Taking a Closer Look at Inventory Allocation and More for Q4
Traditionally, this is the time of year brands are riding the high of Prime Day success and working toward an equally great Q4. But, due to the coronavirus, brands and retailers are grappling with the unfamiliar. During this year alone, traditional retail sales have declined by almost 6% globally. And, on the other hand, e-commerce sales are booming and could continue increasing by 15% year over year in Q4. Not to mention, Prime Day hasn’t happened yet and will likely occur shortly before the holiday season. All of which has left brands to strategize with the odds stacked against them. Here we dive deeper into the current state of the industry and share how inventory allocation will be more crucial than ever.
Current State of the Industry
To elaborate on what we quickly summarized above, 2020 has been a whirlwind for brands. And we’re still seeing mixed results for many of our clients. Based on their unique situation, some are continuing with record increases while others are reporting lower than average numbers.
We expect brands to feel the impact of COVID-19 well into 2021. And, for our Amazon clients, in particular, inventory has been one of the largest pain points. Inventory and supply chains have either helped or hurt brand performance during the pandemic. On both Seller and Vendor Central, warehouses are still backed up, and replenishing inventory for some has been impossible.
With all this in mind, we’re working with clients to prepare for an October Prime Day. Due to timing, we're anticipating additional inventory issues leading into the holidays. And we believe many consumers will do their holiday shopping during Prime Day. Unfortunately, this possibility forces brands to make a decision of which peak time period should be of focus.
How to Prepare for Q4 and Beyond
Many of our clients share the same opinion, focusing on the first peak season is wisest. With that, inventory allocation has been a popular topic of conversation. Usually, brands would evenly allocate inventory across a number of retailers. This year, because of low inventory and supply chain constraints, doing so will be unfeasible. Now there's a natural concern of how this could negatively affect relationships with stakeholders.
Despite the difficulty of these decisions, retailers like Amazon, Walmart, and Target are likely a brand’s best option. Each has an algorithm that drives momentum-based benefits that last beyond a purchase. So, allocating more inventory to these channels will generate the most short-and-long-term success.
As your brand moves closer to Prime Day, Black Friday, and Cyber Monday, remember a holistic approach is a key to success. This also applies to new ventures in 2021 as brands begin to adopt more marketplaces as they mature. A holistic approach to Walmart, Instacart, Kroger, and more will position your brand strongly against competitors.
Finally, inventory allocation will be critical in the upcoming months. But, this could be a valuable learning opportunity for brands ready to expand their e-commerce footprint. With more than just Amazon to focus on, inventory allocation will be a more regular conversation.
If you could use the support of a strategic partner, schedule a free consultation. We’re here to guide and assist brands during an unusual Q4 and position them for success thereafter. And, as always, please reach out with any questions.
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