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 (6th September 2022)
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Global Ecommerce Weekly News: 6th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon announces new inventory and distribution service, AWD Amazon has launched Amazon Warehousing and Distribution (AWD), providing inventory and distribution services to its sellers as a means of addressing current supply chain issues. AWD is now available for sellers using Fulfilment by Amazon (FBA), i.e. outsourcing their fulfilment to the platform. Amazon has plans to expand the service outside the platform in 2023. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/02/amazon-introduces-new-service-to-help-solve-supply-chain-challenges/) Amazon Web Services (AWS) launches in the UAE AWS, Amazon’s cloud-computing platform offering, has launched its second region in the Middle East and now provides its services in the UAE. The move will now allow anyone in the UAE who utilises cloud technologies to harness AWS’s advanced platforms and APIs. An estimated $11 billion USD is expected to be added to the UAE’s GDP thanks to the implementation, with an average of 6,000 external vendor jobs to be created annually. AWS is now available in 87 zones across 27 regions, with sights set on expanding further across Australia, Canada, India, Israel, New Zealand, Spain, and Switzerland. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/30/amazon-web-services-launches-region-in-uae/) --- Other Marketplace News --- Lazada to launch in Europe Alibaba-owned ecommerce platform Lazada is set to launch in Europe, marking a refreshed internationalisation push from the company. The move follows toughening economic conditions and performance in Southeast Asia, advancing the need to tap overseas markets. In Europe, Lazada will face tough competition from giants like Amazon and Zalando. Lazada’s exact entry strategy is to be confirmed and will be reliant on macroeconomic and market conditions, according to Lazada CEO James Dong. [Read more on DigitalCommerce360](https://www.digitalcommerce360.com/2022/09/01/alibabas-lazada-to-take-on-amazon-zalando-in-europe-push/) Chinese ecommerce giant Pinduoduo to launch cross-border platform in the United States Pinduoduo, a Chinese ecommerce giant rivalling Alibaba and JD, has announced it will be launching a new cross-border ecommerce platform. The marketplace is set to launch in the United States next month, as part of the company’s larger push into new markets. Pinduoduo found success in China thanks to its rock-bottom price offerings and harnessing of social commerce marketing, emulating strategies similar to fast-fashion giant Shein. [Read more on Yahoo Finance](https://uk.finance.yahoo.com/news/pinduoduo-launch-international-e-commerce-034129263.html) Alibaba launches its biggest B2B sales event, ‘Super September’ China ecommerce giant, Alibaba, has now launched its month-long B2B sales event ‘Super September’. The event provides 40 million buyers and 200,000 suppliers with the ability to connect on the platform, showcasing a ‘virtually unlimited’ number of products. The event hopes to foster new cross-border business relationships to tackle supply chain challenges currently faced by businesses. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/01/alibaba-launches-super-september-b2b-sales-event/) --- Other Ecommerce News --- Klarna’s losses quadruple in first half of 2022 BNPL provider, Klarna, has reported losses of $581 million USD for the first half of 2022. This figure is almost four times larger than a year earlier, where $129 million USD in losses were reported. The company attributes the losses to employee costs, technology investments, and rising credit losses. Klarna’s figure reporting comes amidst worsening economic conditions, fresh legal and regulatory scrutiny, and pressure from Big Tech competitors. [Read more on The Financial Times](https://www.ft.com/content/483451db-9221-4ca4-83a6-b4ddc6bfcfbb) [Read more on the Guardian](https://www.theguardian.com/business/2022/aug/31/klarna-losses-more-than-triple-as-consumer-spending-slows) One fifth of Snap employees to be laid off amidst poor financial performance Social media platform Snap (‘Snapchat’) has announced it will be laying off 20% of its employees and closing out a number of projects following a year of poor financial results.The move will see 1,200 employees globally lose their jobs, saving the company an estimated $500 million USD in costs. Snap is currently valued at $20 billion, an 84% decrease from its valuation of $130 billion last year. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/01/snap-to-lay-off-20-of-its-workforce-and-wind-down-a-number-of-projects/)

Global Ecommerce: Weekly News (30th August 2022)
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Global Ecommerce Weekly News: 30th August 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon set to shut down Amazon Care Amazon is closing its telehealth service, Amazon Care, which launched in 2019 as a trial program for its headquartered employees. Later the service was rolled out nationwide for employees and other companies. The ecommerce giant has now made the decision to move away from the healthcare space, believing it was not the right long-term solution for its enterprise customers. [Read more on CNBC](https://www.cnbc.com/2022/08/24/amazon-is-shutting-down-amazon-care-telehealth-service.html) Peloton closes new deal to sell on Amazon Following a recent deal, Amazon customers will soon be able to buy Peloton fitness equipment on the marketplace, marking Peleton’s first move outside a direct-to-consumer model. According to Peloton’s CCO, there are already around half a million searches on Amazon for Peloton products every month, despite having no presence on the marketplace. Some key products include the original Peloton Bike, retailing for $1,445 and Peloton Guide for $295. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/24/peloton-strikes-deal-to-sell-fitness-equipment-on-amazon/) --- Other Marketplace News --- 60% of Malaysians are buying from local sellers on Shopee A recent survey of nearly 3,500 respondents found that nearly half of the shoppers prefer to purchase from local sellers due to shorter delivery times. Other shoppers decide to shop locally due to the quality of the products made in Malaysia and an interest in keeping the economy running. As a result, smaller local merchants have been able to grow their businesses, and shoppers benefit from shorter delivery times, products of high quality and supporting local businesses. [Read more on The Malaysian Reserve](https://themalaysianreserve.com/2022/08/25/around-60-malaysians-are-buying-from-local-sellers-on-shopee/) Flipkart’s social commerce platform Shopsy crosses 100 million users Flipkart launched a social commerce arm, Shopsy, in July of last year, which has now surpassed 100 million users, ahead of its target timeline being the end of 2022. This acquisition of new users has made Shopsy one of the largest platforms of its kind in the country, and is expected to onboard a further 100 million by the end of 2023. The platform is centred around boosting local entrepreneurship and powering ecommerce for consumers across tier 2+ regions where users face challenges around trust and navigation when shopping online. [Read more on Business Standard](https://www.business-standard.com/article/companies/flipkart-s-social-commerce-platform-shopsy-hits-100-million-users-1220828006851.html) Meta joins Amazon and Walmart in bid for Indian ecommerce market Amazon mentioned earlier in the year that it would be building a logistics division in-house through its purchase of a 51% stake in Ecom Express, an end-to-end logistics firm, to make ecommerce deliveries more efficient in the country. Walmart operates Flipkart in India and is set to continue its investment in the marketplace. In an effort to compete in the Indian ecommerce market, Meta has partnered with Indian ecommerce company, JioMart, to offer customers a grocery shopping platform within its WhatsApp chat feature. [Read more on Pymnts](https://www.pymnts.com/news/retail/2022/meta-joins-amazon-walmart-indian-ecommerce-market/) --- Other Ecommerce News --- Ecommerce in Spain worth €57.7 billion in 2021 Spanish ecommerce saw 11.7% growth compared to last year, largely attributed to cross-border sales. In the final quarter of 2021, ecommerce sales in Spain were at €16.9 billion euros, at least 60% of which came from cross-border sales. Transactions from foreign locations to Spain generated a turnover of €1.56 billion in Q4, a growth of 27.7% compared to Q4 a year before. [Read more on Ecommerce News](https://ecommercenews.eu/ecommerce-in-spain-was-worth-e57-7-billion-in-2021/)

Global Ecommerce: Weekly News (23rd August 2022)
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Global Ecommerce Weekly News: 23rd August 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon to add mental health support to primary-care service Amazon is set to move into mental health therapy with its primary-care division, following its recent acquisition deal of One Medical. The plan is to partner with virtual behavioural therapy service, Ginger, to offer its Amazon Care users with on-demand access to mental health services, licensed therapists and psychiatrists. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/11/amazon-plans-to-add-mental-health-support-to-primary-care-service/) GMB union calls for £15 an hour minimum pay at UK Amazon warehouses Amazon recently offered its warehouse workers a 3% pay rise, which in comparison to the June inflation rate of 9.4% left employees disappointed. Following this, hundreds of Amazon warehouse workers stopped work last week, protesting against the minimal pay increase, seeking a minimum of £15 an hour. Recent protests consisting of employee walkouts and sit-ins aim to get a better offer out of Amazon. [Read more on The Guardian](https://www.theguardian.com/technology/2022/aug/09/gmb-calls-for-15-an-hour-minimum-pay-at-amazon-warehouses-in-uk) Amazon third-party sellers have received their first-ever holiday fee hike Amazon’s third-party marketplaces account for close to half of the company’s online sales. The company introduced a 5% fuel and inflation charge to its third-party sellers earlier this year, and has now implemented another inflation increase charge. Commencing 14 October, any seller who uses Amazon’s fulfilment service is subject to the price hike, which is set to be an additional 35 cents per item for products sold in the US and Canada. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/17/amazon-third-party-sellers-have-received-their-first-ever-holiday-fee-hike/) Amazon puts a pause on UK grocery shop roll-out as the cost of living increases Amazon has slowed down on its UK roll-out of till-free Amazon Fresh grocery stores following disappointing sales and the rise in cost of living. Allegedly, the company is no longer looking for potential sites to expand and if more stores are opened, they will likely no longer use a till-free system, as consumers become more cautious about spending. [Read more on The Telegraph](https://www.telegraph.co.uk/business/2022/08/21/amazon-pauses-uk-grocery-shop-roll-out-following-disappointing/) --- Other Marketplace News --- Shopee overtakes Alibaba across international markets Shopee has surpassed Alibaba and taken the top spot for sales outside of China. Singapore-based marketplace saw a year-on-year increase of 51.4% at the end of Q2 of this year, while Alibaba saw a 3% drop during the same time period. This can be seen as a promising development for start-ups and their ability to compete with some of the largest ecommerce giants in the market. [Read more on Exchange Wire](https://www.exchangewire.com/blog/2022/08/18/shopee-surpasses-alibaba-in-international-sales-amazon-searches-for-entertainment-exec/) H&M reopens its official store to Alibaba’s Tmall ecommerce platform It has been nearly 18 months since Alibaba removed H&M from its Tmall platform, following H&M’s criticism of human rights abuses in Xinjiang. It is estimated that over a million people, predominantly minorities in the area, have been unlawfully detained in camps across the city. Brands including Nike, Adidas, Burberry and Converse were swept up in the controversy, however H&M was one of the first to be targeted for speaking out about the issue. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/16/hm-returns-to-alibabas-tmall-platform-16-months-after-xinjiang-controversy/) Klarna launches new feature allowing UK consumers to view full online order history Buy-now-pay-later company, Klarna, has launched a new feature on its shopping app, which allows UK consumers to view their full online order history, regardless of whether they purchased the product using Klarna. The feature also shows delivery tracking and aids consumers in managing their online purchases more conveniently. [Read more on The Industry](https://www.theindustry.fashion/klarna-launches-new-feature-allowing-uk-consumers-to-view-full-online-order-history/) --- Other Ecommerce News --- Online marketplaces responsible for £280 billion business turnover in the UK Nearly 900,000 UK businesses are currently selling on online marketplaces, generating an estimated £282 billion worth of sales each year. This figure represents 6% of the UK’s annual business turnover, highlighting the notable contribution that marketplaces make to the UK economy, along with the potential for further growth in this area. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/09/online-marketplaces-responsible-for-280-billion-business-turnover-in-uk/)