jungle scout's million dollar case study - inventory management

THE MILLION DOLLAR CASE STUDY

Session #22: Inventory Management Best Practices

Journey to $1MM

July 26th, 2017

100% to Jeremy Biron – Founder @ Forecastly

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My most difficult is starting with zero knowledge of

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Agenda

▸ Why should we care?

▸ Basic Concepts

▸ MDCS Example

▸ Additional Tips

▸ Free Tools

• Hundreds of Amazon seller accounts analyzed

• Sold on Amazon for almost 10 years

“

”

Why should we care?▸ New Products vs. Existing Products

▸ Profitability

▸ Cash Flow

Lead Time

▸ Jungle Snugs▹ Manufacturing: 30 Days

▹ Sea Freight: 35 Days

▹ Total: 65 Days ▸ Considerations:▹ Likelihood of

Manufacturing Delays

▹ Ground Shipping in U.S.

▹ Packaging/Shipment Prep. Time

▹ Customs

Safety Stock

“Buffer” Educated Guessing

Cash vs. Lost Sales

9

CalculatingNumber of Extra DaysPercentage Extra

Jungle SnugsLong Lead TimeLimited Sales Data

Sales Velocity

Past 30 Days9.8 Per Day (0 Days Out of Stock)

Past 60 Days7.23 Per Day (8 Days Out of Stock)

10

SeasonalityEvery Product has SeasonalityGoogle TrendsCan’t Easily See Q4 Bump

11

Final Calculations – Reorder Point

Current Inventory: 537

Inbound: 0

Safety Stock:

Reorder Point w/o Safety = 65 Days * 9.8 Sales Per Day = 637

Safety Stock = 637 * .25 = 159

True Reorder Point = 796

Final Calculations – Projected Stock-Out

▸ When to reorder?▹ Current Inventory: 537

▹ Inbound: 0

▹ Safety Stock: 159

▸ (537 – 796) ÷ 9.8 = -26 Days

▸ Not Necessarily 26-Day Stock-out

Final Calculations – Quantity

▸ Inventory Gone Before Arrival

▸ 13 Weeks Until Next Order (Post Arrival)

▸ Days of Inventory + Lead Time = 156

▸ 156 * Sales Velocity = 1,529

▸ 1529 + Safety Stock = 1688 Units

Additional Tips

▸ Return on Investment (ROI)

▸ Sea vs. Air

▸ Product Segmentation

▸ Plan Ahead

▸ Know Your Assumptions

▸ Value Your Time

Inventory Tools - Free Downloadhttps://fcst.ly/mdcs

Amazon Seller Calendar

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August 2nd, 201710a PDT /1p EDT / 6p BST

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