Using your Demand Forecast, Rate of Sale, Inventory Sales Ratio, and Sell-through rate, you can make more informed and targeted recommendations to adjust your advertising & business strategy.
The Inventory Optimization tool calculates all of these values at the individual SKU level. Here's how you can leverage each of these metrics:
High Demand Forecast:
Increase Ad Spend: If the forecast predicts high demand, consider increasing ad spend to capture the anticipated market interest. Consider different ad type strategies to increase demand and specific Smart campaigns goals with enough budget to compete.
Promotional Campaigns: Launch targeted promotional campaigns to generate buzz and drive sales.
Focus on High-Converting Channels: Allocate more budget to channels that historically have high conversion rates.
Low Demand Forecast:
Cost Efficiency: Optimize ad spend by focusing on cost-effective channels and ad formats. Review and consider adjusting your ad type strategies and ad budget accordingly.
Retention Campaigns: Run retention campaigns to keep existing customers engaged and loyal.
Target Niche Audiences: Identify and target niche audiences that may have a higher interest in the product despite overall lower demand.
High Rate of Sale:
Scale Up Successful Campaigns: Increase investment by targeting these best selling items in campaigns and ads that are driving high sales. Consider different ad type strategies to increase demand and specific Smart campaigns goals with enough budget to compete.
Maintain Momentum: Use remarketing to maintain momentum and encourage repeat purchases.
Stock Management: Coordinate closely with inventory management, Demand Forecast and Days of Inventory remaining to ensure stock levels meet the sales pace.
Low Rate of Sale:
Optimize Ad Creative and Targeting: Review and improve ad creatives, targeting options, and messaging to better resonate with the audience.
Special Offers, Discounts and Pricing: Consider offering special promotions or discounts, or adjusting the price to boost sales.
Analyze and Adjust: Analyze which ads are underperforming and adjust or replace them accordingly.
High Inventory Sales Ratio:
Promote Best Sellers: Focus advertising on best-selling products to maximize revenue from high-performing inventory. Consider different ad type strategies to increase demand and specific Smart campaigns goals with enough budget to compete.
Upsell and Cross-sell: Implement strategies to upsell or cross-sell related products.
Manage Stock Levels: Ensure that ad campaigns are aligned with inventory levels to prevent stockouts.
Low Inventory Sales Ratio:
Clearance: Run clearance sales or increase discounts or adjust price to move excess inventory.
Targeted Advertising: Use targeted ads to reach potential customers who might be interested in the slow-moving inventory.
Adjust Marketing Messages: Highlight unique selling points or features of the slow-moving products in ads.
High Sell-Through Rate:
Sustain High Performance: Maintain or slightly increase ad spend to sustain high sales performance. Consider different ad type strategies to increase demand and specific Smart campaigns goals with enough budget to compete.
Highlight Popular Products: Use advertising to highlight and promote products with high sell-through rates.
Avoid Stockouts: Review Demand Forecast, Days of Inventory remaining to avoid running out of stock for high-demand products.
Low Sell-Through Rate:
Revamp Campaigns: Revise and test different ad creatives, targeting options, and messages to improve sell-through rates.
Promotional Tactics: Offer limited-time promotions or bundles, or review item price to increase sell-through rates.
Implementation Steps
Analyze Current Metrics:
Review the current demand forecast, rate of sale, inventory sales ratio, and sell-through rate of your SKUs
Identify trends, patterns, and areas needing improvement
Creating insights for rate of sale changes can help identify opportunities
Check Stock:
Validate with Demand Forecasts and available & inbound inventory that enough stock is sent in to the vendor
Creating insights for when stock is low can help to know when to reorder to adjust ad spend
Set Goals:
Define clear advertising goals based on the analysis, such as increasing sales for high-demand products or clearing out slow-moving inventory.
Develop Strategies:
Create targeted advertising strategies that align with the identified goals and metrics.
Develop messages tailored to each product's performance and forecast.
Monitor and Adjust:
Continuously monitor the performance of ad campaigns against the defined KPIs.
Make data-driven adjustments to optimize ad spend, targeting, and creatives.
By integrating these metrics into the advertising strategy, you can create a more dynamic and responsive approach that aligns closely with inventory levels, sales performance, and market demand. This ensures that advertising efforts are both effective and efficient, maximizing return on investment.