Getting control of your inventory: How to keep your items moving quickly
by Carrie Hinkel on October 4th, 2007
Think of your inventory as money on the shelf. The national average for a typical store is $15,000 worth of inventory and 30 percent of that is non-moving, dead merchandise! So what can you do to get control of your inventory and convert your inventory to dollars quicker?
Keep inventory levels comfortably low. Most business owners will inevitably make the mistake of ordering too much of a certain product to get quantity discounts. While that is a smart move for an item that’s a proven fast seller in your store, it’s not a good idea for an initial order. It doesn’t matter what kind of lightning-speed the salesman assures you it will “fly off your shelves.” An item that’s not selling quickly means excess inventory and that means 1) storage fees that add up and 2) money that is just collecting dust. It’s money that could have been used to buy an item that sells quicker and easier.
Know your inventory. Every storeowner should know exactly how much of each item is in stock, what was paid for each item and what the individual storage fees are. This will ensure that you don’t end up in a backorder situation, and that you’re making enough profit on an item to cover its costs. It’s far too common for business owners to be so unfamiliar with their inventory, that they are actually losing money on some items. Frequently, that situation occurs when a storeowner doesn’t take a recent price or storage fee increase into account on the retail end.
Turn dust into dollars. It’s very important to get dead merchandise out of the warehouse. Monthly storage fees add up and it won’t be long before those fees will eat up all the profit left on those non-moving items. It’s best to get the merchandise out and sell it-whether it’s to a liquidator or on eBay-to recover at least some portion of the money. Be careful not to get trapped into thinking it doesn’t make sense to sell a product for less than what you paid. If you don’t sell now, you may not be able to sell later. For every month dead products sit in your warehouse, you are losing more money-both in storage fees and not being able to convert the stale merchandise into cash. If you received just a portion back of what you paid, you could use that money to buy faster-moving products. Keeping merchandise that doesn’t sell is never a winning strategy.
By using the above steps, along with carefully choosing all your products, you’ll have gained control of your inventory and the ability to keep your products moving. Remember, in order to have a successful business you have to keep your inventory rotating. As soon as you start to see a pattern of stagnant sales for a particular product, take action–keep the movers in and get the dust collectors out. The only way to know which products are stale is to be aware of your inventory and its sales patterns. It’s important to check inventory levels and sales on a regular basis and don’t delay in removing stale merchandise.
I am a new member and am curious are you willing and open to liquidation buyers?
M.Glvstrawn
August 30th, 2008
at 8:39 pm