We’ve touched down into everyone’s favorite time of year – summer holiday season.

But amidst the vacays and sunny days, there’s a downside to this period. As you and your buying or merchandising team head to the beach, inventory can get neglected and stockouts become a major risk.

Running out of stock – especially of best-selling items – can damage your reputation, hit your profit and disappoint customers (sometimes causing you to lose them to competitors, forever).

To avoid a summer stockout disaster, it’s vital your people, processes and platforms are working in harmony and set up for success – and we’re here to help.

Work through this handy checklist of tasks to ensure your inventory is kept in check and the risk of stockouts is eliminated this summer…

1. Make sure your data is accurate

Inaccurate data can be a problem, especially if the person you’d turn to for a factcheck is on leave. If you can’t rely on your inventory and sales data, your risk of not ordering enough stock is automatically higher – and so is your risk of ordering too much stock, which can be just as dangerous for your bottom line.

So before you set your out of office, make sure your sales and inventory data is accurate (sadly, this is likely to mean moving away from outdated and notoriously error-prone spreadsheets). Consider investing in a trusted inventory planning tool for support with this.

2. Integrate your platforms

Multiple tools, apps and platforms are necessary to run most modern businesses, but when different people are responsible for monitoring different platforms, and some of those people are on holiday, it can become challenging.

The key to ensuring smooth data flow and consistency is to integrate your tools and platforms directly with your inventory planning software. This can avoid gaps in data and guesswork, which can both lead to stockouts.

Your inventory planning software should be able to offer native integrations so you (and other key members of your team) can gain complete control and consistent visibility, cutting the risk of running out of stock.

3. Stick to one system of record

Just like inaccurate data or unintegrated tools, using multiple sources for your data is a major risk factor for stock outs – especially during the holiday period when key members of your team can be out of the office.

It’s best to stick to one system of record and one source of sales data. Instead, commit to a central source of truth for all your inventory planning, such as Inventory Planner. This will ensure your whole team can access reliable insights they all understand, whenever needed.

4.  Consider better training

Google or Excel spreadsheets that only one person understands are a no-go. Likewise, it’s no use if only one person in the business knows how to place orders with certain suppliers.

Everyone involved with buying or merchandising within your business needs access to the same inventory planning data – and the training required to understand, interpret and act on it. As part of Inventory Planner’s expert-led onboarding process, training can be provided to all necessary staff.

Having informed and well-trained staff who can safely place orders as needed can dramatically reduce the risk of running out of stock over the summer.

5. Re-order in good time

During the summer season, it’s not just your people that might be taking a break – your suppliers might be too. This makes it especially important to place re-orders in good time.

Your inventory planning software should proactively inform you about when you need to re-order stock, but it’s also possible to set reorder points that trigger new POs. Consider extending your supplier lead times by a few days to give yourself a buffer against potential absences. This can easily be tweaked in Inventory Planner.

6. Find OOS (out of stock) patterns

As the saying goes, forewarned is forearmed – and that’s especially true when it comes to avoiding stockouts in the summer break. Your historical sales data can reveal OOS (out of stock) patterns, which can give you clues about when you need to be most alert to the risk of out-of-stocks this year.

However, it’s also important not to be bound to historical trends. The ever-evolving trends of the modern marketplace, especially in this uncertain economy, means what has happened in previous years isn’t necessarily a reliable indicator of what will happen this year. Historical trends are part of the picture – but certainly not all of it.

7. Implement demand forecasting

Reliable demand forecasting is the number one defense against running out of stock. By accurately predicting upcoming demand, you can ensure you always have the optimum inventory levels – avoiding stockouts and overstock.

As a top-rated inventory planning app on Shopify, Inventory Planner reveals which inventory to order, how much to order, and the perfect moment to order it, based on an accurate calculation of how much you will sell that factors in supplier timescales, seasonality and promotions alongside historical sales data. It’s every retailer’s secret weapon for eliminating stockouts – during the summer, and all year round.

8. Keep on eye on market trends

Although you might find yourself slipping into a holiday mindset, pay attention to consumer trends during these summer months. It can help you dodge the risk of stockouts.

The simplest way to achieve this is to ensure you and your whole team have access to the insights and reports created by your inventory planning solution. This can make sure key trend information, like a sudden spike in demand, isn’t missed – and ensure everyone has the information needed to make informed, fast decisions.

Check how many seats you get included with your inventory planning software subscription. At Inventory Planner, there is no limit – which means your whole team can access the information they need to make decisions, even when the ‘usual’ buyer or merchandiser is on a beach somewhere.

Eliminate stockouts the easy way

Book a free demo of Inventory Planner to discover how you can avoid stockouts during the holiday season and beyond.

Remember the early days of the pandemic? The never-before-seen surge in online shopping meant retailers were overwhelmed with demand. Locked down consumers, desperate for a distraction, scrambled for everything from at-home fitness equipment and games consoles to gazebos and scatter cushions – and warehouses were cleared of stock, as supply chains buckled under the extraordinary pressure

Stockouts were disastrous for retailers during the pandemic – up by 250% (Adobe, 2021) – and with 37% of consumers saying they’d simply shop elsewhere if they couldn’t find what they wanted, the general mood was one of impatience. Rather than benefit from the surge, retailers suffered – according to data from our sister company, Brightpearl, almost half (46%) said they experienced stockouts, leading to a loss of sales.

It’s fair to say that most companies who survived these e-commerce waves emerged rattled at best. The lucky ones managed to balance stock levels reactively, replenishing a steady stream of their best-selling products as the orders came in; even successfully growing their business. Most, though, had taken a severe hit to profits, and in what’s called a ‘bullwhip effect’ in supplier circles – ended up over-purchasing a mass of stock as a safety cushion.

FROM STOCKOUT TO OVERSTOCK

When we consider the unpredictability of the last couple of years, overstocking seems a forgivable choice. Worldwide shut-downs made the period where people were stuck indoors, sustained only by a stream of online deliveries, seem like it would never end.

Of course, this level of demand could not be maintained – and in 2022, they have dropped considerably. What no one could have anticipated was the number of coinciding crises that would emerge, sending retailers across the globe into a state of cash flow paralysis.

Among them, a global supply chain crisis – rife with driver shortages and lengthy shipping times, buttressed by a lack of resources and skyrocketing costs brought on by the Ukraine war. High rates of inflation and increased cost-of-living means consumers are buckling down on discretionary purchases and saving their cash for food and gas. Even returns are up – reaching 16.6% in 2021 from 10.6% in 2020 (National Retail Federation).

The result? Retailers who overstocked during the pandemic are now stuck – hoarding a mountain of goods in their warehouses that they can’t shift. With the return on inventory investment slowed, that can damage cash flow predictability.

Unsold stock is another revenue drain that is an absolute killer for cash flow; the other side of the out-of-stock coin. It not only loses firms money, but the cost of stock liquidation delivers a devastating blow to the bottom line that can be lethal for business.

Retail Week recently warned that the post-pandemic problem of excess stock could be the final nail in the coffin for retailers – while other reports describe merchants being overstocked by more than 30% with no space to keep it all.

In the UK, too, one banking source said the 37 listed businesses that make up ‘UK retail plc’ have £2.8bn in excess stock – a major concern when inflation is hitting 30-year highs.

It’s even affecting the US retail giants, with Target recently admitting its plans to ‘right-size its inventory’ by making additional markdowns across the board.

But these reactive, ‘stop-gap’ solutions aren’t viable for all, and are actually making things worse. Six out of ten retailers have put up their prices to cover expenses and make up for losses, whereas 29% are instead choosing to ‘take the hit’ in order to keep their prices stable. In either case nobody wins, as it’s either the retailer or the customer that gets hit in the pocket.

In addition, there are no indicators of when the outlook will change, not with so many global factors at play. In terms of supply chain issues at least, experts have predicted the effects could last well into 2023. This means firms will have months of uncertainty to battle with, alongside a warehouse of overstock trapping their cash; stuck in a tug of war between they can sell and trying to dispose of what they can’t.

It’s clear that this inability to smartly manage stock is a corrosive force on retailers – both in terms of revenue and their long-term viability. The crisis is severe – so much so that 26% of online retailers are only six weeks away from going bust if their cash flow issues don’t improve.

CLEARING THE MIST OVER INVENTORY

These unforeseen circumstances have upped the pressure on retailers, but there are lessons we can learn operationally. The crux of the issue here is a lack of visibility – across inventory planning and purchasing, stock control and supply chain.

Without the ability to target these cash flow blockers lurking in the stockroom; the overstock, the out-of-stocks, and which products are either driving sales or going stale; retail businesses have struggled with intelligently solving their inventory issues. There needs to be a means of laser-focusing on sources of trapped revenue, smartly preparing for unpredictable peaks and valleys in demand, and factoring supply chain issues such as extended lead times, into purchasing decisions.

So what’s the solution? One thing’s for certain – it isn’t in spreadsheets. To calculate something as nuanced as forecasting predictions among so many environmental factors would be almost impossible, not to mention time-consuming.

The key lies in using solutions that drive business intelligence forward, such as inventory planning and demand forecasting software. With it, firms can gain visibility on their inventory, accurately forecast sales and factor in variables such as supplier costs and lead times down to meticulous levels of detail.

We know that access to this data leads to better decision-making and more optimised cash flow – which is essential for survival as we enter a tough recessionary climate.

Manual analysis and guesswork will no longer serve companies in the rapidly shifting e-commerce world. It’ll invariably lead to mountains of excess inventory and many doomed businesses as a result.

New solutions like data-fuelled demand forecasting are needed, to empower retailers to keep a consistent stock of their best-selling items, release their duds, eliminate the risk of overselling, and make informed decisions around purchasing, marketing, pricing and even staffing. Then, they can step off the overstock/stockout see-saw and get back on the ladder towards profitability and growth.

IN CONCLUSION

Drawing consumers back online will be a hardy task, but the multi-faceted disruption to e-commerce makes it vital that retailers do everything possible to take back control of the service they provide. Their long term survival may – and probably will – depend on it.

Are you keeping piles of safety stock in your warehouse? If you’ve been using old methods of stock-keeping for a while, it’s likely you do have a surplus of stock for those ‘just in case’ scenarios when you’re at risk of stockouts – it’s a sensible choice. But did you know that safety stock could be losing you money over time, and that there are better ways to boost cash flow using more intuitive methods of stock replenishment? Read on for the case against traditional safety stock and what you, as a modern retailer, could try instead.

What is safety stock?

A lot of retailers keep safety stock – it’s the extra stock ordered in as a ‘cushion’ to protect you against going out-of-stock at inopportune times. There’s plenty of scenarios in which you may rely on safety stock: after all, suppliers leaving you in the lurch, or an unexpected surge in demand could strike at any time. Rather than be left with shelves empty of your best-sellers, and customers growing increasingly frustrated at not getting what they came for, it’s vital to be prepared with emergency products to keep that all-important cash flow moving.

What are the downfalls of safety stock?

Now that we’ve built up the important purpose of safety stock, let’s discuss the downsides to keeping it. As a modern retailer in today’s rapidly evolving e-commerce climate, keeping a surplus of stock isn’t always in your best interests.

• Safety stock is static. You won’t need the same amount of safety stock in January as you might in May. But if the amount you deem ‘safety stock’ was initially based on guesswork, a period of high sales, a seasonal spike or perhaps very recent sales history, it will stay at that amount  – not fluctuating or diminishing as demand changes or your business grows – unless you repeatedly recalculate it.

This means every single month you’ll be manually assessing how much extra stock you need. On what are you basing the demand? Are you calculating it monthly, or even weekly? Do you have to reassess it every time you make a new purchase order? That’s a lot of time spent in spreadsheets!

• Static, unsold stock is a blocker to cash flow. Keeping extra stock that may have been required at one time, but still isn’t sold months down the line is a blocker to cash flow and will significantly impact your bottom line. It takes up valuable space in your warehouse for months on end and is, in effect, a waste of your money. This especially applies to products that go out of date quickly, such as food products; or items that may go out of style, such as electronics or fashion garments – which may even end up liquidated.

What’s a better solution than keeping safety stock?

When it comes to optimal stock-keeping, the goal is to strike that delicate balance between having enough of your best-sellers to meet demand but not so much that you end up with piles of unsold items taking up space in the warehouse. To forecast this correctly requires in-depth data that zooms right in on your inventory and factors in market fluctuations, seasonality and supplier lead times… but carrying out these calculations manually is time-consuming and repetitive.

With Inventory Planner, there are several intelligent, time-saving ways to ensure you’re ordering in the exact right amount of stock at the right times, effectively eliminating the need for ‘safety stock’ as a concept. Here are just three:

1. Using the ‘days of stock’ method to calculate optimum stock levels

A nifty way to ensure optimal stock levels all year round is to use the ‘days of stock’ function in Inventory Planner. ‘Days of stock’ refers to the number of days you want your next inventory purchase to cover (without out-of-stock days). A regular amount of ‘days of stock’ to purchase for would be 30 days, for example.

By extending your ‘days of stock’ to slightly more than your usual stock cover period, perhaps 5 days more, you’ll receive an optimal amount of inventory – and the number of extra units you require as ‘safety stock’ will dynamically reduce or fluctuate in tandem with your future sales forecasting.

2. Automatic replenishment suggestions

By taking your historic sales data into account as well as numerous factors that may affect demand, Inventory Planner automatically offers replenishment suggestions of all your SKUs – and warns you in advance if you’re about to go out-of-stock on specific items. From these replenishment suggestions, you can directly create a PO, saving you the time and effort of calculating them yourself and ensuring you’re always in stock of the items you sell the most.

3. Full visibility of supplier rules and lead times

Issues with suppliers are one of the leading causes of going unexpectedly out-of-stock; either there’s a pile-up at a port somewhere, container costs have gone up or lead times have extended; and sometimes retailers are none the wiser until their new stock doesn’t show up on time. Inventory Planner offers full visibility of your entire inventory as well as supplier information – so supplier delays, costs, performance and changes of rules can all be factored into what stock you order and when.

Let’s summarise the benefits of using intelligent inventory planning software instead of static safety stock:

• No more time wasted on manual calculations.

Inventory Planner dynamically calculates the optimal number of units for your next purchase based on your data-driven forecasting – automatically covering the need for safety stock without manual calculations.

• Reduces the chance of overstock and out-of-stock.

Your stock is always at its optimum level; that’s exactly enough to cover demand, as well as just enough to cover for emergencies, unexpected sales or supply chain issues.

• An optimized inventory means boosted cash flow.

No more cash trapped in unsold ‘safety stock’, or static items going out of date and liquidated. Instead, dynamic stock levels that keep cash flow moving and boost your bottom line.

If you want to learn more about how Inventory Planner’s data-led forecasting and purchasing recommendations can transform your inventory methods, get an interactive demo today.

This guide was originally compiled as a compliment to Inventory Planner’s presentation as part of the Shopify Compass series on planning for Black Friday / Cyber Monday sales. Click here to learn more about how Inventory Planner helps Shopify merchants forecast customer demand, saving time and money while managing inventory.

Learn More

Forecasting holiday stock needs during a year that has seen spikes, slumps, and no end of complications is no small task. In any year, the fourth quarter provides the bulk of profits for many eCommerce businesses. Plan early to make the most of Black Friday and Cyber Monday sales.

Contents:

I.	Creating a planning calendar
II.	Forecasting fundamentals
III.	How inventory affects your company’s financial health
IV.	How much stock is ‘enough’?
V.	Special forecasting considerations for 2020
VI.	Forecasting for new products
VII.	Prioritizing replenishment
VIII.	Identifying and clearing overstock
IX.	Planning for 2021 including Chinese New Year
X.	Exceptions to the rule

 

I. Creating a planning calendar

August – September

*Products with lead time over 60 days will need to start sooner

1. Create a calendar with key dates.

There may be others that apply to your niche and customer base. To start:

• Thanksgiving
• Black Friday
• Cyber Monday
• Giving Tuesday
• Green Monday
• Free Shipping Day
• Hanukkah (start/end)
• Christmas
• Kwanzaa
• Boxing Day
• New Year’s Eve/Day

Consider shipping cut off dates and add them to your calendar. When is the last day for a customer to order using standard shipping to receive their order by Christmas?If you offer expedited shipping, let customers know those final order dates too.

2. Coordinate which items/categories to emphasize

Work with marketing, merchandizing and other relevant departments in your company to make sure the items purchased fit with customer demand, marketing campaigns and produce desired profit margins. Consider:

• Buying trends from last year. What categories or attributes sold well during the same time last year?
• Trends from non-seasonal sales this year. What hot new trends can you incorporate in your holiday merchandising?
• Are you going to launch new items? Are there holiday-specific items to make available during the fourth quarter?

3. Decide which items are needed and when

Do you need Thanksgiving-related items by Halloween? Are Christmas/Hanukkah items needed by one week or more before Thanksgiving? Add the timing of stock arrival into your planning calendar.

For Inventory Planner merchants, add this info to the Edit Forecast section so that you are purchasing at the right time.

Consider if you should change your typical Days of Stock setting (planning period) for these items. If you typically plan to have enough stock for 21 days but want to cover 45 days of availability for the holidays, then ensure you’re reflecting this in your forecasting.

4. Check with suppliers

Touch base with key vendors to ensure you’re both on the same page for holiday inventory needs.

• Are promotional prices available? Even if discounts are not advertised, it doesn’t hurt to ask!
• Are pre-sale (early order) discounts available?
• Will there be changes to the lead time? Do they anticipate any production delays or backorder issues?
• Will there be changes to shipping time?
• Do they have holiday shutdown dates? Are they open on Black Friday? Between Christmas and New Years? Do they close for other holidays?

5. Plan cash flow

Now that you know when you need to have items available and when to place orders, when you will you need to pay for your purchasing. What are your supplier terms? Are payment terms different for pre-sale items?

To estimate revenue for the current year, consider:

• Expected revenue (based on last year + annual growth rate)
• Seasonal expenses (labor, shipping, warehouse space)

6. Increase lead time and days of stock as needed

Consider if you need to alter your days of stock. For example, if you typically plan to have 14 days of stock on hand, but want to place one order for to last 45 days during the holidays, you’ll need to alter your forecast.

7. Check on health of settings and data for ordering

Clean up your product data and forecasting information. Important items to check include:

• Discontinued items – remove from forecasting view or grouping of products to be replenished
• Set up units of measure (case size), minimum order information and other ordering parameters
• Update costs
• Note discounts
• Input cubic measurements – both for supplier order and for customer order shipments
• Mark items as seasonal as needed. This will reference sales trends from the prior year rather that the last few months.

8. Place orders according to schedule

Now that you’ve created your schedule and adjusted lead time and days of stock, start ordering to coincide with when you will need product.

October

9. Plan for stock audits

Does your warehouse and fulfillment team conduct a full audit of your products? Or do you audit when a stock discrepancy is found?

If you’re conducting a full audit, what is the procedure? How many people are needed? What are key dates when you will audit your stock count?

10. Plan contingency for slow sales during holiday season

Create a contingency plan before Black Friday so that you know what dates you will examine sales. Have a plan of action for which levels of sales volume that will trigger promotions or needed reorders from your suppliers. Make these decisions now so that you can act quickly when needed.

November, December, January

11. Monitor sales at key dates

Using your contingency plan, monitor sales for additional promotions or reorders you will need in order to react to customer demand.

(wait until January if promotions will only happen after the holidays)

II. Forecasting fundamentals

Whether you run an eCommerce site or are stocking a brick and mortar store, inventory forecasting is crucial to the financial success of your business. Too little inventory on hand and you miss out on sales. Too much on your shelves and you’ve tied up cash that could be used to build your business in other ways.

So how do you strike a balance between optimizing stock levels and managing cash flow? Inventory forecasting can be a powerful tool to help you do just that.

What goes into a forecast?

To figure out what inventory you should have on hand, start with a forecast of future sales. Sales for the coming 30, 60 or 90 days are based on past sales velocity and seasonality of products.

For an accurate forecast, consider:

• Sales velocity is the rate of sales omitting stockouts (out of stock days). We use sales velocity rather than average sales over the past 30 days because we want to know the rate of sales if inventory was fully stocked. If you don’t omit days when inventory was out of stock, then you could underestimate future sales.
• Seasonality will inform if the emphasis for past sales should be on the most recent months or should be on trends from 12 months prior.
• Sales trends show if demand is steady or increasing in recent months.

How should you handle seasonal products?

Seasonal products need to be treated differently from other products. A seasonal product is one that sells at a significantly different rate during a particular time of the year. Seasonal products can include items for sale around certain holidays. They can also be items like items in a spring collection or winter sports gear.

Let’s look at an example:

The default forecast projects steady sales from month to month.

The seasonal forecast follows seasonal trends shown the prior year with spikes in sales in December and May.

Unlike other products that sell at a steady rate all year or ones see an increase in sales month over month, seasonal products have different considerations when calculating your forecast. The default sales forecast will emphasize sales in the most recent months, taking into account if sales are increasing, decreasing or holding steady. A forecast for seasonal products references trends from the prior 12 months.

How do you forecast sales for new products?

New products without sales history present a particular challenge to creating a demand forecast. There are two approaches:

Consider trends for other new product launches.

Have other new products increased sales rapidly immediately upon release? Or, is there a period where the new product is marketed to customers and sales increase slower over several weeks or months? Examine the month over month increase for other new products. This approach assumes that similar product launch plans and resources will be invested in the new product.

As an example, previous product launches with gumballs, lollipops and licorice saw strong sales the first two or three months, then a drop off during the following months.

Applying that to our new product in jelly beans, we can estimate that there will be drop in sales after two to three months.

Look to sales trends within the same product category or brand.

Is there a particular type of product that sells well during summer months? Or does one brand attract loyal buyers who will immediately consider a new release.

For example, Jill’s Jelly Beans shows solid sales across all available flavors. When considering Orange as a new flavor release, we can look at the sales velocity of Lemon and Lime flavors to approximate the future sales for Orange Jelly Beans.

Looking at other flavors, we see a pattern of a strong increase in the second month after launch, then a decline followed by another increase. Seeing this pattern in several other launch flavors can inform how the new Orange Jelly Beans will perform.

How do you handle promotions when forecasting?

Your default forecast shows predicted sales continuing on the current demand trend. Promotions should change that trajectory, so how do you handle them when creating a forecast?

Future promotions:

If you are planning a promotion during the forecast period, you will need to increase the forecast. Consider:

• Does the past sales information include previous promotions?
• If so, consider that the sales velocity already includes increased sales due to promotions
• If not, you will need to estimate how much your promotion will increase sales
• Keep in mind cost of lost sales due to stockouts.
• Promotions can lower margins so be use to factor that into your revenue planning.

Past promotions:

If past promotions occurred during the period used to calculate the sales velocity, you may not need to increase the forecast – or not by much.

What is the difference between a forecast and replenishment?

A sales forecast looks at the predicted sales for the next 30 days (or time period of your choosing).

Replenishment is the additional amount of stock needed to cover those sales. Replenishment takes into account:

1. Consideration of current stock levels – How much is already on hand? How much additional product will be needed?
2. Lead time from vendors – how long will it take from placing a purchase order with a supplier until that product is received into inventory?
3. Stock on order – how much product is already ordered from your supplier and is scheduled to arrive during the time period under consideration.

If you are forecasted to sell 300 Lime flavored Jill’s Jelly Beans during the next 30 days, this is the sales forecast. If you have 60 on hand and the lead time is 3 days, the replenishment will be 270. Our sales velocity is 10 per day. My current stock will cover 6 days. Since the lead time is 3 days, we still need to cover 24 days of sales. At 10 per day, that is 240 to cover the remainder of the 30 days.

Are you under or overstocked? How much overstock do you have?

Wondering if you have more stock than you’ll need for the next 30 days? Or maybe you know you have too much – and you’re wondering how much overstock you have on hand? We can use the forecast to figure out how much stock should be on hand.

First, determine how many days of stock you want to have on hand. Days of stock are the number of days you want to cover with inventory stocked in your store or warehouse. Some considerations when determining your days of stock include:

• Lead time – how long will it take to receive products from your supplier? If you have a short lead time, you could also have shorter days of stock. However, if it takes 90 days to receive a new order from your vendor, you will want longer days of stock. Consider that days of stock is approximately equal to how often you will need to place an order. You wouldn’t want to place an order every 14 days if it takes 90 days to get to you, leaving you with multiple orders in transit.
• What is the cost of being out of stock? That is, how much does each lost sale cost you? If an average day out of stock would cost you $10,000, you may want to have more stock on hand than if each stockout would cost you $100. To determine the cost of being out of stock for a day multiply your sales velocity per day times the retail cost of your product.

Now divide your stock by your sales velocity per day. Subtract that number from your targeted days of stock and that will give you how many days you are under- or overstocked.

For example: You have 1000 candy bars in stock. Inventory should cover 30 days of sale and you sell 10 per day.

Now you know how many days of overstock you have based on the current sales velocity.

 

III. How inventory affects your company’s financial health

The finances of your inventory depend on each business, but with three metrics – margins, understock, and overstock – you will be able to determine where you need to have your inventory to optimize your profit and invest those profits back into your business.

Margins

Profit divided by revenue will show you your margins. Of course you, as a merchant, must cover the cost price (what you pay your vendor). But you must also have enough margin to pay for the rest of your overhead costs including salaries, rent, marketing and other expenses.

How do you calculate this? Consider non-inventory expenses and ensure you are building in enough margins so that you are able to cover that as well. Those expenses include the rest of your overhead, and part of that function is volume. However, if you don’t have sufficient margins, no amount of volume is going to save your business. Take a total-business look at fixed and variable costs. How much do you really need to cover? What are appropriate margins?

Understock

Understock and stockouts are dangerous to your inventory financial health. Look at your replenishment needs. You are missing out on sales when you are understocked or have stockouts. One key metrics to consider is forecast lost profit (stockouts during the lead time multiplied by profit). What are you missing out on in terms of profit?

Lead time is how long it takes to get your merchandise once you place the PO. That is the very quickest time you can get the items in. You are losing out on revenue for every day you have a stockout.

You can also look at replenishment retail value. What is the revenue you can bring in based on the forecasted replenishment needs? For all these units forecasted in order to meet demand, take replenishment times price to get the replenishment retail value. That is another way to look at future revenue you can get in for these items if you order them.

When deciding what items to replenish, consider using an ABC class analysis of recent sales. That looks at each variant or product’s contribution to your revenue over the last thirty days. Alternatively, you could calculate the contribution to your profit instead of your revenue to maximize your return on investment.

To calculate the contribution of each variant to your total revenue, divide the variant revenue by the total revenue. Then sort variant contributions from highest to lowest. Finally, create a running total or cumulative sum of the variant contribution.

The variants contributing to 80% of your revenue are considered A class items. The next 15% of variants are B class, and the final 5% are C class items.

The highest priority is keeping A class items in stock when determining replenishment priority because that is what is delivering revenue. Then determine if C class items are worth the investment. Alternatively, you could potentially eliminate C class items since they contribute the least amount to your overall revenue. The cost (fixed and variable including time to maintain inventory levels and storage costs) may outweigh the contribution of C class products to the revenue.

Overstock

Look at your planning period (lead time plus days of stock). What will you have on hand past that date? This is your money sitting on a warehouse shelf. Items in stock beyond your planning period are tying up capital that could be generating a better return on investment elsewhere – that could be used buying different inventory, or it could be in another area of your business such as advertising.

Here are the number of units and their retail value. Keep in mind overstock retail is going to be the full retail value of your overstocked units. There is a high probability that you could discount this amount.

Look at how steep your discount is going to be. If your brand proposition is quality, then you should consider shallower discounts. If you want to move through quantity, then you can do steeper discounts so you are not sitting on that inventory any longer than you really need to. Think about your overall brand value as you are discounting. There are a variety of approaches you can take to move out overstocked inventory.

 

IV. How much stock is ‘enough’?

A crucial concern when optimizing your inventory is determining how much stock to hold. Generally speaking, we know that overstock means cash is sitting on the shelves when we could be using it elsewhere, and understock means we’re missing out on sales. But what is the right amount of stock to have on hand? What is ‘enough’? Here are key considerations for determining how much stock to have on hand for your business.

Risk tolerance

Consider your risk tolerance as it relates to stockouts (running out of inventory). Is it most important for you to be in stock at all times? Is reliability and availability part of your value proposition to customers? If so, you are more likely to be overstocked as part of building in a buffer for supply chain issues that can come up.

Or, is it more important to tightly manage cash flow so that you don’t have too much capital tied up in inventory? If cash flow is your paramount concern, then figure into your consideration the cost of lost sales due to stockouts. You may find the opportunity cost of using cash elsewhere in your business outweighs occasional lost sales.

Using inventory forecasting and demand planning, you can forecast the cost of lost sales per item per day. Look at the margin of each product to determine your forecasted lost profit. That will help to determine if spending money on inventory is your highest priority – or if that capital is better spent elsewhere in your business.

Stock cover

How long would you like your stock to last? Another way to think of this is, how often do you want to reorder inventory? Stock cover (also known as days of stock) is the length of time that your current inventory will last based on the sales velocity for that item. Sales velocity is calculated as units sold divided by days in stock.

Note that sales velocity is different than average sales because it takes into consideration days when the item is in stock. If an item is out of stock and therefore as no sales, then figuring sales velocity is more accurate. Using average sales can lead to under-forecasting…which leads to more stockouts. Break the cycle – use sales velocity instead of average sales for forecasting calculations!

Like risk tolerance, determining your ideal days of stock depends in part on your priorities. If cash flow is your primary priority, then you want to know how quickly you can turn new inventory into sales which can then be reinvested into more inventory. Knowing your sales velocity, how quickly can take $10,000 worth of inventory and sell it for $20,000? Does it take 7 days? 30 days? 90 days? The longer it takes to produce a return on your initial investment, consider the opportunity cost of using your capital to buy inventory. What could you do with $10,000 worth of inventory that will take 90 days to sell? Is there a different product that you could make $20,000 on quicker?

Vendor considerations

Supplier conditions may also play a role in determining your ideal level of stock on hand. Is there a minimum order quantity (MOQ) or minimum budget you need to meet when placing an order? If there is an MOQ, then you may be forced to purchase 90 days of stock when you would ideally like to store only enough inventory to cover 30 days.

Another vendor-related factor that may influence your decision is how quickly can your vendor produce new items? Are you ordering custom items with a long lead time? Your forecasting should consider your lead time so that you place purchase orders in time to avoid stockouts.

What about product-related costs like shipping, taxes, and duties? These expenses should figure into your calculations for how much inventory to order each time. Consider products with very low shipping costs. You may able to order those items more frequently. Conversely, if high shipping costs add significantly to your product costs, then you should explore what you can do to lower the impact of those costs. Is it less expensive to ship one large order rather than several smaller orders?

Not all products are equal

Not all products in your store need to have the same priority for replenishment. Consider using an ABC class analysis of recent sales. An ABC class analysis looks at each variant or product’s contribution to your revenue over the last 30 days. Alternatively, you could calculate the contribution to your profit instead of your revenue to maximize your return on investment.

To calculate the contribution of each variant to your total revenue, divide the variant revenue by the total revenue.

Variant contribution = variant revenue / total revenue

Then sort variant contributions from highest to lowest.

Finally, create a running total or cumulative sum of the variant contribution.

The variants contributing to 80% of your revenue are considered A class items. The next 15% of variants are B class, and the final 5% are C class items.

When determining replenishment priority, you can prioritize A class items so that you do not run out of stock and ensure that you replenish those items first. Remember, this will involve some level of overstock that goes beyond your ideal days of stock. B class items have next priority where you do not carry as much overstock. C class items could be items where you tolerate occasional stockouts – or even eliminate these items since they contribute the least amount to your overall revenue.

Not all locations are equal

If you’re using a third-party logistics (3PL) company to manage your fulfillment or if you’re selling on Amazon (Fulfillment by Amazon – FBA), then you can clearly see the cost of storing your inventory over time. Click here to see updated FBA fee schedules. Similarly, 3PLs often charge based on how much space inventory takes up in their warehouses, and can add a long-term storage fee if items are around for too long.

Even if you’re handling fulfillment in-house, there is a real cost to storing your inventory. When managing multiple warehouses, look at each location or selling channel (as with FBA) to analyze the associated storage fees. Figuring in each location’s storage fees can help to show where you’re adding costs that may eat into your margins.

 

Special forecasting considerations for this year

Cash flow is always top of mind and never more than now. Here are some tips.

1. Reevaluate your forecasting method. If you normally reference two years of sales history to calculate the sales velocity of an item, it’s worth looking at a much shorter time period. Daily habits are changing for most consumers.
   Tip:For Inventory Planner users, this means changing to the ‘Last Sales’ forecasting method.
2. Keep in mind when using a short sales history calculating the forecast, this can be very volatile. Each day’s sales will have a large effect on the calculation.
3. As always, keep in mind when you’ve been in stock and out of stock. When possible calculate the sales velocity only using in stock days. This will make a huge difference in your forecasted demand if you’ve had stockouts. Read more here about how stockouts affect a forecast. The goal: How much do customers want when this item is available?
4. If your revenue is dropping and cash flow is tight, prioritize your ordering/replenishment needs. What items have the highest ROI? Metrics to watch: forecast lost profit, replenishment profit, and replenishment retail. Here’s more detail about replenishment metrics to watch and how to calculate them.
5. Another option: ABC Analysis. This identifies what contributes the most to your profits. The top 80% of revenue comes from A Class, the next 15% from B Class, and the final 5% from C Class. Here’s how to calculate your ABC Analysis.
6. If you stock multiple warehouses or locations, consider the needs of each one, not just your company’s aggregated inventory demand. Each location has its own personality – different things sell at different rates in each location. Here is more information about forecasting for multiple warehouses or locations.
7. Consider reducing your Days of Stock (AKA ideal stock cover). Inventory sitting on your warehouse shelves is money you can’t use elsewhere in your business. Especially while things are changing quickly, focus on small orders to vendors made frequently.
8. Talk to your suppliers to see if they can lower minimum order quantities. Vendors are likely struggling too and a small order is better than no order (not the case 100% of the time, but worth having the conversation).
9. Check with suppliers to see if lead times have changed. Suppliers in many countries may be facing labor shortages or dealing with other limits on production. (While checking in, be sure to ask how they’re coping with the outbreak.)
10. Shipping times are slow and they will only get slower during the holidays. Carefully consider shipping cut off dates this year to allow for this.
11. Plan inventory ordering ahead of time to allow for additional shipping time, especially when sourcing overseas.
12. Prime Day is moving from its traditional date in July to October in 2020. Review sales data in 2019 to see what increase in demand you saw in July. Even merchants not selling on Amazon can see a bump in sales during this time, so it is worth checking. Use Prime Day to test marketing and up-selling strategies that you can use during the holidays.
13. Were you out of stock during the last few months during a spike in demand?
14. What is the trend since lockdown? Many saw a spike in April/May and demand dropped in July.
15. Trends: look at year over year and recent trends. Look at recent trends first. Then see what typically happens inNovember and December compared to the rest of the year.
16. How can you plan for higher traffic due to the lack of in-person sales events happening at big box stores?
17. Are there special inventory/shipment restrictions at my warehouse, 3PL, or Amazon warehouse?
18. Are there penalties for keeping current overstock at your warehouse, 3PL, or Amazon warehouse?

Bonus:Check shipping carrier data and delays complied by ShipBob.

 

VI. Forecasting for new products

Keeping your product catalog fresh can be an important part of bringing customers back for repeat purchases. Few things are more exciting than bringing new inventory into your catalog.

How will customers react to new products? How can you tell if they are selling well enough?

Short of consulting a crystal ball, it can be a mystery to figure out how much to order without prior sales history. Here are some key points of data to use as a guide for placing your initial order.

Look at other new product launches

Consider what you have done in the past since this is the most readily available data. Have other new products increased sales quickly upon release? Or does it take your customers weeks or months to warm up to a new product? Examine the month-over-month increase for previously launched products, assuming similar launch resources and plans are being invested in this new product.

As an example, previous product launches with sundresses, maxi skirts, and swimsuit coverups saw strong sales in the first six weeks, then a drop-off during the following months.

Applying that to our new styles of beach-ready summer dresses, we can estimate there will be a drop in sales after six weeks.

Look at trends within the same category or brand

Look at products with similar attributes to your new line. This could include category, collection, brand or vendor.

For example, Cora’s Candles show solid sales across all available scents. When considering Gingerbread as a new scent release, we can look at the sales velocity of Christmas Tree and Spiced Cider flavors to approximate the future sales for the Gingerbread candle.

Looking at other scents, we see a pattern of a strong increase in the second and third months after launch. Seeing this pattern in several other launch scents can inform you how the new Gingerbread candle might perform.

History of the option sets

Option sets are different colors, sizes, or flavors of the same item. For example, when you look at t-shirts, you can look at the history of the different sizes (small, medium, large, etc.). The proportions each size sells at will guide your initial order of the new t-shirt. If you sell 25% size small, 50% mediums, and 25% larges, use this distribution when determining sizes of the new style to order.

Merging sales history of similar products

Merging sales history is ideal when you have an old product being phased out and a new product coming in that is very similar. Link the sales history to the new product so that even though you don’t have any sales history, you have a good idea how it is going to sell based on the old one.

An example here is a food item selling in a 2 oz. size and being replaced with a 2.1 oz. size. Merge the sales history so you can see how the 2.1 oz. will perform based on how the 2 oz. size sold. The change in size is not significant enough that we expect a change in the rate of sales.

How to handle seasonal product with a short sales history

Top-down forecasting uses sales trends for categories and forecasts the future sales based on the product contribution to the category.

Seasonal forecasting references what happens 12 months ago. If you look ahead to how a product sells in August 2019, you must look at how it sold in August 2018 and even August 2017. When you have seasonal items with less than 12 months of sales history, consider using top-down forecasting.

If an item has only been for sale this summer, you must use top-down forecasting because we know this category is seasonal. Take sunglasses: They tend to sell better in the summer, not the winter. Use that seasonal trend.

Once you have a little sales history, you know a particular sunglasses style contributes to 2% of the unit sales. Tack that 2% to the seasonal wave. As the category dips in the winter, you are looking at 2% of that lower number will be forecasted to your new seasonal product with only a little sales history.

 

VII. Prioritizing replenishment

With so much data available, it can be difficult to figure out where to start when prioritizing what you need to order based on customer demand. Keep in mind that not all of your inventory and not all of your replenishment needs are going to be the same.

Take a look at a couple of different metrics:

Forecast lost profit

How much will you miss out on if you don’t order these items? That can help to put things in perspective. If you’re going to miss out on $100, $200, maybe that’s just low priority. It’s not worth your time to go through replenishing those items. If you’re going to miss out on much larger amounts, then that is worth your time and that’s a much higher priority. That can also help if you’re strapped for cash or you’re thinking about cashflow needs, you can really figure out, “What do we need most urgently and what can we wait on?”

Forecast lost profit is calculated as stockouts during the lead time * (price – cost price)

Stockouts are the days when a product is out of stock.

The forecast is the projected customer demand shows as sales in units for the “days of stock” period. The forecast is calculated using the sales velocity and the sales trends in recent months (are sales increasing or decreasing?). Sales velocity is the rate of sales excluding out of stock days. Seasonal products emphasize the sales trends from the prior year rather than the most recent months.

Replenishment retail value

What does the retail value, the revenue that you’re going to bring in when you replenish the items that you need? Even better yet, look at your replenishment profit. How much are you really going to make once you take out your expenses based on the number of items that you’re ordering?

Replenishment retail is the replenishment * price.

The retail value of products to cover the “days of stock” period. Retail price is the price the customer will pay.

Replenishment profit is the replenishment * (price – cost).

The expected profit of products needed to cover the “days of stock” period.

Determining ABC Classes

To calculate the contribution of each variant to your total revenue, divide the variant revenue by the total revenue.

Variant contribution = variant revenue / total revenue

Then sort variant contributions from highest to lowest.

Finally, create a running total or cumulative sum of the variant contribution.

The variants contributing to 80% of your revenue are considered A class items. The next 15% of variants are B class, and the final 5% are C class items. You can change those figures if you want, but for our purposes, we are sticking with the 80/20 rule.

You can prioritize A class items when determining replenishment priority so that you do not run out of stock and ensure that you replenish those items first. Remember, this might involve some level of overstock that goes beyond your ideal days of stock. This will act as a buffer to deal with any supply chain issues that might arise. B class items have next priority where you do not carry as much overstock. C class items could be items where you tolerate occasional stockouts—or even eliminate these items since they contribute the least amount to bottom line.

 

VIII. Identifying and clearing overstock

Optimizing your stock levels requires paying attention to both understock and overstock. Once you forecast customer demand and ensure that you have enough stock on hand to meet upcoming sales, the next step is to clear out overstocked inventory. Liquidating excess stock generates cash that you can invest elsewhere in your business including marketing and inventory with a higher turnover rate.

 

There are a variety of ways to sell off overstock, but one of the quickest ways is to sell in bulk. Here are some time-tested tips to help you move out overstock as quickly as possible.

 

1. Experiment with bulk options to see what works for your customer base. Try different selling options. Check sales history to see how many customers are buying in a single order now. Add options at and above the average. People like to choose the middle option. By presenting larger options, you’re giving customers the opportunity to buy more at a better value. Customers who choose larger options are a bonus and bring up your average order value.
2. Don’t overwhelm customers with too many options. Inundating customers leads to decision paralysis and then they bounce from your site. Pare down options to see if it increases conversion rates. It sounds counterintuitive that buying will increase with fewer options – but this works!
3. Factor in the marginal cost of shipping larger quantities. With many (most? nearly all?) eCommerce companies providing free shipping, think about how your cost per order drops when you are shipping one large order to a customer instead of two smaller orders on two different dates. The cost of one large shipment is lower than the cost of two smaller shipments. What can you do to incentivize them to purchase in bulk and increase the size of their cart?
4. For brands that do not want to have a race to the bottom in terms of pricing, think about how to reframe the discount of bulk pricing to add value to your brand. For example, if a customer buys 50 units, provide them a voucher for $5 toward their next order. This method helps to encourage users to come back and become frequent shoppers.
5. Most importantly, A/B test to find what works for your customer base. Every business has to find the right fit that works for their customers. What works for one business may not work for the next. Try out different approaches – number of options, higher quantity options – to pin down what works for your customers.

 

Bonus:Clearing overstock after the holidays

If you do have stock leftover after the holidays there is still plenty you can do to focus on moving out underperforming and seasonal products. Here are some ideas to take into consideration for clearing out overstock that will appeal to online consumers:

1. Encourage buying in bulk

Who doesn’t love a good deal? Offer discounts of 5-15% to customers who buy overstocked items. These transactions can have multiple overstocked products per sale.

2. Sell at a discount

How quickly does the merchandise need to be sold? The higher the discount, the quicker the item will sell. Flash sales not only create a sense of urgency, but they can also be tailored to very specific merchandise. You can also generate flash sales based on customers’ browsing history.

3. Bundling

This is a chance to think outside the shopping cart. Are there underperforming items in stock? Bundle them with bestsellers to increase average cart size and reduce overstock. Get creative with the packages that you offer.

4. Promotional gifts

Using excess stock as promotional gifts rather than discounts emphasizes quality over quantity. Do you have a high-value, low-costquality item that you have in bulk? Consider this as an option.

5. Offer free shipping

A Wharton School of Business survey showed that a free shipping offer of $6.99 appeals more to customers than a discount that cuts the purchase price by ten dollars. (http://knowledge.wharton.upenn.edu/article/how-the-offer-of-free-shipping-affects-on-line-shopping/) Never underestimate the power of free shipping! Why do you think Amazon Prime as taken the world by storm?

6. Return to the vendor

Whether asking for a refund, direct exchange, buy-back, or credit, this is not a guarantee, but it is certainly worth investigating! Even if the vendor will not negotiate, you can always find a jobber (a small-scale wholeseller) to take the inventory off your hands.

7. Donate

Check with your tax professional about the new 2018 tax laws that went into effect in the United States, which makes the standard deduction larger than in previous years. Take into consideration the donation value and what time of year it was given, but this can turn into marvelous marketing and PR for your company.

Even if you are left with excess inventory in the first quarter, there are still many ways to reduce that inventory to produce cash for use elsewhere in your business.

 

IX. Planning for next year including Chinese New Year

Merchants who order inventory from China must understand patience and planning are vital when preparing for the Chinese New Year (CNY). What is the best way to ensure there is enough inventory to avoid overstock during this fifteen-day holiday, one of the most celebrated festivals on the planet?

Before we can worry about stockouts, it is important to understand the timeline of the CNY, because it is different from the Western holidays of Christmas and January 1st. The date of the CNY changes based on the lunar cycle, and can occur any day between January 21 and February 20. It is typically the second new moon of the winter solstice.

Many workers take the week before the New Year off, and depending on the supplier they work for and the part of the country they are located in, they will not return to the production line until two or three weeks after the CNY.

That is nearly an entire month of production lost. So what can vendors do ensure there will not be overstock during the long holiday?

Just as with the holiday season in November and December, careful planning and good communication are essential to avoid overstock. Consider the following steps to take to prevent stockouts during CNY.

Use demand forecasting. Pay attention to lead time and days of stock in sales forecasting. It will be important to increase the days of stock. For example, you normally have 14 days of stock of a particular item on hand based on sales velocity. Obviously 14 days will not carry you through CNY. If you know the manufacturer shuts down for 30 days, increase days of stock to 30 for the four weeks they are closed because you cannot order during that time.

Don’t forget shipping times. Vendors must factor in shipping times after CNY. Items could be held up on either side of the ocean. Going back to our previous example, vendors should consider carrying 30 days of stock plus 7 days of freight for a total of 37 days of stock. You can go back to regular stock levels after CNY, but check with manufacturer to see if their lead time is increasing to produce with their backlog.

Ask lots of questions. Your liaison with your supplier is your first line of defense when planning for CNY. Here is a list of questions to ask them before businesses close in China for CNY:

1. How long will you be closed? Each supplier will be closed for different lengths of time. Carefully note which suppliers will be closed for up to four weeks, and plan accordingly.

 

1. How much notice do you need for orders? Ask when you can place your last orders. Don’t expect many orders to be filled in January. Any last-minute orders you place after Christmas or in January will not be filled until February or, more likely, March. Keep in mind that your suppliers fill orders for other vendors, so this is really a crunch time for everybody.

 

1. When do you expect production to pick back up? It is helpful to know when production will start, when they back orders will be filled, and when they expect to be back at full production. Ask if you can reserve extra manufacturing time to avoid stockouts. This will make for better planning on your end, even if there are additional costs involved.

 

1. Will staff be on hand to answer questions if I need help? While production workers will certainly be gone for a minimum of three weeks, can you work with the sales, engineering, or administrative branches of the company? They are less likely to be gone for the entire duration of the holiday. Will they be answering communication at all during the holiday? Is so, when?

 

1. Do you have stock on hand in case of emergencies? Even the best laid plans can go awry, no matter how carefully you plan. What then? If you have a product that is particularly in demand, your supplier may have inventory they can ship via freight or by air should an emergency arise.

 

1. How long is shipping time? Much of the transportation network will also be shut down at CNY. Expect a backlog in shipping right after the holiday. Can your liaison tell you how long it will take to ship stock after CNY? Can they give you a timeline of when they expect shipping to resume normally?

 

1. Will there be a backlog at customs? How long will it take the first products to reach my country? Expect bottlenecks on both sides of the ocean, especially items leaving China. While it may be difficult to predict exactly how long it will take for your inventory to clear customs in China, your supplier liaison will have the best time estimate available to you. Use them as a valuable resource, and remember the lead time it takes for shipping. If not a problem, keep the regular lead time and go back to regular days of stock merchant was using before.

 

Open and honest conversation between merchants and manufacturers is paramount. Keep in mind many factories will be closed between two and four weeks. Use inventory software and demand forecasting to analyze such things as days in stock and sales velocity. Increase days of stock to avoid stockouts, and remember to have enough inventory for the CNY holidays closed plus shipping time.

 

X. Exceptions to the rule

There are exceptions to every rule, and sales forecasting is no different. We;ve gone into depth about the exceptions that may come up and the best ways to deal with them in our article on inventory planning exceptions.

This guide was originally compiled as a compliment to Inventory Planner’s presentation as part of the Shopify Compass series on planning for Black Friday / Cyber Monday sales. Click here to learn more about how Inventory Planner helps Shopify merchants forecast customer demand, saving time and money while managing inventory. 

You sell the same item on two different platforms, but you’ve used two different SKUs to list it on each platform. Is there a way to combine these?

Yes, there is!

There are three scenarios where it is helpful to link and merge data across different platforms:

• Sales data. You want to see trends across platforms to know if something is increasing or decreasing in sales, or even selling out.
• Introducing new products. You can’t forecast if you don’t have any data, but linking similar items can give you an idea of how your new product might perform.
• For ordering purposes. You want to know the total demand across platforms so that you can place one order for everything needed to sell on Amazon and Shopify.

Linking will help you with your combined warehouse data, for example if you sell on Amazon and Shopify. You can see total sales and other performance metrics, revenue, how the variants are selling. Inventory Planner has a feature that allows you to link the same variants. Even if you use different SKUs, they can be manually linked with a master SKU to combine your Shopify and Amazon inventory.

You merge data when you have an old product with a lot of sales history which is being discontinued, but have a new product that you think will perform similarly. An example would be a perfume bottle being sold in a 2-ounce bottle and being replaced with a 2.1-ounce bottle. Because these products are so similar, you can merge the data to make sales forecasts.

How to set-up ‘linked variants’

To link variants across connections it is necessary to assign a unique ‘master SKU’ for variants in each connection. This can be done in two ways:

1. Manually Assign Master SKU 

– from the Replenishment screen by clicking Details (the “i” icon):

> Merged Variants > Manual Link Variants

Or you can…

2. Import the master SKUs

– from a CSV. To do this from Replenishment, click on Import at the bottom of the screen then Master SKUs. You will need to import a CSV for each platform (ie, one import for Amazon, one import for Shopify).

The import will need two columns with column titles: The master SKU you are assigning, and the SKU from your connected platform. As an alternative to your platform’s SKU, you can use the product title, barcode, or ASIN.

Connect your first CSV by clicking on ‘select file’.

Use the dropdown options for each field to make sure the correct information is matched. Use the field ‘Select variants source connection’ to indicate which platform uses the SKUs in your spreadsheet. If you are importing SKU information that corresponds to Shopify, select Shopify in this dropdown.

Finally, click Upload.

You will then see the results of your import including information successfully imported and any errors with details.

Click on ‘Download all errors as CSV’ to see issues that need to be corrected. The number in the ‘Line’ column indicates the row in your spreadsheet where the error occurred.

Repeat the process with additional platforms using SKUs that you need to match. After the second import, the two platform SKUs will be matched using the master SKU you have assigned.