Getting Ahead of the 8 Ball: What We’ve Learned as an Amazon Seller
If you only react to your FBA metrics as opposed to understanding and planning ahead for them, you’ll always lose the game.
We began our Amazon journey in 2012. We had heard from some of our fellow retailers about their success selling on Amazon and decided to give it a try.
As many others have experienced, we had instant success. Most of our early sales were Merchant Fulfilled, but as the volume grew we looked to Fulfilled By Amazon (FBA) to help us meet the needs of this growing business.
FBA grew steadily for us until 2017. That was the year that we received several large opportunities to represent brands on Amazon. In 2017 our business exploded, growing multiples of what it had been just 12 months earlier.
To handle the growth, I looked to online experts and services to help analyze the business. One of the services I signed up for was, and is still, a major player in helping to determine profitability by ASIN. I immediately found errors in their calculations and actually started to email them and then stopped. I thought, why am I paying for this service and helping them fix it?
To overcome the shortfall in 3rd party analytical tools, I built a custom data warehouse for my business by pulling in the MWS feeds and reports. Shortly after building my own custom analytics based on my seller account data, Amazon launched the IPI score.
Once again I searched the internet to find an expert who could help with with operations and managing IPI. It was clear that Amazon wanted us to use their capabilities for fulfillment, not storage, and I looked to the key 3rd party sites for their expertise.
Back then (and now), I could not find anyone that was focused on IPI, or helping sellers interact with FBA at an operational level. There were plenty of sites with their own spin on what you could find on the help pages in Amazon, but no one who actually seemed to know what it took to pack a box and send it into FBA while meeting the performance requirements of Amazon.
We doubled down on our data warehouse and custom analytics. Additionally we added warehouse space and operational improvements to manage our inventory.
Everything was working well, IPI was above the minimum, Seller Fulfilled Prime sales were strong, and FBA was solid. We were rocking!
And then COVID hit in March 2020. The IPI minimum was raised and we fell below the new 450 requirement, and the subsequent increase to 500. Our space at FBA was severely limited. Fortunately we had our 40,000 square foot warehouse and Seller Fulfilled Prime capabilities to get us through 2020.
Looking back, the IPI restrictions were one of the best things to happen to our Amazon business. It forced us to evolve to the next level. We further entrenched ourselves in our analytics and operational processes. The custom analytics we developed since 2020 have helped us not only determine which products are most profitable, but also how to predict and manage our IPI and FBA Sell Through.
As of this post, our FBA inventory is 40 times larger than at the end of 2020, IPI is well above the minimum, Sell Through is stable, and best of all, we plan for our FBA metrics as opposed to reacting to them.
Our Amazon business is flourishing. My team has embraced the Amazon metrics as a key to understanding how to drive profitability and operational efficiencies.