Inventory management is absolutely key to the success of any retail endeavor, whether that be an online ecommerce store or a brick-and-mortar retail outlet. Inventory management involves many different things, from storage to wholesale ordering frequency and much more. Proper inventory management will keep the products your customers want available.
Of course, proper retail inventory management means many different things to different businesses. To take one quite simple example, a company selling any perishable products such as food and drink will have to ensure that this does not hang around in warehouses long enough to spoil.
But even with non-perishable products – for example, a retail outlet purchasing bulk designer sunglasses to encourage impulse buys of these useful products at the counter – there comes plenty of inventory management challenges. For example, overstocking can lead to serious cash flow issues, as you cannot sell enough products to make back the money that you paid to the wholesaler.
On the other hand, if you do not purchase often enough from the wholesalers, then you risk running out of the product at times when there are actually customers there ready to buy it. As no retailer needs to be told, empty shelves represent lost revenues. You cannot run out of stock.
It Depends on the Products Too
Part of success in inventory management also depends on what type of products you are selling. Any retailer will try to sell a good range of relatively inexpensive products and few high-end ones too. Again, the same principles of inventory management apply, even if the marketing strategies are quite different.
Olympic Eyewear, a supplier specializing in bulk designer sunglasses, say that any given wholesaler will have a pretty good idea of how fast their products typically sell. You might be the retailer – and of course, it all depends on how well you can sell the products – but any given wholesaler will be able to give you some advice regarding how often purchases are typically made, averaged across all their clients. This information then needs to be refined to apply to your specific outlet. Nonetheless, seeking advice from wholesalers is a great place to start when you are trying to optimize your inventory management.
Further Reasons Why Optimized Inventory Management is Essential
Given that so much depends on what products you are selling, where you are selling them, how you are marketing them, and how large your customer base is, the advice can be remarkably diverse. Accordingly, it might be better to list some further benefits of optimized inventory management. If you do not see any of these at your outlet, then you know it is time to change your strategy.
Decreased Inventory Costs
That’s right, you can end up paying less for your products if your inventory management is on point. This is because when you purchase larger and larger wholesale orders, the price per unit decreases further and further. The trick is to buy the maximum from wholesalers that you can shift before the next order.
Improves Order Fulfillment
One for the ecommerce companies. With a good inventory management strategy, the whole ordering process can be sped up. Remember, the process begins at the wholesaler and ends at the customer’s door. Optimizing that process means speedy delivery.
Shrinkage is the loss of inventory through things like damage and theft. If there is simply less stuff hanging around in the warehouse for less time, then there is less chance of this happening. This saves you money.
Ultimately, every retailer should think long and hard about inventory management. The difference it can make to profit margins can be significant.