1.
Using The Amazon Demand
Forecast to Increase Profitability
Stay in Stock: How Operational Inefficiency on Amazon Can Impact Sales & Marketing Growth

2.
Today’s Logistics
● Session recording and slides will be sent
● Submit questions to our panelists
● Join in on our poll questions throughout
● Resources available as handouts
Persephanie Arellano
Webinar Coordinator

3.
Experts-Only Approach
Strategic acquisitions have positioned us as the
leading independent performance marketing agency
Search • Social • Amazon • Email • Display • Shopping & Data Feed • SEO • Affiliate •
Conversion Rate Optimization • Creative Services • Analytics & Marketing Science

4.
Today’s Speakers
Eric Kauss
Manager, Amazon Vendor Operations

5.
Today’s Agenda
● How to Navigating Amazon’s Probability Level & Demand Forecast
● Different Adverse Effects of Inefficient Demand Forecasting
● Benefits of Analyzing Self-Service Data & Its Impact
● Purchase Order & Chargeback Management

6.
POLL QUESTION
What is your level of confidence using the
probability forecast ?

7.
Navigating Amazon’s Probability Level &
Demand Forecast

8.
Operational
Foundation - Path to
Sales & Profits

9.
Why Proper Demand Forecasting Is Crucial
Expanding Product
Offering
Content +
Product Setup
Amazon
Operational
Efficiency
Purchase
Order
Management
Advertising
/ Marketing
Efforts
Increased
Sales Growth
Warehouse
Efficiencies

10.
Demand Forecast - Purchase Orders
● Indirect Market Factors
○ Sales Performance
History
○ Seasonality
Market Factors
Demand Forecast - Market Factors

11.
Top 4 Factors Impacting Demand
Traffic to the
Detail Page
Amazon’s
Profitability
Vendor
Lead-Time
(VLT)
Sales History

12.
Sourcing vs. Manufacturing View
Sourcing – Sales and inventory metrics for an asin purchased from the directly 1P vendor
for the parent vendor code associated with the asin in Vendor Central.
Manufacturing – Includes sales and inventory metrics from all sources the asin is
purchased from including suppliers/distributors.
The Forecast is calculated on the Manufacturing data. Demand includes glance views for
the detail page and is not vendor/seller specific. Amazon has no way to differentiate
whether a glance view was due to a 1P or 3P offer.
If an asin is being purchased by Amazon from multiple sources, Manufacturer data should
be higher than Sourcing data. It is primarily due to some asins the vendor is not
designated as the manufacturer.

13.
Interpreting Amazon’s Probability Forecast
& Vendor Inventory Risk
P90
10% Amazon
will purchase
more
P80
20% Amazon will
purchase more
P70 30% Amazon will purchase more
Mean
For vendors that need more lead-time to acquire inventory
➔ 6 weeks or longer
➔ Key for vendors who manufacturer overseas

14.
Understanding the New Amazon
Probability Level (P-Level) Demand Forecast
Forecast is a rolling 26 week estimate as close as possible to actual customer
demand. Demand is predicated on total traffic to a detail page whether a
customer purchases from 1P or 3P.
Presented in different probability
levels giving vendors a choice of
how to stock inventory based on
risk tolerance
No longer calculates safety stock
into demand
Continues to use Vendor
Lead-Time (VLT) for the
calculation of actual purchase
order quantities per week
✓
✓
✓
✓ Does not represent an actual
purchase order forecast

15.
Amazon Purchase Order Formula
Example
Available
Inventory On
Hand
Open Purchase
Orders
4 Week
Demand
Potential
Purchase
Order
Quantity
Vendor
Lead-Time
(VLT)
Revised Potential
Purchase Order
Quantity
1000 100 1200 100 7 days
(1 Week)
25
Does not represent an actual purchase order forecast
Available
Inventory
On Hand
Open Purchase
Orders
Potential
Purchase
Order Quantity
Demand

16.
Adverse Effect of Inefficient
Demand Forecasting

17.
True Cost of Stocking Out
Lost sales when
product is out of
stock
Loss in organic
ranking (result of
lost sales velocity)
Re-investment in
resources to
recover ranking
True cost of stock
outs on Amazon

18.
Analyzing Self-Service Data & Its Impact
on Amazon’s Demand Forecasting

19.
Key Metrics Impacting Forecasting Demand
Fast Track Glance View
Rate (in stock to ship
Prime)
Sell-Through Percentile and
/or Conversion Percentile
Change in Glance Views
(prior period or YoY)
Traffic Diagnostic
Rep OOS (out of stock)
Lost Buy Box (due to price)
Sales Diagnostic
Change in Shipped COGS
(prior period or YoY)
Note: Traffic Diagnostic includes ALL glance views to a detail page not just from vendor
direct supplied product

20.
Strategy to Determine Future Purchase Orders
Purchase Order vs. Demand Tracking - Understanding what
demand within the forecast is actually 1P
● Demand forecast → previous 13 weeks sales; compare these to actual purchase
orders
● Track the demand vs. purchase orders on a weekly basis
● Calculate % of actual demand for which PO are issued
● Demand changes based on time of the year
● Amazon is still expecting a 100% confirmation rate

21.
Back Up Planning: Direct Fulfillment / Drop-Ship
Advantages of Direct
Fulfillment/Dropship
● Vendor’s inventory acts as a backup
● Make a vendor’s entire catalog available
● Build demand for new products at a quicker pace
● Protect sales
Note: You may already have a Direct Fulfillment account.
See Handouts for additional information on this program.

22.
Hybrid Approach to Selling on Amazon
The Amazon Hybrid Strategy
Allows a Vendor to:
● Keep up with demand
● Pricing control
● Flexibility
● 3rd party direct shipping or FBA
● New product launches

23.
Purchase Order & Chargeback
Management

24.
Purchase Order Management
● Review procedures for processing purchase orders
in a timely and efficient manner
● Review procedures use of PO
● Acknowledgement Status and Codes
● Understand the backorder process and the
ramifications/costs of doing so
● Monitor shipping information to update delivery
dates to Amazon
● Confirm information is being transmitted in a
timely manner to Amazon

25.
Operational Metrics Impacting Efficiencies
PO On-Time Accuracy
Percentage of time a
purchase order did not
ship on time, which
causes late delivery and
missed sales.
Target is below 10%
ASN Accuracy
Percentage of Advance
Ship Notices with errors.
Target is below 5%
Prep Issues
Product not prepared
correctly for immediate
shipping.
Target is below 5%
Rejected PO Rate
Percentage of rejected
asins by the vendor at
their discretion.
If average is above 20%
for the specific asin over
the last 13 weeks a
chargeback occurs.

26.
Pro - Tips
● Understand the Complexity of the Forecasting System
● Know the Key Metrics Impacting Demand
● Understand the Split of 1P vs. 3P Demand
● Analyze Alternative Strategies for Operating on the Platform
● Review Correct Procedures of PO Management
● Analyze Current Chargebacks for Action Points

27.
SMALL TEXT
STACK TEXT ROW 1
STACK TEXT ROW 2
Schedule Your 1-1
Advanced Amazon Advertising
and Operations Strategy
Evaluation

28.
Q & A
Eric Kauss
Manager, Amazon Vendor Operations

29.
Blog: How Amazon Operations Can Boost Your
Profitability
Link to Blog:
https://www.cpcstrategy.com/blog/
2019/04/amazon-operations/
Posted by: Greg Swan,
Content Specialist

30.
Webinar Calendar for May
Factors That Influence
Purchase:
1. Price
2. Shipping Method
3. Review Quality
4. Count of Reviews
MAY 5 6 7 8 9
Using Amazon
Demand Forecast
to Increase
Profitability
10 11
12 13 14 15 16 17 18
19 20 21
Increase Amazon
Detail Page
Conversions
Leveraging
Creative Content
22
How to Deploy
the Ultimate Cart
Abandonment
Strategy
Masterclass
23 24 25
26 27 28 29 30 31 JUNE 1