Having the right products in the right quantities is the classic problem in retail. When the inventory is optimal, sales increase, margins increase and customer satisfaction rises. You always want enough stock on hand so that customers can buy whatever they want, whenever they want. No one likes to see “sold out”!
So, while there is no right answer for every business, there are some questions to ask yourself as you develop guidelines to help you define your best stock levels.
- What are your best sellers? Which products sell month-after-month? What are the new up-coming “hot” styles that are gaining in popularity?
- What are your upcoming promotions? Do you have a sale on the “classic black” or the 2-pack? Then be sure to order extra to plan for the additional sales.
- Do you keep inventory? Tracking inventory on a regular basis helps you zero in on the ideal number of each product to have on hand.
- What are your overhead costs? Is your storage space free, or do you pay for the space in which you store your inventory? How much? If having a lot of extra stock is costing you money and you can get product fast – Go lean.
- How quickly does your vendor ship? Asia Pacific will ship most orders out within 24 hours. If you promise 3-5 day delivery, and can process your incoming orders quickly, you need to hold less stock.
- How much does it cost you when product does not sell? Do you have significant enough margins to take a loss on product when it does not sell? How much?
Retail is risky – but you can mitigate the risk with planning, careful control of your inventory, and math! Know your numbers, stay on top of any changes, and be prepared for an amazing 2018!