If you “stock up” on products then this is what you can expect:
On average you can expect 30 day growth that is substantially lower than the average ROI that you source product at. If you feel like you’re treading water and your business isn’t really growing then this is probably one of the core reasons.
Another major reason behind this phenomenon is that it usually takes at least 3 reinvestment events per month to at least keep pace with your average ROI:
Stocking up is something you might do when you have a brick and mortar store so you don’t disappoint customers looking for specific popular things. Stocking up is definitely something to be avoided when selling on Amazon unless you want mediocre to poor end of month results that cause you to keep treading water.
The only exception to this would be your own private label products where you’ll lose ranking when you go out of stock but most people start PL too soon. This is not an opinion this is based on mathematical reality. You should only start selling and “stocking up” your own products when the Buying Power Reduction Percentage (BPR%) for your product does not exceed 1.5% to 2% of your total working capital.
When you stock up on your own products then it’s easy to fool yourself into believing that you’re growing as in the previous example. If you tie up your capital then you can’t reinvest and your month-to-month growth is severely stunted.
Many sellers get into private label and creating their own products way too soon. You need sufficient working capital in order to step into private label or you’ll end up in financial trouble relatively quick.