Amazon inventory is a crucial but neglected area for all Amazon sellers.  We have Jeremy Biron with us today. He’s the founder of Forecastly. He has been selling on Amazon for over 10 years so he has a really deep understanding of the marketplace and of Amazon inventory management and the issues that can involve.

He was one of the first FBA sellers in the office supply space running a multi-million dollar operation. Jeremy has a strong knowledge of Amazon and what it takes to maintain your Amazon inventory.

Tell us more about yourself and how you got started.

Coming out of college about 15 years ago, Jeremy was working in the corporate world doing marketing and sales. Quickly realized that the corporate life wasn’t for him. He got into selling  Amazon inventory  part-time while working the corporate job. He happened upon office supplies. Not the sexiest products but he found a place. He realized that he could make more money selling on Amazon than in his full-time job and he enjoyed it much more.

He started selling full-time 8 years ago. Then, about 2 years ago, the office supply space wasn’t going in the right direction. He heard from a lot of other FBA sellers about their Amazon inventory issues. Jeremy had the answer. He had custom software they used in-house. He decided to take this software, improve it so it could be mass-distributed, and began Forecastly.

What prompted you to create this custom software for Amazon inventory?

It was a combination of stock-outs and excess Amazon inventory. At first, they were just using the reports you get from seller central. It shows how much you have in stock and how much you sold in the past, like 30 days. It would be 30 days later, after he had placed all those orders, and looked at his profit and loss and think that he should have sold more. As it turns out their estimations were off. He knew from the beginning that using the inventory reports from Amazon wouldn’t cut it.

Tell us about how you used the Amazon inventory reports and what the limitations were.

A lot of the time, those aren’t accurate. Looking at your current Amazon inventory and your inbound numbers. You inventory is usually right, but your inbounds number aren’t. They didn’t know exactly what was going into Amazon. What status was it in. Even looking at your existing Amazon inventory, you can’t tell if it’s being labeled, is it moving around the country, or is it reserved because it’s already been sold. If I have 100 units, and 10% has already been sold, I really have 90.

The other piece of it is figuring out your sales velocity. That’s not as easy as many people think it is. Let’s say you sold 50 units last month. If you don’t know if you were in stock the entire time, your don’t know your true sales velocity. If you sold 50 in the last 30 days, but you were out of stock half that time, you should have sold 100. However, those reports are saying you sold 50, and if you want a 30 day supply, you should buy 50 more.

The last piece to this is taking that demand forecast and building a replenishment strategy off it. Knowing when you’re going to run out of stock.There isn’t an Excel spreadsheet that will tell you if you’re going to have a spike in sales. The only way to do that is by using a database and running some crazy statistical calculations.

Coming back to why this matters. One thing you mentioned was demand forecasting. Basically, you have to think about this before you place your very first order, if you’re new to Amazon. Or when releasing a new SKU. How do you work this out?

This is something Jeremy sees a lot of mistakes with. Even if you’re an experienced private label seller and you're bringing out a new product. It’s tough trying to figure out how much to order.