In cross-border business, goods occupy a large part of the capital. Whether the stocking and replenishment can be reasonably carried out will directly affect the cash flow of the enterprise.
Excessive replenishment will result in a backlog of goods, resulting in overruns in warehousing costs and logistics costs.
If the replenishment is too small, it will be out of stock, overtaken by other similar products, and the listing weight and product ranking will drop.
Therefore, a reasonable replenishment strategy is crucial. So how to formulate a replenishment strategy to make replenishment reasonably?
What is a replenishment strategy?
The replenishment strategy, as the name implies, is to formulate a corresponding replenishment strategy according to the sales demand and inventory situation, so as to realize the replenishment of products within a certain period of time to meet the sales demand.
Affected by many factors such as sales demand, procurement process, supplier quality, delivery speed, first-way transportation, etc., there are many factors that need to be considered in the replenishment strategy. Among them, safety stock, safety days, replenishment volume and replenishment point are the basic elements of replenishment strategy.
(1) Safety stock
Safety stock is the stock prepared to prevent the instability of supply and demand. Uncertain factors include sales surge caused by promotion and logistics delay.
Generally speaking, the larger the safety stock, the less likely it will be out of stock, but the larger the safety stock, it may lead to a large amount of remaining stock, which will result in a lot of storage costs for cross-border e-commerce sellers .
Therefore, the safety stock also needs to consider factors such as sales volume and delivery time of goods. Cross-border e-commerce sellers can refer to the following calculation methods for safety stock: Safety stock = estimated daily average sales * arrival time period .
Average sales sellers can conduct statistics based on 7-day, 14-day, 30-day, 60-day sales, or even longer sales, to obtain more accurate and close to actual sales data.
However, in fact, there is no standard calculation method for the calculation of safety stock. Sellers need to summarize the reasonable stock quantity suitable for their own business based on past historical data and purchasing conditions.
(2) Safety days
The number of safety days refers to the number of inventory buffer days in order to prevent out-of-stocks due to abnormal conditions. Cross-border e-commerce sellers can stock up for the corresponding number of days according to the sales performance of their business, generally ranging from 7-14 days.
(3) Replenishment volume
The replenishment quantity is the quantity of products that need to be replenished, which can be calculated by referring to this formula: replenishment quantity = safety stock + in-transit inventory quantity – current inventory – sold but unclaimed inventory .
However, the replenishment volume is not a stable factor, and may be affected by the supplier's delivery cycle, inventory cost, sales volatility, product attributes, etc., which may produce different replenishment volumes.
(4) Replenishment point
The replenishment point means that when the inventory reaches a certain value, it needs to be replenished. The replenishment point mainly considers the transportation time of the product in transit, the inspection and storage time, and the processing time before sales.
For the calculation of the general replenishment point, you can refer to the following calculation method: replenishment point = safety stock + average daily sales volume * average preparation time .
In addition, taking the Amazon platform as an example, the data that sellers need to refer to for replenishment include the following:
FBA Inventory in Inventory : Quantity of existing inventory in Amazon's warehouse, including on-sale and transshipment inventory
FBA Inventory in Transit : Quantity sent to Amazon warehouse but not arriving at Amazon warehouse
Overseas warehouse stock and in-transit quantity
Local Availability and In Transit
Stocking time : based on comprehensive considerations such as the number of days for purchasing plan confirmation, the number of days for suppliers to prepare goods, the time for quality inspection and warehousing, the time for return and rework, the number of days for the first trip, and the number of days for overseas warehouse transshipment, etc.
Through the above key factors and data, cross-border e-commerce sellers can initially formulate a replenishment strategy, set the safety stock amount, replenishment point, and safety days required by their own business, and comprehensively consider multiple factors to formulate the replenishment amount in a certain period. .
How to efficiently formulate a replenishment strategy?
1) The problem of replenishment strategy formulation
In the process of formulating a replenishment strategy, many sellers often feel that they know the direction and method of replenishment in theory, but in the process of practical operation, they often face many challenges.
The main reason is that there are too many factors to be considered in the replenishment strategy, and they are all variables, and any change will affect the final replenishment volume. for example:
The statistics of the first-way transportation time are incorrect, which affects the arrival time of the goods and cannot meet the replenishment demand.
There are many warehouses, ignoring the situation of one of the warehouses, resulting in too many replenishment products
Errors in manual sales statistics, predicting impossible sales demand, and greatly reducing the accuracy of replenishment
Upstream and downstream of the supply chain, information is not aligned, and information is biased, resulting in decision-making mistakes
The above list is only some of the problems that affect the accuracy of the replenishment strategy. The reality makes many people anxious and carefully arrange replenishment.
2) Efficient replenishment strategy formulation method
In order to make more accurate decisions, sellers can use tools or systems that support real-time inventory tracking to support replenishment reference data , keep abreast of inventory conditions, simplify the replenishment strategy formulation process, and use the power of technology to achieve accuracy that is difficult to achieve by manual statistics. sex and comprehensiveness.
Taking Leadstar ERP as an example, it automatically obtains the inventory data of local warehouses, overseas warehouses, and FBA warehouses. Amazon sellers can keep track of the inventory status, including the quantity in transit, the quantity available, the quantity to be inspected, and the quantity of goods to be delivered.
In addition, Linkstar ERP automatically combines /30-day sales, procurement, warehouse, FBA in transit and FBA warehouse inventory to calculate the recommended purchase volume, recommended delivery volume and out-of-stock date, and sellers have an opinion on when the out-of-stock will occur. , it is clear at a glance when it is time to replenish, and replenishment has become easier.
How to deal with the backlog of goods?
For sellers, the backlog of goods means an increase in storage costs and a reduction in profits. It is also necessary to take related measures to reduce the backlog and save profits.
1) Find the source of the backlog of goods and adjust
The common reasons for the backlog are: product quality problems, insufficient traffic, few or many negative reviews, etc.
Stop loss in time
For product quality problems, if it is completely unsellable, it is recommended that the seller arrange for the destruction of the goods in time to reduce the continuous backlog of storage costs.
For the problem of insufficient traffic, sellers can increase on-site and off-site promotional activities and increase advertising bids to obtain more traffic and more orders.
For comment problems, sellers can invite buyers who have purchased products to comment accordingly, and continuously optimize product listings.
Lower the price
In addition, sellers can also consider the way of price reduction. Price reduction will be very attractive to many buyers, but this method will have a certain impact on profits.
For products with poor sales performance, sellers can consider bundling them with products with better sales, which can not only improve the competitiveness of products with good sales, but also speed up the consumption of backlogged inventory.
2) Slow down the transportation speed of goods that have not arrived in the warehouse
After the backlog of goods, if there are still goods in transit, sellers can consider switching them to other warehouses, or open up new channels for sales to ease the pressure on inventory.
In addition, to avoid the situation that the goods are known to be sufficient, the original goods procurement plan is still in progress, resulting in a continuous backlog of goods.
How to deal with out of stock?
Once the stock is out of stock, the seller can take emergency measures to reduce the loss as much as possible.
Generally speaking, sellers need at least 14 days to replenish inventory after out-of-stocks appear, and Amazon also has a 14-day grace period for out-of-stocks. Replenishment within 14 days has little effect on the ranking and weight of product Listng.
The following will take 14 days as a time interval to sort out the specific response methods for you.
1) Lisitng that is expected to be out of stock within 14 days
When it is predicted that the product is about to be out of stock, raising the price can reduce the sales volume of the product and delay the product out of stock, but the price increase will also lower the product ranking, and there is a certain risk.
Emergency replenishment from China through UPS Worldwide Saver red list, fast delivery and warehousing. UPS red list has priority in the process of delivery, and the delivery speed is fast, generally arriving within 3-5.
But while rushing to restock at super speed, there are also high shipping costs. This method can be adopted if the product the seller is selling has a relatively high unit price per customer.
Reduce on-site advertising budget
When products are running out of stock, lowering your advertising budget can reduce traffic, which in turn reduces order volume. With this approach, it's important to be careful not to pause the ad directly, as this could affect the performance of the ad group.
Reduce coupons, promotional discounts
Coupons and promotional discounts will also bring a certain amount of traffic to the product, reduce the related coupons, and also prevent Lisitng from selling as usual and entering a state of fast out of stock.
Lower the price
If the seller can replenish new products to the FBA warehouse within 2 weeks, after the replenishment is put on the shelves, while ensuring the profit of the product, the seller can adopt a price reduction strategy, increase the advertising budget, and use this opportunity to sprint high advertising with higher sales. weights and rankings.
2) Listngs that are out of stock for more than 14 days
Rebuild a new listing
The product has been out of stock for too long, and the weight of the product is almost non-existent. There is no need to invest resources to promote the old Lisitng. Create a new Listing and put the replenishment inventory on the new Listing.
Merge old listings with new listings into variants
After the goods arrive at the FBA warehouse, the new and old listings will be merged to obtain new listing traffic, and the original review and QA will be inherited at the same time, and the product may be pushed up again.
How to avoid replenishment risk?
For cross-border sellers, it is also crucial to effectively monitor the stock of goods and demand dynamics, and arrange replenishment in a timely manner to prevent problems before they occur.
1) Daily monitoring of sales and inventory
In the daily operation analysis, the seller should not only pay attention to the daily sales changes and growth, but also pay attention to whether the sales volume is within the established range . In the event of continuous growth, decline, or sudden increase or rapid decline in sales, we must make a response plan and adjust it in time.
In addition to sales, changes in FBA warehouses and local warehouses also need attention, especially when the number of warehouses is large and the sales needs of multiple stores need to be met.
However, manual statistics of sales performance data and inventory status are often time-consuming, and it is difficult to avoid errors in manual statistics .
Sellers can use the early warning function of Linkstar ERP to preset rules in advance to monitor sales, sales, order volume, inventory, etc. Once the preset rules are triggered by sales performance, local inventory, and FBA warehouse inventory, sellers can know the first time , and take appropriate measures.
2) Continuously optimize the ability to improve sales forecast
Before selling each product, sellers can preset the sales situation of the product in advance, monitor the gap between the actual sales situation and the target sales volume, and continuously optimize the sales plan. Ensuring the accuracy of the plan with a large amount of data can also prompt supply chain personnel to support stockpiling and replenishment.
Whether it is out of stock or backlog, it is still a risky thing for sellers. It is the best policy to do a good job in replenishment monitoring and replenishment strategy, follow up in time, and ensure sufficient inventory of goods.