A new way of managing inventory
Like most small businesses.. ecomm or brick and mortar, we are constantly in an inventory crisis. By crisis, I mean too much, too little, not enough cash to buy more, or inventory that just doesn't move. Since we are such a high tech operation, (kidding.. you need to see Lee Ann's basement.. a fabulous sea of red and purple,) we still play a bit of a guessing game when it comes to what our customers want.
I had an idea earlier in the year that would involve managing our inventory a bit differently. We talked it over, and agreed to give it a shot. We decided to not carry as much of the product that we are selling, if any, and to promote one product each week, and then pull it down. Our hope was that our customers would get used to buying it when they saw it, and they would also get used to waiting an extra week to get their merchandise.
This is how it works: We take orders for a purple dress that we don't have. We have confirmed with our supplier that said dress is in stock in ample quantity. Every few days we place our order for the dress from our supplier, and then send it out. We could drop ship, but prefer not to. We package things a certain way.. wrapped in purple tissue with our sticker and contact info. We want to keep that consistent.
What this has done for us: Tremendous turn around in our cash flow! We now hold less inventory, and have more money in the bank, and less debt. We've depleted a nice amount of what we intended, since when our customers buy what's new, they also add in a little of what's not. Sounds good right?
What remains the same: We will always stock certain items that are strong sellers, ie purple pajamas for pajama parties, etc. But this allows us to play around a bit with what works and what doesn't without laying out ANY cash. When we do extremely well on something, and continue to over a few weeks, then it makes sense to secure it as permanent inventory. We do this in the interest of faster turnaround and customer satisfaction. But some products are just a flash in the pan, and interest only lasts for a week at most.
What you need to do to make this work for you: Find a supplier that doesn't require minimums, and is grateful for your business. Explain what you are doing, and why. Let them know that this isn't a long term answer, but a way for you to see if there's interest in the product. A good supplier will see the promise in this technique. We always stock the big sellers, and end up with very happy wholesalers. We've negotiated those with minimums down for a trial period, say two weeks. Some will do it, some not.
We haven't completely adhered to "the discontinue a product after a week" part of the plan. We generally carry a product for a bit longer because we find that most people respond to a email campaign for longer than a week. I find this crazy that someone would answer an email weeks later, but we see it a lot. If we highlight purple dresses, we move them for 2/3 weeks. We haven't announced that we are going to pull the products after a set time yet, simply because I'm anticipating that it will make my customers frustrated. They are women over 50 and do not generally appreciate being pushed. I respect that.
I am thrilled in our success here. The challenge goes back to keeping inventory new and fresh, and constantly looking for new products to promote and finding willing vendors. I'd encourage any ecomm to try this to ease up on inventory and STRESS! Good luck!
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