Management & Finance

Inventory Management: Use 80-20 Rule, Test New Products

How do you decide what products to sell on your ecommerce store? And where do you buy the products? These are questions that most smaller ecommerce merchants struggle with. Here are a few tips to help.

Decide Which Products to Sell

  1. Offer a variety. As a retailer, the breadth of your catalog is often more important that the depth. Shoppers typically like to browse through a large collection before making their purchasing decisions. In other words, you must offer a variety of goods within the category you are selling. This, however, does not mean that you need to stock up large volumes of every product you want to carry. Use the 80-20 rule. For most businesses, 80 percent of the volume sold comes from 20 percent of the products. So you need to have large amount of inventory only for that top-selling 20 percent. For the remaining 80 percent, carry very small quantities of inventory.
  2. Analyze competitors. How do you decide what products to add to your catalog? Here, some competitive analysis can help. Visit the web stores of a few successful ecommerce merchants in your industry, and see what they are selling. Use that information to choose products for your web store. If they are selling branded merchandise, do a Google search to see where you can buy those products at wholesale price.
  3. Listen to customers. Most important of all, listen closely to your customers. They will frequently suggest which products your company should carry.
  4. Experiment with new products. Always be experimenting with new products. In order to successfully do this, you need to regularly monitor your competitors, keep a close eye on your sales, and always be up to date on the trends in your category. In other words, you must be totally immersed in your business ecosystem. Based on what you learn, buy new products in small quantities and display them on a “new products” section of your web store. Monitor sales to decide whether to continue purchasing these new products.

Sources for Inventory

  1. Trade shows, exhibitions. Look for trade shows and wholesale product exhibitions in your area. Dallas Market Center, for example, holds approximately 50 markets each year, which feature home, gift, apparel and accessories items. some of these shows attract more than 50,000 attendees. Other companies host similar trade shows across the nation. Exhibitions and trade shows are a great way to meet a large number of distributors under the same roof.
  2. Work with wholesale distributors. Most wholesale distributors sell via sales agents. Once you identify a distributor to buy your goods from, talk to its sales agents. Sales agents typically carry catalogs in the product category. Maintain strong relationships with these agents so that they will alert you with new trends in the market place.
  3. Seek volume discounts. Always seek out volume discounts from your vendors. Many vendors require a minimum dollar purchase to offer those discounts. Use that opportunity to increase the breadth of your catalog. Buy small quantities of different products rather than large volumes of the same product to meet the minimum dollar amount.
  4. Watch product-return fees. Some vendors accept product returns but will charge you additional amounts to have the return option. Use this opportunity wisely. If you believe that you can sell your inventory by simply lowering the price, then choose the no-return option to save money up front.
  5. Consider drop shipping. Many vendors offer drop shipping. If you are a beginner, drop shipping can be a great way to get started, particularly for products that are bulky or too expensive. Drop shipping will save you the warehousing costs and will save your money from being tied up in inventory.
  6. Shop for discounts. Finally, look out for discount deals from wholesale dollar stores such as Another site to find wholesalers is

Jagath Narayan

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