Prime Day Prep 2021: Inventory Planning
With Amazon Prime Day 2021 just around the corner, it’s never too early to think about inventory planning. This year’s Prime Day is slated for June 21 – 22. Since 2020 was an anomaly and has thrown a wrench in traditional forecasting models and inventory planning, we’ve teamed up with Jill Liliedahl from Inventory Planner for expert advice on how to best prepare your brand for this year’s Prime Day.
We’ve asked Jill the most pressing questions to give your brand a leg up on the competition. In this post, we’ll cover:
- Inventory Planning Success — 3 Factors
- Q&A for Prime Day 2021 Inventory Planning
- Inventory Planning Checklist
Inventory Planning Success — 3 Factors
When it comes to the success of your brand’s Prime Day, there are 3 factors that will greatly impact expectations and outcomes:
- Price — This is largely out of your control due to market prices dictating competitiveness and as well as the consumer’s willingness to pay a particular price.
- Inventory — This is mostly within your control and can be positively affected by proper planning and prepping.
- Marketing — This is 100% within your control and can be effectively leveraged with the right advertising and promotions strategy in place.
Q&A with Jill Liliedahl — Prime Day 2021
How do I determine the right amount of stock for Prime Day?
Consider Shopping Habits & Changes
One consideration that every company should keep top of mind is how shopping habits have changed and if those changes will be permanent. The pandemic has shifted traditional brick-and-mortar shopping in favor of ecommerce across the board. No matter what the product is, online orders are massively up — for now, at least.
The golden question is: how long will these trends hold?
While no one can definitively answer that question, especially since it will vary for each business and even more so amongst different industries, it can be helpful to look at the overall Year-over-Year (YoY) percentage increases compared to the Prime Day bump in the last 12 months.
Think Tactically & Specifically when Forecasting
There won’t be the kind of YoY increases in sales like we saw in 2020 forever, which means that forecasting must be dynamic. Overforecasting can lead to overstocking, which is more of a consideration for some merchants than others. Those with cash flow considerations should be conscious of overstocking since that money could be better spent elsewhere (like advertising).
Another factor to take into account is your brand’s particular industry and the variable demand for certain products due to the pandemic. The outdoor industry, for example, has seen a huge bump in demand as more people make their way outdoors in lieu of traditional vacations. On the flip side, there may be delayed demand for travel products such as suitcases and luggage with continued restrictions on travel. .
It’s important to keep in mind that although forecasting won’t be as accurate as past years, we can still use the available data available to make educated predictions.
What would a brand need to know about inventory planning for Prime Day?
Timing Is Incredibly Important
While timing is always an important consideration, it’s even more so this year to ensure Prime Day success. Inventory planning on a seasonal basis is already tricky as it is, but with Prime Day changing dates last year and then again this year, forecasting has an extra complication thrown in.
Last year’s numbers are tricky because it isn’t clear how the timing of Prime Day affected sales data (or even if it was affected at all). Because Amazon moved Prime Day 2020 from July to October, no one is sure if those numbers were adversely impacted by how close the shopping event was to Black Friday and Cyber Monday, and whether or not shoppers chose to hold off on purchases until those holidays.
However, we can still use the data available to make a few educated inferences by looking at what kind of bump in sales occurred compared to the months leading up to and following Prime Day. Those surrounding months can serve as a baseline and this analysis can be used for previous years as well when Prime Day was in July. This can be done by examining the sales velocity from March – September 2020; for 2019 numbers, check January – June and August – October vs. July.
Order Sooner Rather than Later
With myriad issues in the global supply chain due to the pandemic, ordering stock far enough in advance is going to be absolutely critical. By giving a greater lead time, you can potentially mitigate avoidable setbacks. In 2020, international suppliers were hit especially hard due to a global imbalance of where shipping containers were located worldwide. Too few containers to move inventory left many products, and companies, in limbo.
Although domestic suppliers may not face the same problems as international vendors, it’s still important to order early and have redundancies in place. Consider having a backup supplier to avoid rising prices or delayed shipments due to a lack of shipping containers. Plus, having an alternative supplier lets you leverage the other option to command better terms with your first supplier.
Sometimes logistics can become so difficult that paying your supplier more might not be enough to ensure a reliable supply, especially since there are many hurdles that can jam up your inventory that are outside the control of your vendor (availability, customs, natural disasters, etc.).
Give your brand the best shot and communicate with your suppliers early and often to set expectations and determine realistic outlooks for your Prime Day.
Does forecasting change with a special event like Prime Day and what would a brand need to do to properly prepare?
Leverage The Spillover Effect
Forecasting definitely changes with major sales events and one of the biggest blind spots for brands focusing on Prime Day is ignoring their stock needs for other sales channels. Many vendors see an increase in traffic on their own sites in addition to what they’re selling on Amazon. Make sure you analyze the data for your own brand and consider Prime Day sales bumps on channels outside of Amazon as well.
Choose Your Ad Strategy
When considering Amazon advertising for Prime Day, the timing of paid ads and promotions can affect the extent to which you capitalize on more shoppers looking for deals.
Some brands run ads on Prime Day to capture the flood of traffic and sell out their stock almost immediately. While this can be lucrative depending on how much volume you sell, this is the most expensive option (like paying for a Super Bowl ad).
Another option that can save money is to run advertisements for a week or two leading up to Prime Day and then stopping them before the event starts. This helps give potential customers a heads up on the deals your brand will be running and is a great way to get sales from savvy shoppers who plan their purchases. The potential downside here is that you won’t be capturing the eyeballs of those who casually shop on Prime Day or shoppers who are distracted by deals being run on the day itself.
The last option for creative ad strategy is to…
Ride The Wave
Amazon’s official announcement of Prime Day and the time leading up to the sales event is a great opportunity to ride the wave of the ensuing shopping frenzy. Prime Day has become the major summer sales event and puts customers in the shopping mindset, making them more likely to buy even if it’s not on Amazon.
If you have an email list, consider starting a drip campaign that:
- Raises awareness of Prime Day, and
- Steers customers to your own website for hot deals in order to maximize profits.
You’ll make better margins and can cash in on the event in more ways than one.
Recap: Inventory Planning Checklist
- Consider changes to shopping habits from year to year
- Think tactically and specifically when forecasting
- Time your supplier orders properly
- Order sooner rather than later
- Take into account non-Amazon inventory and order accordingly
- Choose an advertising strategy in advance
- Leverage email marketing to direct customers to your own site
These considerations should help nail down just how much inventory your brand may need to make the most of Prime Day.
If you’re looking for more detailed insights and expert consulting for your brand, get in touch with us here!