With so many vendors around and so much competition, small e-commerce businesses can have a hard time deciding what retail inventory to buy. A tight budget complicates matters further, calling for very effective spending and inspired choices. Whether you sell perishable products, digital goods, or anything in between, several best practices can help you optimize your spending and maximize sales.
Be Your Own Customer
Most e-commerce shop owners sell products they are interested in or knowledgeable about. Chances are you are already a consumer of products that fall into the category (or categories) you sell. Before buying inventory or replenishing your stock you can switch roles and look at things from your average customer’s perspective. What would you buy if you were a customer?
Understand Your Current Inventory
Your existing inventory metrics, together with any data you may have about past inventory performance, helps you further optimize your purchase orders. You want to go beyond current inventory levels to consider sell-through rates, gross margins, product gaps, as well as seasonal demands. If you feel that you are missing reliable information or spending too much time trying to understand your inventory, you may want to upgrade your inventory management app, or get a QuickBooks cloud inventory solution, if you don’t use one already.
Work on Improving Your Relationship with Vendors
Automated purchase orders and replenishment tools make your life easier, but you shouldn’t neglect vendor representatives. These are the people through which you can negotiate terms, improve delivery conditions, and settle any issues. They are the ones that can help you get discounts on frequently ordered products, or get your hands on products with limited availability.
One thing to remember is that the less time you spend counting stock, updating spreadsheets, or manually calculating inventory performance, the more time you have to invest in building good relationships with vendor representatives.
Analyze and Predict
To identify trending products and best performers, you need to be able to monitor the flow of stock in and out of your inventory. This in itself is a science, and while Pareto’s principle of 80/20 applies, where 80% of your sales are the result of 20% of your stock, largely applies to all e-commerce businesses, online demand is often more unpredictable than in the world of brick-and-mortar businesses. More careful monitoring is necessary. A cheaper alternative to an inventory analyst and manager is a mobile inventory app with sales forecasting capabilities.
Keep an Eye on Your Competitors
If Amazon or another store is already selling at a good price a product you consider ordering, you may not have much of a chance to sell it. Even if you can offer a slightly better price, most consumers will succumb to the familiarity and sense of security that more established stores provide. By eliminating or minimizing these products from your purchase orders you can save up money for more specialized products which your customers won’t easily find on larger e-commerce stores.
To learn more tips on running a successful e-commerce business and managing your purchase orders and stock effectively with a QuickBooks cloud inventory solution, take a look at our blog.