Running out of stock on a marketplace is not just a lost sale. It is a compounding problem. On Amazon, a stockout kills your organic ranking, tanks your Best Seller Rank, and hands your Buy Box position to a competitor or a reseller who may not represent your brand well. On Walmart, it drops your listing out of search results entirely. The recovery period after a stockout can take weeks or months, depending on the category and how long you were out.
Most brands that struggle with inventory on marketplaces are not bad at math. They are bad at process. They lack the systems, cadence, and discipline to translate sales velocity into purchase orders with enough lead time to avoid gaps. This post covers the operational framework that prevents stockouts while avoiding the opposite problem: overstocking, which ties up capital and triggers storage penalties.
Demand Forecasting: Start with the Data You Have
Demand forecasting does not require a data science team. It requires clean historical sales data, an understanding of your lead times, and a realistic view of your growth trajectory.
For most marketplace SKUs, a rolling 30-day and 90-day average daily sales rate gives you a working baseline. The 30-day number captures recent momentum. The 90-day number smooths out short-term spikes and dips. If you are running promotions, launching new ad campaigns, or entering a seasonal peak, you need to layer those factors on top of the baseline.
The mistake most operators make is forecasting based on what they hope to sell rather than what the data supports. A new product launch with no sales history requires a different approach: start with conservative estimates based on comparable SKUs in the category, plan for a 60-day initial inventory window, and adjust after you have real velocity data.
For brands managing marketplace operations and fulfillment across multiple platforms, forecasting becomes more complex because each channel has its own demand curve. A product that sells 20 units per day on Amazon might sell 5 per day on Walmart and 3 per day on your direct-to-consumer site. These are separate demand signals that need separate planning, even if they draw from the same inventory pool.
Reorder Points and Safety Stock
A reorder point is the inventory level at which you need to trigger a new purchase order. The formula is straightforward:
Reorder Point = (Average Daily Sales x Lead Time in Days) + Safety Stock
Lead time is the total number of days from when you place an order to when units are received, checked in, and available for sale. For FBA, this includes manufacturing or supplier lead time, transit time to your prep facility or warehouse, prep and labeling time, transit to the Amazon fulfillment center, and Amazon's receiving time. That last piece is critical and often underestimated. Amazon receiving can take anywhere from 3 to 21 days depending on the time of year and facility capacity.
Safety stock is your buffer against variability. If your supplier is always on time and your sales velocity never spikes, you need less safety stock. In practice, neither of those things is true. A reasonable starting point for safety stock is 14 days of average sales for established SKUs and 21 days for newer or more volatile products.
For brands working with a distribution partner, the reorder point calculation shifts because you may be managing replenishment to Amazon and Walmart from a domestic warehouse rather than directly from the manufacturer. This shortens lead times significantly but requires clear communication cadence between the brand and the operator managing fulfillment.
Seasonal Planning
Seasonal planning is where most inventory strategies either succeed or fail. The brands that stockout during Q4 almost always made the same mistake: they planned based on average velocity rather than peak velocity.
If your product sells 50 units per day in October but historically sells 120 units per day in the last two weeks of November, you cannot use the October number to plan November inventory. You need to look at year-over-year data and calculate the seasonal multiplier for each period.
A practical seasonal planning calendar looks like this:
- January-February: Analyze prior year Q4 performance. Identify which SKUs outperformed and which underperformed. Adjust annual forecasts.
- March-April: Place initial Q4 orders for products with long lead times (90+ days from manufacturer). This is especially critical for products sourced internationally.
- May-June: Finalize Q4 inventory plans. Lock in quantities with suppliers. Begin pre-positioning inventory at domestic warehouses.
- July-August: Start shipping Q4 inventory to FBA. Amazon restricts inbound shipment quantities as Q4 approaches, so early placement is essential.
- September-October: Monitor sell-through rates against plan. Make final replenishment decisions. After mid-October, it becomes very difficult to get additional inventory into FBA in time for peak.
- November-December: Execute. Monitor daily. Adjust advertising spend based on inventory levels.
This calendar applies primarily to consumer products with Q4 seasonality. If your products have different seasonal patterns, such as outdoor products peaking in spring and summer, shift the timeline accordingly. The principle is the same: you need to plan backward from peak demand, accounting for every step in the supply chain.
Multi-Channel Inventory Allocation
When you sell on Amazon, Walmart, your own website, and possibly through wholesale channels, you have to decide how to allocate limited inventory across channels. This is a capital allocation decision, not just a logistics decision.
The factors that should drive allocation:
- Margin by channel. Amazon takes a referral fee plus FBA fees. Walmart takes a referral fee plus WFS fees. Your own site has payment processing and shipping costs but no marketplace fees. Wholesale has the lowest per-unit revenue but the highest volume potential.
- Velocity by channel. Allocate more inventory to channels where it sells faster to maximize cash flow turnover.
- Strategic importance. A new Walmart listing might justify over-allocation to build velocity and earn organic ranking, even if the short-term margin is lower.
- Storage costs. FBA inventory sitting longer than 180 days incurs aged inventory surcharges. Walmart WFS has similar long-term storage fees. Your own warehouse may be cheaper for slow-moving inventory.
The operational discipline required is maintaining a unified inventory view across all channels. If you have 1,000 units in your warehouse, 500 units in FBA, and 200 units in WFS, your available-to-sell quantity on each channel must reflect reality. Overselling because of disconnected inventory counts creates cancellations, which damage your seller metrics.
Operators who manage fulfillment across multiple channels need systems that update inventory in near-real-time. This does not require enterprise-level software. A well-maintained spreadsheet with daily updates can work for smaller catalogs. Larger catalogs need inventory management software that integrates with each marketplace's API.
FBA Storage Limits and IPI Score Management
Amazon's Inventory Performance Index (IPI) score determines how much inventory you can store in FBA fulfillment centers. The score ranges from 0 to 1,000, and Amazon sets a threshold, typically around 400 to 500, below which your storage limits get restricted.
The IPI score is influenced by four factors:
- Excess inventory percentage. Units that Amazon's algorithm considers overstocked based on your sales velocity and forecast.
- Sell-through rate. The ratio of units sold and shipped over the past 90 days to the average number of units in FBA.
- Stranded inventory percentage. Units in FBA that are not available for sale because of listing problems.
- In-stock rate. The percentage of time your replenishable FBA SKUs have been in stock over the past 30 days.
The practical implications: you need to keep inventory moving. Sending in six months of inventory for a slow-selling SKU will drag down your IPI score, which restricts your storage for your fast-selling SKUs. The target should be 30 to 60 days of inventory in FBA for most SKUs, with replenishment shipments timed to maintain that window.
Stranded inventory is the easiest factor to control and the one most often neglected. Run a stranded inventory report weekly. Fix listing issues immediately. Every unit sitting in a fulfillment center that cannot be sold is costing you storage fees and dragging down your IPI.
For brands evaluating their current marketplace operations, a Snapshot assessment can identify inventory management gaps and provide specific recommendations for improving sell-through and reducing storage costs.
Building the Replenishment Cadence
The difference between brands that scale smoothly on marketplaces and brands that lurch from stockout to overstock is cadence. A replenishment cadence is a regular, scheduled review of inventory levels, sales velocity, and inbound shipment status.
For most product catalogs under 200 SKUs, a weekly replenishment review is sufficient. For larger catalogs or products with high velocity, twice-weekly or daily reviews may be necessary.
Each review should cover:
- Current inventory levels by SKU and location (FBA, WFS, own warehouse, in transit)
- Current sales velocity versus forecast
- Inbound shipment status and expected receiving dates
- Any SKUs approaching reorder point
- Any SKUs with excess inventory that need markdown or removal
This review generates a punch list of actions: create shipments, adjust forecasts, investigate receiving delays, fix stranded listings. The key is that it happens on a schedule, not reactively when something goes wrong.
Brands that work with an experienced marketplace partner benefit from having this cadence managed professionally. The partner tracks inventory, manages replenishment, and flags issues before they become stockouts. This is especially valuable for brands that do not have dedicated marketplace operations staff.
When Growth Outpaces Planning
Inventory planning gets harder as you grow faster. A product that goes from 10 units per day to 50 units per day in a month will blow through your safety stock if your replenishment cadence was built for the 10-unit-per-day baseline.
The solution is not to hoard inventory. It is to shorten your feedback loops. Monitor sales velocity more frequently. Have contingency plans with your supplier for expedited orders. Maintain a domestic buffer stock that can be shipped to FBA on short notice.
If your brand is scaling and you need operational support to keep inventory flowing, get in touch to discuss how a structured replenishment program works in practice. Or if you are earlier in the process and want to understand what your current inventory position looks like, start with a Snapshot.
Growth without operational discipline is just a more expensive way to run out of stock. The brands that win on marketplaces are the ones that plan for the growth they want, build the systems to support it, and execute with consistency. Inventory planning is not glamorous. It is the foundation that everything else depends on. If you are ready to build that foundation with an experienced operator, apply to work with us.
FAQ
How much safety stock should I keep for FBA inventory?
A reasonable starting point is 14 days of average daily sales for established SKUs with predictable velocity, and 21 days for newer products or SKUs with variable demand. Adjust based on your supplier reliability and lead time variability. If your supplier regularly ships late or Amazon receiving is slow in your product category, increase the buffer. The cost of carrying a few extra weeks of safety stock is almost always less than the cost of a stockout.
What happens to my Amazon ranking if I go out of stock?
Your organic search ranking drops, often significantly. Amazon's algorithm prioritizes products that are available and selling consistently. A stockout of even a few days can cause you to lose ranking positions that took months to build. The recovery period depends on your category competition and how long the stockout lasted, but expect two to four weeks to return to pre-stockout levels for a short gap, and potentially longer for extended outages. Your Best Seller Rank resets and your advertising campaigns lose their optimization history.
How do I manage inventory across Amazon and Walmart simultaneously?
Maintain a unified inventory view that accounts for units allocated to each channel, units in transit, and units in your own warehouse. Set separate reorder points for each channel based on channel-specific velocity. Use a single source of truth for total available inventory and allocate based on margin, velocity, and strategic priority. The most common failure mode is overselling because inventory counts are not synchronized. Even a simple spreadsheet updated daily can prevent this if the process is disciplined.
When should I start planning Q4 inventory for Amazon?
Begin in January by reviewing prior year Q4 data. Place orders for products with long lead times (90+ days) no later than March or April. Start shipping to FBA in July or August. Amazon tightens inbound shipment limits as Q4 approaches, and receiving times slow dramatically in October and November. If you wait until September to start planning Q4, you are already behind for any product that requires international sourcing or has lead times longer than 30 days.