Protecting Your Inventory During Promotions

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Introduction

One of the best ways to get your product ranked fast on Amazon is to run a promotion and give your product away for a very deep discount. This works extremely well, but there is a danger that is not often discussed.

Amazon’s coupon system does not have the capability of specifying how many total redemptions of the coupon to allow. It does let you to limit the number of times each customer can use the coupon, but there is no way to set a maximum number of total redemptions.

This means that if someone you give the coupon to shares it on a popular deal site, such as SlickDeals.com. you might have hundreds, or thousands of people use that coupon in a very short period of time. This may wipe out your entire inventory at a loss.

While “going viral” can be good. but in this case. it might not be good… and in fact it can be quite costly.

This guide will walk you through a process we have just discovered to protect your inventory from such “viral events” and sell only the number of units you want to sell at a discount.

Protecting Your Inventory

Although Amazon does not give you a direct way to limit the number of times a coupon can be redeemed. you can control available inventory using a method that involves “reserving” your FBA inventory. and releasing units into the fulfillable pool at will.

You need to follow these Instructions very carefully, because If you miss a step or do this wrong, it may end up costing you a lot of money!

The process uses a feature called Multi-Channel Fulfillment. This is a benefit of using FBA that most people do not realize is available. Most people think that FBA is only a way to have Amazon handle logistics (warehousing. order fulfillment. etc) for sales made on amazon.com. This is not the case. Amazon’s FBA service can provide logistics and fulfillment for sales made anywhere. 

If you have a website where you sell your product. when a customer orders from your site. you can upload. or manually enter. the order information into Seller Central and have Amazon ship the product to that customer on your behalf.

This is the capability we are going to leverage. with a slight twist.

When entering a fulfillment order in Seller Central to have Amazon fulfill via FBA. there is an option to have Amazon not actually ship immediately. but instead to have the order “held” for up to two weeks. This is usually used when a customer makes a payment in a form that needs to be verified. such as a check. or eCheck. It allows you to sell outside of Amazon. collect the payment. and then “reserve” the specific number of units sold until you verify the payment.

Then, when the customer’s payment has cleared, you tell Amazon it is OK to ship. This is the “intent” of this feature.

Of course, for our purposes there is no “payment to be verified” or anything like that. That is just the “intent” Amazon had when they created this feature, which we are going to leverage differently.

The key for us is that when we enter a fulfillment order and have Amazon “hold” that order, it removes the number of units in that order from our available FBA inventory. They will keep these units “held” until we either: a) tell them to ship them; b) cancel the order; c) two weeks have gone by and we have not done anything with that order.

After two weeks, if we have not done anything with that fulfillment order, Amazon automatically cancels the order and puts those held units back into the fulfillable FBA inventory.

If you are confused in any way, don’t worry, I will cover the exact steps and guide you through this process in detail shortly. For now, I just want you to have an idea of why we will use this feature to help us protect our inventory.

Imagine you have 1,000 units of your new product in inventory and you want to jump start your rankings with a high volume of sales, and to do this you will setup some kind of campaign to give away your product for 99% off the normal purchase price.

If you simply do nothing but promote the coupon code and someone posts the code on a popular deal site, those 1,000 units can be gone in a matter of minutes and you are out of inventory and lost a lot of money on all those 1,000 sales!

Now, with the method we are teaching you about here, what you will do is decide how many units you want to sell per day during your promotion, and you will reserve the remaining inventory, using the method taught in this report, so that if your coupon goes viral, once the number units you want to sell have been sold, you will artificially “run out of inventory,” because the other units are “reserved” and are not fulfillable by FBA.

Let’s say that in our example above, we want to sell 100 units during our promotional period. Since we have 1,000 units in stock, we will reserve 900 units using our method, which means from an Amazon perspective, there are only 100 units in stock (the other 900 are reserved to be shipped via your “held up” order). Once you sell out of the 100 units, you can simply cancel your “held” order and the other and the 900 units go back into your Amazon fulfillable inventory within minutes. This gives you a chance to watch how a promotion is going, and perhaps cancel a coupon code without risking your inventory. Brilliant, isn’t it?

That is the background and high level overview of what you will do and how that will protect your inventory from potential viral promotions. Now let’s get to the step-by-step process.

Step-by-Step Process for Protecting Your Inventory

You need to follow these instructions very carefully, because if you miss a step or do this wrong, it may end up costing you a lot of money! You have been warned!

The biggest mistake you can make is forget to actually set the status of your order to “Hold for Two Weeks.” If you forget to set this, Amazon will actually ship those units out to you, and you will be paying the shipping charges… so once again… MAKE SURE YOU FOLLOW THE PROCESS AND VERIFY EVERYTHING AT EACH STEP BEFORE PROCEEDING.

Step 1. Login to your Seller Central account and click on “Inventory => Manage Inventory”

Step 2. Click on the “Actions” link next to the product you want to protect, then click on “Create Fulfillment Order”

Step 3. In the Provide Details screen, fill in all the required fields: Full Name, Address Linel, City, State/Region, Postal Code. Do NOT leave this screen yet. After entering this information, go to Step 4.

Note: This must be a valid address in the US. If you live in the US, you can just use your own name and address. Otherwise, find any name and address to use. Don’t worry, nothing will be shipped if you follow these instructions carefully. You just need to enter a name and a valid address to proceed.

Step 4. On the same screen (Provide Details screen), on the bottom right, you will need to enter the number of units “Ordered.” This is the number of units you want to “reserve” and make unavailable from your FBA inventory. See note below.

Note: Instead of reserving all the units you want to protect at once, you should determine the number of units you would like to release per day during a promotion, then create multiple reservations for that number of units. This will make the process of “releasing” held units back into inventory as simple as canceling one of these held-up orders (we will cover this later). For example, if you have 1,000 units in stock and would like to release 100 units per day for potential viral promotions, then you would reserve 100 units in this step, and repeat the process a total of 8 additional times, which will reserve a total of 900 units and allow 100 units to remain in your FBA Fulfillable inventory. There is a reason “editing” an order will not work for our purposes and why you must “cancel” a held order in order to release inventory. I will explain this later.

Once you are done, click “Continue”

Step 5. On the “Review & Place Order” screen, make sure you select “Hold this inventory for up to 2 weeks.”

Note: This is a CRITICAL step. Make 100% sure you have selected this option, or Amazon will actually ship this inventory to the address provided and charge you FBA and shipping fees, which can be quite costly. You have been warned!

Once you have verified you set the order to be held, click the “Place Order” button on the bottom right side of the screen.

Then, if you did this correctly, you should see a message on the next screen telling you that your inventory was successfully placed on hold until the specified date.

Within 15 minutes of so, the number of units you chose to “hold” will be removed from your FBA Fulfillable Inventory and shown in the FBA Reserved inventory on the “Inventory => Manage FBA Inventory” screen.

Note: In some occasions it takes longer than 15 minutes to show these changes in the inventory screen, be patient and check again in a few minutes.

This is all there is to protecting your inventory. Repeat the process to enter as many of these “on hold” orders as you wish in order to protect all the inventory you do not want sold during a promotion.

Always remember to double and triple check that you have indeed selected the option to “HOLD” the order for two weeks. If you forget this option, Amazon will ship all of those units and charge you for FBA and shipping fees. This is an expensive mistake you do not want to make!

Next you need to learn how to make these units available in your Fulfillable inventory again when you are ready to do so.

Releasing Units Back Into Your FBA Inventory

Placing your “held” units back into your FBA Fulfillable inventory is very simple. You will just need to cancel the “held up” order (or orders) you created.

Note: Remember, if you do nothing, the held order will automatically expire in two weeks and the held units will automatically be placed back into your FBA inventory. If you want to hold inventory for longer, you will need to create new “hold” orders.

In order to cancel a held order and release your inventory, follow these steps:

Step 1. In your Seller Central Account, click on “Orders => Manage Orders” Step 2. On the Manage Orders screen, click on the “Advanced Search” link.

Step 3. Select “30 Days” in the “Pre-Selected” Orders Placed pull-down, then select “Non-Amazon” for the Sales Channel, and click the “Search” button.

Step 4. You will now see all the “held” orders you created and any other orders you might have manually created within 30 days. The order details will look “greyed out,” and this is normal. However, the order number is a clickable link. Go ahead and click the order number for the order you want to cancel.

Note: You can easily see the number of units held for each of your “hold” orders.

Step 5. On the Order Details screen, click the “Cancel This Order” button.

Step 6. On the Cancel Fulfilled Order screen, click the “Cancel this Order” button to confirm the cancelation, and you will then see a screen confirming that the order has been canceled. Within about 15 minutes the number of units that were being held in the order you just canceled will be available in your FBA Fulfillable inventory. Sometimes it may take a few extra minutes. Just be patient and the numbers will update soon.

You now know how to both “hold up” and how to “release” held up inventory. Armed with this knowledge you can now protect your inventory during steep discount promotions and guarantee that you only sell the planned number of units at a deep discount.

Now, that you know the mechanics, let’s discuss a bit more how to use this method.

Other Concepts for Promotions and Inventory Protection

The steps we covered in this report are simple, yet powerful and flexible. Let’s cover some more concepts to make sure you are optimizing the use of these concepts.

Number of FBA Fulfillable Units

As already explained earlier, when you create hold orders, those units are removed from the FBA Fulfillable inventory and are not available for sale at Amazon. So if you have 1,000 units and you place 900 on hold, Amazon will only allow 100 units to be purchased by customers. Once those 100 units have been sold, your listing will show up as “Out of Stock.”

In order to allow Amazon to sell more units, you have to follow the process described above to cancel a held order and release those units back into inventory.

During your promotions, it is important that you watch your inventory carefully and release more units as appropriate to allow sales to continue coming in.

This process on a “workaround” we found that allows us to control the number of units being sold. There is no way to distinguish real sales from coupon sales.

Managing Viral Promotions”

When you run a deep discount promotion and it goes viral (posted on a popular deal site, for example), you will run out of available inventory very quickly. If you protected your inventory beyond what you planned to sell at a discount, you can release more inventory in stock to allow “real” customers to buy your product.

However, before releasing more product into inventory, you should first disable (or change) the coupon code which went viral. Otherwise, as soon as you release more inventory, those customers with the coupon code, which they may have found online, will continue to consume your inventory at a discount.

Follow the process you to manage your coupons to cancel (or change) the coupon code, then once that is done, you can release more units into inventory.

Editing a Hold Order

You may have noticed in the steps above, that instead of canceling a hold order, you can edit it. While this may appear to be a shortcut, where you can simply enter a large hold order and then change the number of units, there is a slight problem with trying to do this.

Editing an order and changing the number of units held is indeed possible, however, it requires that the new number of units to be held be available in your inventory before the old number is released. 

Therefore, if you are holding more than half of your total units, s is the case with how we are using this method, editing will not work.

For example, if you are holding 900 units and you have 100 available in your Fulfillable inventory, and you want to release 100 more, then trying to edit the hold order for 900, and changing it to 800 will fail, because you do not have 800 units in your available inventory before you release the 900.

I will spare you the technical details, but in order to ensure that they never sell more than what is possible, when editing an order Amazon must first reserve the new number of units, then only after that occurs can they release the old number of units in the hold order. This is why in our example, editing will not work.

Flexibility of Hold Orders

You might want to create hold orders with different numbers of units so that you can release at will. In our example, where we wanted to release just 100 units per day out of our total, you might create 9 hold orders for 100 units each. This will do the trick… but you may also want to create smaller hold orders, so you can release even more slowly. Maybe you want to sell 100 per day, but you want to want to further control how those are distributed throughout the day, so you can create several hold orders ranging from 10 to 25 units, so you can release that smaller number at will.

There is a lot of flexibility on how you do this. Do not make this more complicated that it has to be, but know that you have a lot of control to do what you want.

Summary

Until now, there was no way to protect your FBA inventory from your deeply discounted offers going viral. We know of several cases where coupons were posted on deal sites and inventory was wiped out within minutes.

Using the technique in this report you now have full control of how you release your inventory for sale. Make sure you follow the steps carefully and heed the warnings in this report.

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