Gold Coastal kept going out of stock.
To a point they were completely bare on all major items during peak season.
Losing out on thousands in revenue.
They were also facing the common problem of what to order and when to order.
In this case study, we are going to show how important planning is & why a well oiled supply chain is a must for sellers.
Pay close attention, because this is important.
Our client Gold Coastal was lacking in-demand planning, forecasting and inventory management.
Their business was unable to handle future planning and keeping that in line with production lead times, ocean shipments, and inland transit.
This is one of the biggest areas of concern for all Amazon sellers and is why creating a “buffer” of stock in your pipeline is critically important.
If you don’t have stock to cover sales hikes, you will always be chasing your tail and going out of stock.
Most sellers do not have this level of “Supply Chain Optimization“.
And neither did Gold Coastal.
They were caught between a rock and a hard place.
Either creating excess inventory or stocking out completely.
Excess inventory can be the result of a number of disruptions in the chain. Shipment delays, Technical challenges or other factors like returns or quality requirements.
If you are selling fast moving consumer goods where demand is hard to predict, excess inventory is caused by miscalculating in customer demand.
And stockouts are in the top 3 most frustrating experiences for online shoppers.
They create disappointment and frustration for sellers as well.
In addition to lost sales and revenue, they can lead to missed opportunities to engage shoppers, and potentially damage the brand.
We applied a very specific 2-step strategy for Gold Coastal.
First, we found out how much inventory is needed throughout the supply chain.
Second, how frequently we need to reorder.
For that we need to consider lead time and buffer stock.
For example:
- Production lead : 45 days of stock
- Ocean lead time: 65 days of stock
- Inland transit time: 15 days of stock
- Buffer stock at 3PL: 30 days of stock
- Stock at Amazon: 45 days of stock
In total 200 days of stock in the pipeline is needed.
And to keep this pipeline running, you need to set the “reorder point”.
If sales kept constant in the above example, you’d have to place an order every month.
But as we know sales are not constant.
So you have to analyze the numbers on a weekly basis to keep pumping inventory into the pipeline.
What impact did this strategy have on our clients’ business?
- YOY they achieved +125% sales growth
- +95% in-stock throughout the year
- Reduced Air shipments by 80%
- Crossed last years sales within 6months
- Client saved 15hrs per week by hiring our services.
- No need to data crunch. We provided our recommendations weekly.
When Gold Coastal started with us they told us they will be selling the business in 1-2years so they wanted to maximize sales and optimize costs.
Due to the results we generated, they were able to sell the business above their own expectations.
The key thing in all this was the importance of planning.
“If You Fail to Plan, You Are Planning to Fail” — Benjamin Franklin
Winning with AMZ is not about better or cheaper products than your competitors…
But the strength of the supply chains your business is built from.
Supply chains contain different companies, lots of different relationships, all trying to manage processes, infrastructure, equipment, information systems and staff.
To make it all perform in a synchronized & efficient way is like spinning 30 different plates.
But what happens when one plate smashes?
You lose money
You lose customers
You don’t hit your quarterly goals
Your business is un-sellable
This is why it makes sense to hand over that responsibility to a company who will handle your supply chain for you.
So you spin ONE plate instead of 30.
Make sense?
If you would like a free supply chain audit to see if you have any expensive kinks in your business then click here.