Purchasing inventory wisely is an important part of any online retail business, since buying too little of a product might leave virtual shelves bare just when shoppers want something and buying too much can diminish capital and restrict cash flow.
Often the secret to making better purchasing decisions comes down to what a buyer knows about the product and the market.
I spoke recently with a product buyer for a regional farm-and-ranch retailer with both brick-and-mortar and ecommerce operations. I asked "Theresa" and several of her colleagues about what it takes to make good buying decisions. Theresa sits in a low-walled cubical in the purchasing bullpen. Her cube is against the front of the building, granting her some additional daylight and a view of the parking lot, thanks to a sizable window.
There are several shoe catalogs and trade journals on her desk and on the shelves around her. She even has a notepad shaped like a flip-flop sandal.
Theresa started working in her family's shoe store near Portland, Ore. as a child and purchased shoes for a national sporting goods chain before taking her current position. Her value to her company is in her ability to judge the market and the products she buys.
What follows are three tips — focused primarily on learning more about products and markets — that should help you make better purchasing choices.
Love What You Buy
As with anything, having a passion for the products one is buying can go along way toward making better buying decisions.
Buyers that are interested in something are more likely to be aware of emerging trends and even potential problems. This familiarity, in combination with quantifiable data — like previous year's sales, the size of the total available market, or even the cost of commodities used to manufacture a product — will help professional buyers follow trends, discover opportunities, and make good choices.
An example can be found in the clothing industry. Wrangler's Classic Cowboy Cut Jean is model 13MWZ. These jeans are being replaced with a new cut called the 47MWZ. When a clothing buyer is deciding how many pair of 13MWZ or 47MWZ jeans to purchase, several things might be factored in. How many pairs of 13MWZ jeans have been sold in the past? What are the differences between the 47's and the 13's? How do the retail prices compare? And what do cowboys really want to wear?
A passionate buyer, who knows the answer to that last question, may be better prepared to make just this sort of decision.
Love the Customers You Buy For
Products are for people. Many online businesses sell directly to consumers, and even Internet retailers that do sell business-to-business deal with people at those businesses.
Making better buying decisions can certainly take the form of finding better prices, better terms, or even better shipping solutions, but part of being a smart buyer comes from understanding and even loving those for whom one buys.
Steve is a professional buyer, for the same regional retailer, who focuses on agricultural products. His family has been in farming for generations. He lives in the country, and most everyone he knows is tied to agricultural. The people he buys for are the same people he associates with in his personal life.
Recently, he lobbied hard at his store to bring in Stihl chainsaws and power tools. His company had plenty of good brand-name saws and tools, but Steve knew his customers would appreciate Stihl, which was an instant success.
If you love the customers you buy for, you'll have their best interest in mind, and looking out for customers is always good business.
Respect Brand Names
It may well be that Stihl chainsaws are better than the competition, but it may simply be that Stihl is just a more recognized brand. And when it comes to selling items online, brand names can be a significant source of traffic.
Consider Dansko, the popular clog brand. According to Google Insights for Search, the brand name, Dansko, received more searches in the past 12 months than the category name, clog. If an online store was selling some other brand of clog, that store could be missing the opportunity to get additional site traffic.
Wise buyers know which brands are marquees in their markets and respect them.
Certainly, good information about prices, units, and inventory is important for making good buying decisions, but having a passion for products, people, and brands may be the best tips for making better purchasing decisions.