The FBA Restock Death Spiral and How to Avoid It
Keep Your FBA Products Stocked in the Age of Restock Limits
Raise your hand if you’re in this situation:
You have inventory stock of slow sellers sitting in FBA warehouses, eating up your restock limit. Meanwhile, you can't keep your best-selling ASINs stocked, and you're watching your inventory restock limits decrease week after week. This is what we call, "The FBA Restock Death Spiral"
FBA restock limits are mainly based on sell through, or how many units you sell in a given time period. When your best-selling products are out of stock, your sales drop, which further drops your restock limits the following week. How is a seller supposed to navigate this situation?
First, we should consider which behaviors Amazon is trying to encourage with these ever-changing restock limits.
So, which behaviors is Amazon trying to reinforce with its FBA Sellers?
Behavior #1
Amazon does not want slow selling products in the FBA system, they want products that sell a lot of units, that are reliably well stocked.
This makes it easier on the FBA system at every level and delivers a consistent experience to Amazon’s customers. It’s easier for Amazon to receive products into an Amazon FBA warehouse when the inbound shipment is a large shipment of 1 SKU, rather than a smaller shipment of 100 SKUs.
Behavior #2
Amazon also does not want slow selling product clogging up their limited warehouse space. When you have a large portion of your FBA capacity committed to slow moving ASINs, Amazon punishes you for it because your restock limit is based on your volume of sales.
How can sellers avoid this death spiral, and maybe even turn it into a virtuous cycle, where their restock limits actually start increasing instead of crashing?
1. Focus on your best-selling ASINs
Prioritize your best-selling ASINs for replenishment, at the expense of slower moving products. Sell through, or remove, the inventory of slow moving ASINs to free up space to supply 45-60 days of your best-selling ASINs. This will ensure your fast movers are always in stock. And, having a healthy quantity of product in stock also helps with organic rankings, buy box wins, and ad placements.
2. Take advantage of FBM
There is no need to abandon your slower selling ASINs. While you prioritize your FBA capacity to your best-selling products, you may have to sell out of FBA inventory of slower moving products. When this happens, activate an FBM (Seller Fulfilled) offer for these products. That way your ASINs stay active and relevant until you are ready to restock them with FBA inventory.
FBM is your friend right now.
3. Run advertising and promotions to increase sell-through
Running advertising and promotions for your products is always important, especially if your goal is sales growth. It’s even more important now that restock limits are based on how many units you sell in a given time period.
You can boost your sales dramatically with an effective ad campaign, promotions such as coupons & deals, or just a simple price drop.
Any way you look at it, increasing sales velocity will increase your restock limits.
4. Once you are at full speed with top sellers, restock the slower moving ASINs
After 30-60 days of having your best-selling products in stock and selling at top speed, you will start to see your restock limit gradually increase. Once it increases enough, start sending in your slower moving ASINs into FBA.
Keep in mind these strategies will work best with standard-size FBA products. Extremely limited warehouse space for “oversize” and “apparel” are keeping restock limits down for those categories regardless of sales history.
By following the restocking behaviors Amazon is reinforcing currently, you can reverse the downward trend of your FBA restock limits.
Petros Neofotistos
Petros lives on the cutting edge of e-commerce marketing and data analytics. He helps clients build strategies to target and retarget customer segments that lead to sales. He can take the overwhelming amount of business data available to brands, find the important information, and apply that information to business and marketing decisions with a tight feedback loop.