
If you find yourself out of stock on Amazon, you can switch on the “temporarily out of stock” notice by setting up a restock date in your Amazon Seller Central account.
This will allow you to take back orders for up to 30 days before your stock lands in Amazon’s warehouse.
Alternatively, if you can get a new batch of goods to Amazon within three days, you can turn on the holiday setting. This will make your listings inactive and hide them for 36 hours.
To Activate the Holiday Setting on Amazon:
- Go to your Seller Central account and click “Settings” and then “Account Info.”
- On the Seller Account Information Page, click the hyperlink marked ‘Going on holidays?’
3. You’ll then have the option to either make all your listings in all your marketplaces inactive or choose specific marketplaces to deactivate.
4. Click “Save.”
And that’s it! Now that you’re safe for 36 hours, get your emergency stock to Amazon, stat!
Pause All Active Campaigns
If you’re running any active advertising campaigns while out of stock, it’s time to pause them until you have your inventory under control. This includes ads on social media platforms like Facebook, Instagram, and TikTok, as well as Google Ads, and, of course, Amazon Ads.
The beautiful thing about digital advertising is that you can easily pause and restart your campaigns anytime.
The second you pause the campaign, all ads stop. Once you have your inventory stocked up, you can restart them right where you left off and with a click of a button, they’ll reappear immediately.
How to Avoid Running Out of Inventory on Amazon
While it may sometimes feel like going out of stock on Amazon is inevitable, the truth is that it isn’t. With the right strategy, tools, and mindset, you can avoid stockouts on Amazon entirely.
Once you’ve replenished your inventory and are safely out of crisis mode, sit down and develop a plan to ensure this never happens again.
1. Get Serious About Inventory Management
In the early days, relying on your default seller dashboard settings may have been enough to keep you in stock. But as your sales grow, so does the need for a more dynamic demand forecasting and inventory management system.
Amazon’s recommended ship date for restocks isn’t always reliable for fast-growing sellers, which is why many stores are turning to software tools that can help predict stock requirements with greater accuracy.
Depending on which type of inventory management tool you choose, you can even set up automatic stock reorders that activate when a specific inventory threshold is reached, helping to keep your best-sellers in stock no matter what.
2. Set a Minimum In-Stock Number for Your Amazon Inventory
While sending inventory from your supplier to Amazon’s warehouse can be easier and more cost-effective, it can also lead to a dangerous guessing game of when to reorder.
Shipping by sea from countries like China has lead times of up to 50 days, so waiting until the last minute is risky. It leaves no room for production issues, port closures, customs backlogs, and Amazon warehouse processing delays — all things that are par for the course in any e-commerce business.
Instead, set a minimum in-stock number. Use your forecasting tools to determine the date you’ll reach this figure, then place a refill order six to eight weeks before that date.
Be sure to order more than what you’ll be sending to Amazon directly. You’ll need some product for restocking and the rest for your backup plan (which we’ll dive into shortly). Double your usual order, and you should be covered.
3. Have Your Backup Plan Ready
When it comes to Amazon seller inventory, stockout prevention is always better than the cure. Even if you take all the right steps to slow sales and rectify your stockout, you’ll want to have a contingency plan in place.
Here’s what a solid Amazon inventory backup plan could look like:
- Keep inventory in your own warehouse or 3PL network.
- Build a network of local suppliers in case of emergency.
- Order raw materials and packaging to assemble just in case.
- Pull stock from another sales channel until your Amazon inventory arrives.
No two e-commerce businesses are the same and there are many feasible routes to take to help you stay in stock on Amazon.
Consult with your operations team and suppliers to create a plan that will cause the least disruption to your business and your success on Amazon.
Keep Your Amazon Seller Inventory on Track with Working Capital
There’s no greater momentum killer than a sudden and unexpected stockout. While it can be a tough road to recovery, there are steps you can take to get your Amazon sales back on track and keep scaling your business.
That’s where the right kind of working capital can help.
At SellersFunding, our flexible Working Capital solution empowers you to get the advantage over your competition when it comes to inventory, advertising, product development, and so much more.
We’ve helped hundreds of e-commerce entrepreneurs like you secure the funding they need to reorder stock ahead of peak season sales and fully control their inventory. Stockouts shouldn’t stand between you and your next growth level.
“As the business was starting to scale, we started working with large retailers that were putting in large purchase orders,” says CROSSNET CFO, Chris Koop. “On our end, that was fantastic. But the question was, how can we go and build the inventory when we didn’t have an adequate capital structure?”
Find out how SellersFunding helped the team at CROSSNET close their biggest order in company history.