In the wake of COVID and the holiday season, inventory challenges and supply chain issues have been a common problem plaguing both big and small brands. Strong Amazon inventory management is critical to success, but some issues can’t be avoided. When inventory constraints happen, it’s time to make swift adjustments to your Amazon strategy; focusing particularly on Amazon Advertising and DSP. We’re here to share tips on how to remain strategic amid inventory challenges.
The first step is to understand how much inventory you have and how long it will last. Review your internal metrics and inventory information, as well as lean on inventory reports and forecasts within Seller and Vendor Central. These reports are available for both Amazon Advertising and DSP and can offer a clear picture of the current and future state of inventory.
Answering the question of how long inventory will last is critical to determining the next steps. For example, if items are low on inventory and a shipment is en route to Amazon, you may want to scale back slightly on Amazon Advertising and pause high funnel advertising.
If inventory won’t last long and replenishment will take some time, more significant adjustments will be needed. The goal is to avoid going completely out of stock, as this can hurt Best Seller Rank and organic keyword ranking. While strategy shifts may still impact those important metrics, it won’t be as drastic if an item is out of stock.
On the Amazon Advertising side, when inventory challenges arise, Code3 Search Strategists begin by pausing all Sponsored Brand campaigns. This is because the campaign type continues to run even when the Buy Box is lost due to inventory or pricing. If a competitor is winning the Buy Box, brands should do everything possible to avoid sending traffic there.
Retail aware campaigns such as Sponsored Product and Sponsored Display can continue to run with low or out of stock items, however, a reduced budget is appropriate. Sponsored Display campaigns can also be utilized to protect the PDP of out of stock items from competitors trying to conquest.
Keep Buy Box messaging top of mind as well. “We have seen conversion rates and overall efficiency metrics decrease when the Buy Box for a product says ‘ships within X number of days/weeks,’” says Chandler Walnsch, Search Advertising Strategist II.
To remedy this situation, periodically check the PDPs of advertised products with inventory issues, and consider minimizing investments behind the product campaigns if performance decreases.
For DSP, the first step is to limit demand generation tactics so brands are not driving interest and intent that cannot convert. This includes a variety of traffic generation activities as well as mid-upper funnel tactics such as in-market and lifestyle audiences and conquesting.
Additionally, brands should pause or substantially scale back on any video advertising such as streaming TV (OTT), Twitch, and any online video. “Video advertising tactics are very likely to increase traffic,” says Ben LeMaster, Lead Programmatic Strategist. “Our data suggests 80-90% of people who view a PDP after watching a video ad do so after seeing it two or fewer times.”
Reducing or pausing off-Amazon advertising is critical, as it can create a lot of visibility and demand. On-Amazon retargeting campaigns should be maintained, albeit at a lower scale, as it can help preserve conversion rates while slowing down overall traffic.
Inventory issues can be stressful and lead to additional problems with Amazon performance if swift and effective strategy adjustments aren’t put into place. Careful planning and being nimble with strategy are key to winning inventory struggles. If you could use a strategic partner to help adjust your strategy, contact us today.