Whether it’s Colonel Sanders, Dr. Pepper, or Duke of Bush’s Baked Beans, secret recipes have always been a staple of great marketing. Our minds conjure up images of a smudged index card in a secret vault protected by more passwords and turnkeys than an atomic bomb testing room. If companies protect their secrets like this, they must be hiding something really special, right?
Perhaps the most famous of all secret ingredients is the “Special Sauce” of McDonald’s BigMac®. Is it really just Thousand Island dressing, or something different? McDonald’s has published all of its ingredients online for several years now, and the Big Mac Sauce is no exception.
Despite some of the unappetizing additives, the push for "revealing" a big corporate secret creates a lot of buzz. So, we thought we’d create a big marketing moment by unveiling our own secret formula for how RestockPro's Amazon restock calculator works.
Know Your Numbers
Two of RestockPro’s most useful features are calculating your margin on each item you sell and giving you a suggestion on how many items to reorder from your suppliers. Each piece of information is essential to sellers. You need to know how much you make on your products, and you have to optimize your inventory at Amazon fulfillment centers to meet sales demands and avoid overstocking fees.
Amazon Restock Calculator Secret Sauce
Margin = Selling Price - Costs - Amazon Fees
In your RestockPro settings, you can configure the selling price. You can try to use either the average 7-day price on Amazon, and if that isn’t available you can choose the New Buy Box Price. If neither of those details is available, use the Listing Price or the Lowest FBA Price (all of which RestockPro automatically fetches for you).
Costs include your supplier cost per unit (either the current cost you have set or a computed average cost based on your purchase history in RestockPro), inbound and reshipping fees, packaging material, and labor fees. You can upload all of these numbers once when you first set up your account.
Amazon fees are also automatically gathered by RestockPro. These include FBA fees and Amazon commissions.
And here’s the reordering Formula:
Total Amazon Quantity / Daily Sales Velocity = Stock Days Remaining
Total Amazon Quantity is the QOH (Quantity on hand) at the Amazon fulfillment sites and any items on the way there. This can include items in process, which has an equation of: in process = reserved - any pending items that are earmarked for customer orders.
Sales Velocity is calculated automatically by RestockPro and can be viewed based on 2, 7, 30, 60, 90, or 180-day sales cycles across all of Amazon. You can also use a simple or weighted average of a combination of these figures. You may also choose to adjust this velocity to account for out of stock periods.
For example, let’s say you are using 30 days as your Velocity Rule and your product has been selling two per day over the last 30 days. With the Out of Stock adjustment, RestockPro could determine that the product was only in stock 50% of the time. If it had been in stock the whole time, you could have sold double the amount. So the velocity would be increased to four per day, for the purposes of determining how many to restock for the next 30 days. It’s important to review this carefully before making a reorder, because the more the product is out of stock, the less predictable the adjusted velocity becomes.
Restock Suggestion = (Target Max Days Stock + Supplier Lead Time - Current Stock Days Remaining) * Sales Velocity
You determine your own target max days stock in your store settings and set the supplier lead time. You can even override the target max days of stock for a supplier. RestockPro will factor in any items you have in your local warehouse that you haven’t sent to Amazon yet and can be configured to handle case packs, which are items ordered in multiples, or minimum order quantities.
Give it a Try
Many companies make a big deal about their complex algorithms that take hundreds of data points to create the optimal moment of restocking.
Our software is amazing, but it’s not complicated. Unlike others, you don’t need a degree in differential equations to figure it out, and unlike McDonald’s Special Sauce, there’s nothing in there to squirm about. Everything is based on common sense and good business practices. We print our recipe right on the Calculations popup - so there’s nothing hidden or magical about our Amazon restock calculator. The reason people love using RestockPro is not because of its mystique, but its performance. It gets you the exact data you need, when you need it, and gives an extremely logical suggestion.
Try RestockPro for free and be amazed at how much it frees up your time.
Originally published on October 21, 2015, updated December 20, 2023
This post is accurate as of the date of publication. Some features and information may have changed due to product updates or Amazon policy changes.
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