50+ Essential Terms in Retail Management and Supply Chain for Amazon FBA Success
Amazon FBA success relies on understanding key terms in retail management and supply chain to optimize operations, maximize profitability, and streamline processes. Here’s an overview of 51 essential terms, ranging from forecasting to campaign strategies, each of which can help you manage inventory, improve sales, and build a sustainable business.
1. Forecast
The process of predicting future demand for products. Accurate forecasting is crucial for balancing inventory levels and minimizing stockouts.
2. Baseline Forecast
A basic forecast based on historical data without adjustments for promotions or special events. It establishes a foundational demand estimate.
3. Uplift Forecast
This forecast includes additional factors like marketing campaigns or seasonality to predict demand spikes.
4. Days of Inventory
The average number of days your stock will last based on current demand, helping manage when to reorder.
5. Clearance Sale
Discounting excess stock to free up warehouse space and reduce storage fees.
6. Storage Fee
Costs incurred to store products in Amazon’s fulfillment centers, which increase with higher stock levels and longer storage durations.
7. Out of Stock
Occurs when inventory levels are insufficient to meet customer demand, leading to lost sales and decreased customer satisfaction.
8. Availability
The percentage of time a product is in stock and available for purchase. High availability is key for customer retention.
9. Excess Stock
Inventory that surpasses expected demand, which may lead to higher storage fees and potential waste if unsold.
10. Sell-in
Refers to the initial sales made to distributors or Amazon’s fulfillment centers.
11. Sell-out
Represents actual sales to end consumers, reflecting true demand for a product.
12. Supplier Lead Time
The time it takes for suppliers to deliver products after an order is placed, impacting inventory management.
13. Week of Inventory
Measures the amount of stock available to cover weekly demand, helping in restocking decisions.
14. Safety Stock
Extra inventory kept to protect against stockouts due to unexpected demand or supply chain delays.
15. Overstock
Excess inventory beyond projected demand, often requiring clearance strategies to avoid costly storage fees.
16. Internal Traffic
Visits to your product listings generated from within Amazon’s ecosystem, like search results or Amazon ads.
17. External Traffic
Visits driven from sources outside Amazon, such as social media, email campaigns, or influencer marketing.
18. AOV (Average Order Value)
The average amount spent per order, a key metric for maximizing revenue per customer.
19. CTR (Click-Through Rate)
The percentage of users who click on your ad or listing, helping measure ad effectiveness.
20. CVR (Conversion Rate)
The percentage of users who make a purchase after visiting a listing, indicating listing effectiveness and product appeal.
21. STR (Sales Through Rate)
The speed at which products are sold, helping gauge product popularity and inventory turnover.
22. ROAS (Return on Ad Spend)
Measures the revenue generated for every dollar spent on ads, essential for assessing ad profitability.
23. Product Bundling
Selling multiple products together, often at a discount, to increase average order size.
24. SKU (Stock Keeping Unit)
Unique code assigned to each product for tracking purposes.
25. Dead Stock
Inventory that hasn’t sold for an extended period, potentially requiring discounting or bundling to clear.
26. Slow Moving
Items that have low sales velocity, often indicating a need for promotional support or clearance.
27. Fast Moving
Products that sell quickly, often requiring more frequent restocking.
28. Reorder Tool
Tools that help automate reordering based on sales trends, inventory levels, and lead times.
29. Reorder Point
The stock level at which a new order should be placed to avoid running out of stock.
30. Inventory Simulation
Testing inventory scenarios to predict outcomes and optimize stock levels.
31. Forecast Bias
A consistent error in forecasts, either overestimating or underestimating demand.
32. Forecast Accuracy
A measure of how closely forecasts match actual sales, critical for effective inventory planning.
33. Demand Planning
The process of anticipating future demand to align inventory levels with customer needs.
34. Supply Planning
Coordinating the supply chain to ensure products are available to meet forecasted demand.
35. Supplier Rebate
Incentives from suppliers based on purchase volume or order timing, which can help reduce costs.
36. Consignment
Inventory arrangement where suppliers retain ownership until products are sold.
37. Raw Data
Unprocessed data collected for analysis, the basis for deriving actionable insights.
38. Dataset
Organized data used for analysis, often structured in a way that supports decision-making.
39. Business Intelligence
Tools and processes used to analyze data and support strategic decisions.
40. Margin
The percentage of profit after subtracting all expenses, a key measure of profitability.
41. Sales Subsidy
Discounts or allowances given to customers to boost sales, often used in promotions.
42. Campaign Tap-In
A strategy to leverage existing campaigns or trends to increase product visibility.
43. Campaign KV (Key Visual)
The main image or graphic used in marketing campaigns to attract customer attention.
44. GMV (Gross Merchandise Value)
The total value of products sold, an important measure of overall sales volume.
45. Affiliate Marketing
Promoting products through affiliates who earn commissions on sales generated through their referral.
46. Underforecast
Occurs when actual demand exceeds forecasted demand, often leading to stockouts.
47. Overforecast
When forecasted demand exceeds actual demand, often leading to overstock.
48. Oversales
Selling more than what’s available in stock, leading to potential fulfillment issues.
49. Organic Sales
Sales generated without paid advertising, often driven by SEO and brand reputation.
50. Active Days Stock
The number of days your stock will last at the current sales rate.
51. ABC Analysis
A method to categorize inventory based on value and importance, helping prioritize stock management.
Conclusion
Mastering these 51 retail and supply chain terms will provide a solid foundation for optimizing your Amazon FBA business. Whether managing forecasts, adjusting for seasonal demand, or optimizing ad spend, understanding these concepts can help you streamline operations, control costs, and ultimately improve profitability on Amazon.