Does Your Advertising Account For Inventory Levels?

Tana Cofer

June 7, 2021

Advertising and inventory are the yin and yang of an ecommerce business: you need inventory in order to advertise, and you need advertising in order to sell your inventory. Both are necessary for the success of your business, and both work together to help you kill it on the sales front.

While advertising can be extremely good for business, there is an unpleasant side effect that increased advertising can cause which isn’t so good for business, especially not on Amazon: inventory stockouts.

How stockouts harm your business on Amazon

Stockouts can generally lead to disappointed loyal customers and the loss of potential customers across your sales channels. On Amazon, however, stockouts don’t just disappoint customers: they make your listings practically disappear.

Here’s how it happens. When your brand starts pouring more money into advertising a product on Amazon, you generate more traffic on that product’s listing. If you’ve got good conversion rates, increased traffic through advertising means you’re going to sell out faster.

Without a safety net or proper planning, that stockout will create two major problems for your business:

**1. Wasted ad dollars: **your product could go out of stock at any time, and every minute advertising is not paused on that product could be a minute of ad dollars wasted, which adds up quickly. Advertising inventory that is low in stock can be problematic as your advertising might be what drives the sales to push the product out of stock, wasting ad spend that could have been used elsewhere and causing an item to go out of stock, lose it’s rank, and force customers to buy other brands.

**2. Lowered rankings in organic search results: **Amazon has no awareness of when or if a product will be restocked, so once an item sells out and traffic and sales drop off of the listing, marketplace algorithms will push that product listing lower in the search results, making your product all but invisible to customers, even when it comes back into stock.

“The ramifications of running out of stock are pretty heavy,” said Mitch Park, Director of Product Management at Pattern. “Customers can’t find you, and so you don’t sell anything, but the trickle down effect is you start losing out on your organic rank. Your best seller ranking goes down because your sales drop because customers can’t find you.”

Lost sales are twofold, added Tony Morales, Director of Advertising at Pattern. Not only do you lose sales for every day your item is not available to be purchased, “but also when it comes back online, it may have been selling, say, 100 units a day, but because its ranking is lower and it’s on a different part of the page, maybe now it’s only selling 20 units a day when it comes back in stock. Even though you’re back in stock, you’re essentially still losing out on 80 units a day.”

“The best thing we can do,” Morales said, “is just make sure we never go out of stock to begin with.”

Pattern’s solution: Predict

Manually tracking your inventory shortages and pausing your ad spend so you don’t waste money is both inefficient and exhausting, especially when you have a hundred plus products to keep track of and limited manpower.

The best solution to prevent your advertising from turning into a money pit and protect your brand from stockout penalties on Amazon is through Pattern’s one-of-a-kind, expansive ecommerce tool Predict and its newest feature, In Stock Protection (ISP), available to Pattern brand partners now.

What is In Stock Protection?

Launched in November 2020, the In Stock Protection (ISP) feature on Predict is specially designed to automate the ad spend process for you so that you can save money, keep your products in stock, and protect your ranking on Amazon without breaking a sweat.

Through the ISP feature, Predict provides your brand with daily updated data on how many units you have on hand, how many you’re currently selling per day, and when your anticipated restock date is. Using that information as a baseline, Predict will automatically pause advertising on Amazon for products that are running low on inventory, divert ad dollars to other products, and re-enable ads once additional inventory is available.

“Everybody wants to advertise to sell more units, but if you don’t have enough items in stock, essentially what you’re doing with your ads is you’re accelerating your time to be out of stock,” Morales said. “What we’re doing here is we’re essentially preventing that from happening, saving the money we spent on ads, and hopefully prolonging the time that that item can be in stock from natural sell through until the next order comes in so that they have more units such that they don’t run out and don’t lose their ranking.”

In addition to giving you detailed data about your inventory, Predict provides personalized reports that give your brand insights on how many ad dollars you were able to repurpose by pausing ads on low stock products and how many organic sales (meaning sales that you would have missed out on had your product gone out of stock) were protected.

How does Predict's In Stock Protection determine whether a product’s ads should be paused?

Predict will pause advertising for products that meet one of the following criteria:

  • The likelihood of that product’s on-hand inventory meeting weekly demand is 50% or less.
  • The likelihood of the product’s on-hand inventory plus units in transit from the warehouse meeting demand for the next two weeks is 50% or less.

“If you’re not likely to meet weekly demand, we’re going to pause ads to protect spend. If you’re not likely to meet demand for two weeks, including inventory that’s coming, you’ll be paused for that, too,” Park said.

Let’s say you sell an expensive jewelry item and you only have one left in stock, but you typically sell five a week. In this scenario you also aren’t expecting a restock within the next two weeks. If you keep advertising, those five people who normally find you via ads aren’t going to all be able to purchase that jewelry from your brand that week. To protect your organic sales and make your last unit as profitable as it can be, Predict will automatically pause advertising on it and divert it elsewhere until your next shipment of jewelry arrives and is processed.

“This is all done without the user or an employee having to worry about it or keep track of what’s going on, which is a big benefit,” Morales said.

What about when you don’t want ads paused?

Maybe you don’t want Predict optimizations to run on a certain product because it’s a holiday special and you need to sell out of it. ISP can easily be overridden to allow for stockout exceptions.

Where can you access Predict's In Stock Protection?

ISP runs across all global Amazon marketplaces, streamlining international inventory and advertising processes as well as domestic. Currently, Predict and the ISP feature are only available to Pattern brand partners.

Success stories of Predict's In Stock Protection

Since the In Stock Protection update launched in November, Pattern has been able to repurpose over $1.03M USD in global ad spend and protect more than $2.41 million USD in organic sales for brand partners.

“Across the board for all of our brands, we have made adjustments 12,000+ times. That’s more than any person is going to be able to do,” Park said.

One of Pattern’s brand partners in the health supplement space has found major success with the ISP feature, repurposing $147k in ad spend and protecting $275k in organic sales in just the past six month. This brand was able to repurpose $10k in ad spend for their liquid vitamin D3 product alone through the implementation of these optimizations.

Part of what makes Predict—and a Pattern partnership at large—so valuable for brands is that Pattern manages both the inventory side of your business and the advertising side of your business, making the sales process far more efficient.

“No other ad tech has as much insight into that whole pipeline as we do,” Morales said.

More on Predict

Advertising and inventory optimization isn’t the only thing Predict can do. This comprehensive ecommerce tool helps Pattern’s brand partners manage every facet of their business. Predict can show brands if they’re winning the Buy Box, which competitors in the marketplace are selling their products, where price erosion is happening, how they can improve their customer experience, and much more.

To learn more about Predict or learn more about a partnership with Pattern, schedule a demo today!

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Global Ecommerce Weekly News: 27th September 2022
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Global Ecommerce Weekly News: 27th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon drives renewable energy push with 71 new projects Amazon is planning to add 2.7 gigawatts of clean energy capacity through a couple of new projects as the company attempts to use 100% renewable energy by 2025. The ecommerce business will soon have a total of 329 renewable energy projects, generating 50,000 gigawatt hours of clean energy, which is equivalent to powering 4.6 million US homes every year. [Read more on Reuters](https://www.reuters.com/business/sustainable-business/amazon-drives-renewable-energy-push-with-71-new-projects-2022-09-21/) Amazon launches Prime Early Access Sale Amazon is launching a new 2-day shopping event for its Prime members only, beginning on the 11th of October. Across 15 countries, Prime customers will have access to the shopping event, with thousands of deals on offer globall, ranging from fashion to electronics to essentials. The event has the purpose of giving Prime users the chance to spread the cost of items over the winter months, 6 weeks ahead of Black Friday. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/26/prime-early-access-sale/) --- Other Marketplace News --- Shopify unveils new localisation tool Shopify is launching a new localisation tool, called Translate & Adapt, which works with Shopify Markets to offer localisation for sellers who are looking to expand into new markets. The tool translates a user’s online store into different languages, including product pages and information pages. Merchants are also able to create different shipping terms for each market using the new tool, which allows international expansion and offers a more localised consumer experience, unveiling new potential. [Read more on Ecommerce News](https://ecommercenews.eu/shopify-launches-new-localisation-tool/) Etsy is set to invest hundreds of millions into its marketing platform Etsy CEO claims that the company is on route to spend more than $570 million USD on marketing this year. Even during a time of macroeconomic pressure, inflation and rising interest rates, the company is preparing itself and its sellers for the upcoming holiday season and is focused on retaining interest from buyers. [Read more on Yahoo News](https://uk.news.yahoo.com/etsy-600-million-on-marketing-ceo-154054219.html) --- Other Ecommerce News --- Meta looks to cut costs by 10% in the coming months Meta employees are facing job redundancies as the company plans to cut its costs by 10% over the next few months. Meta reported a 22% YoY increase in costs and expenses, totalling over $20 billion USD. The cuts are expected to come in the form of job redundancies as a result of department reorganisations rather than formal layoffs. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/22/meta-to-slash-costs-by-10-over-coming-months/) DHL teams up with Quadient to offer smart locker deliveries in the UK DHL and tech company, Quadient, have partnered to offer smart lockers parcel pick-up throughout the UK. The new contactless, secure locker stations will give recipients more choice and flexibility to receive their parcels at a time and location best suited to them. The partnership plans to install 500 locker stations across the country by the end of 2022. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/21/dhl-partners-with-quadient-to-offer-smart-locker-delivery/) The online fashion market is set to be worth nearly $170 billion USD in 2025 The European online fashion retail market is set to grow 50% by 2025, with an online turnover of $170 billion USD, which is 33% of the retail branch’s total. Cross-border marketplaces prove to be the largest drivers of this growth, with online websites and apps like Vinted largely pushing the market’s online growth. Zalando recently became the largest cross-border fashion retailer/marketplace, responsible for 11.7% of the online market’s share. [Read more on Ecommerce News](https://ecommercenews.eu/online-fashion-market-worth-e175-billion-in-2025/)

Global Ecommerce: Weekly News (20th September 2022)
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Global Ecommerce Weekly News: 20th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon to raise pay and add extra work benefits for delivery drivers Following the rise in fuel prices and protests by Amazon workers, the ecommerce giant is raising its delivery drivers’ pay and adding more work benefits. Amazon has mentioned that it will be investing $450 million into rate increases along with an education program and a Delivery Service Partners program. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/14/amazon-to-raise-delivery-drivers-pay-and-add-more-work-benefits/) Amazon announces it will give away shipping software to merchants at no cost Amazon has recently announced that it will be giving ecommerce merchants free software to manage shopper orders on and off its platform as it extends its reach. The ecommerce giant will be ending monthly costs for sellers using Veeqo, a shipping software it recently acquired and instead offer to them a new, free shipping software. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/16/amazon-to-give-away-shipping-software-to-merchants/) --- Other Marketplace News --- Walmart unveils new virtual fitting rooms In an effort to drive clothing sales, Walmart has launched virtual fitting rooms while competitors reduce spending amid the cost of living crisis. The virtual try-on tool can be used by Walmart customers to virtually measure the clothing items and see how the products would look on them. Shoppers will now be able to see how over 270,000 clothing items on Walmart’s ecommerce site would look on their bodies. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/15/walmart-launches-virtual-fitting-rooms-to-drive-clothing-sales/?utmsource=Retail+Gazette+Subscribers&utmcampaign=2da7f0f8f8-EMAILCAMPAIGN202209150742&utmmedium=email&utmterm=0d23e2768b6-2da7f0f8f8-61040615) THG slashes sales and profit expectations The Hut Group has slashed its forecasts for 2022 as rising interest rates, inflation and energy costs take a toll on consumers. Previously, THG estimated its sales growth to be between 22-25% but after a recent evaluation, has lowered this prediction to between 10-15%. Initial predictions did not take into account the negative effects of ceasing sales in Russia and Ukraine along with the impact that the cost-of-living has had on consumer spending. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/15/thg-slashes-forecast-as-cost-of-living-crisis-hits-consumers-wallets/) --- Other Ecommerce News --- DHL and Post Office team up to provide click and collect services Through a partnership between delivery company, DHL and Post Office, a new click and collect service is to be tested at Post Offices before rolling out to over 1000 branches across the UK. Online shoppers will now have the option of choosing their local Post Office as a collection point, and DHL will fulfil the delivery aspect, opening up networks for both parties. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/14/post-office-partners-with-dhl-express-to-provide-click-and-collect-services/) US consumer watchdog plans to further regulate the BNPL sector The US Consumer Financial Protection Bureau (CFPB) has raised concerns regarding the collection of consumer data and the fast-growing nature of the BNPL sector, which includes companies such as Affirm and Klarna. The CFPB is worried that these companies could be negatively impacting consumers’ financial health and aims to put better regulations in place to ensure consumers are safe and empowered. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/16/us-consumer-watchdog-to-start-regulating-bnpl-sector/) Japanese ecommerce market estimated to grow by 6.9% in 2022 The ecommerce market in Japan, largely dominated by domestic online retailers including Reakuten and Mercari, is set to reach $194.3 billion USD in 2022, after seeing an annual compound growth rate of 5.2% between 2018 and 2021. This makes Japan the fourth leading ecommerce market globally, following China, the US, and the UK. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/13/japan-ecommerce-market-to-grow-by-6-9-in-2022/) Ecommerce brands are spending more on TikTok ads TikTok may soon be surpassing Facebook and Google as the most lucrative advertising channel, with ecommerce brands spending 60% more on TikTok ads in Q2. Facebook is still ahead as the top choice for ecommerce advertisers but only grew by 5.6% from Q1, while Google grew 20.5% in Q2, and Snap declined 10.8% in Q2. [Read more on SearchEngineLand](https://searchengineland.com/ecommerce-brands-spent-60-more-on-tiktok-ads-in-q2-387876)

Global Ecommerce: Weekly News (13th September 2022)
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Global Ecommerce Weekly News: 13th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon scales back on US warehouse facilities Amazon is shutting down two facilities with 300 employees, discarding plans for 42 facilities, and delaying plans to open a further 21 buildings across the US. The ecommerce giant is scaling back on hiring as well as the expansion of its vast delivery network, as it was left with an excess of space following its rapid expansion during the pandemic. [Read more on Business Insider](https://www.businessinsider.com/amazon-closes-2-facilities-scraps-plans-42-new-buildings-report-2022-9?r=US&IR=T) --- Other Marketplace News --- JD.com is ‘betting’ on ecommerce grocery market Amidst a slowing economy and a decline in ecommerce, Chinese ecommerce giant JD.com has increased its urgency to seek new growth engines. The company is looking to boost its online grocery business through offline partnerships and expansion into lower-tier cities, where it may be able to unleash more consumption power. [Read more on The Star](https://www.thestar.com.my/tech/tech-news/2022/09/08/chinese-ecommerce-giant-jdcom-bets-big-on-online-grocery-lower-tier-markets-amid-slowing-economy) Shopee shuts operations in Argentina, Chile, Colombia, and Mexico Sea’s ecommerce arm, Shopee, has shut local operations in some LATAM countries but will continue to maintain cross-border operations in a few markets. Latin America is Sea’s most important region following South-east Asia, accounting for close to 19% of its revenue in 2021. The move away from these countries is largely due to increased levels of macro uncertainty and rising interest and inflation rates, and rather putting a focus on its core operations. [Read more on Straits Times](https://www.straitstimes.com/business/companies-markets/seas-shopee-shuts-operations-in-argentina-chile-colombia-mexico-sources) --- Other Ecommerce News --- Instagram scales back in-stream shopping elements Instagram is re-examining its approach as it hasn’t been able to make ‘fetch’ happen. ‘Fetch’ in this context being the online shopping trends which have become all-consuming in China, and what Western social platforms have been hoping to add into their apps to make them more addictive and revenue-generating. Consumers have not been swayed by the latest shopping tools on TikTok and Instagram, leading to Instagram scaling back its in-stream shopping program. [Read more on SocialMediaToday](https://www.socialmediatoday.com/news/instagram-scales-back-in-stream-shopping-elements-as-it-re-examines-its-app/631276/) FedEx Express supporting the growth of cross border ecommerce FedEx express has expanded its international commerce shipping service to four more markets across the Asia Pacific, Middle East and Africa (AMEA) region in an effort to support the strong development of ecommerce in this region. Three of the fastest growing markets, the Philippines, Indonesia and Vietnam are leading Southeast Asia’s ecommerce sales, which is set to reach $100 billion by 2023. [Read more on Post & Parcel](https://postandparcel.info/149889/news/e-commerce/fedex-express-supports-the-growth-of-cross-border-e-commerce-within-the-amea-region/) India ramps up hiring as companies prepare for shoppers Ecommerce companies are getting ready for the festive season by rapidly expanding their temporary workforce. As ecommerce in India grows, the country is predicted to have 372 million online shoppers by the end of 2022. The festive season this year, running from October to December, is expected to see a two-fold increase in logistics and delivery alone. During this period, companies are predicted to add 20% more to their existing workforce base, with a 8-10% higher pay scale compared to last year. [Read more on Business Insider India](https://www.businessinsider.in/business/ecommerce/news/the-great-indian-festival-of-hiring-e-commerce-companies-gear-up-for-indias-shoppers/articleshow/94000346.cms)