What are the weapons at your disposal to increase your revenues? Assuming you have the best possible ecommerce listings, prices and shipping terms for your items, you could increase the breadth of inventory on offer. You can do this by buying more inventory or using the inventory of a drop-shipper to increase your range. You could also make the inventory you have, virtual or otherwise, available in more places. It’s the same when talking about stock control. The difference is that it’s being offered by more marketplaces and being seen by more potential buyers.
Our top tips for managing your stock
But what about the other side of the equation, the cost side? The more inventory you have, the more time and effort it takes to manage it. The more places you sell stock in, the more places you have to update the stock levels. It is a largely proportional relationship. Meaning more stock equals more operational overhead. It’s not like you can avoid the issue. Especially if you’re lucky enough to have a very small product line but sell thousands of each product. With each sale you still have to rebalance the stock levels wherever you’re offering the products. Let’s look at some of the problem areas with inventory and stock control.
- Firstly, if your processes are mainly manual, then you need a lot of elbow grease to keep tabs on everything. If you sell in one place, then this is manageable with manual processes. Many Volo customers find that the addition of a second place, if they don’t have their own website, becomes the tipping point. They won't be able to use spreadsheets or paper to follow the flow of goods any more. This second place could be perhaps Amazon or eBay to their website, or a second multi channel marketplace. It’s too much effort and they’re always playing catch-up. They have to move from manual to automated.
- Complexity can increase your business processes significantly with the addition of inventory and outlets for your products. This is especially true if a business grows organically rather than with an emphasis on planning and control. Complexity and success don’t automatically go together, because the propensity for costly mistakes increases. The answer here is to look for solutions to help simplify things by streamlining processes and reducing interdependencies.
- The staffing costs associated with inventory and stock control can also start to rise. You could throw money at the problem and hire more people to manage the problem away. This will give you accuracy and peace of mind until you calculate how your cost base has increased. It will also have corresponding effects on your precious operating margins and profits. Can you raise your prices and risk becoming uncompetitive? Again, the solution is to get the right balance between automation and human hands on deck.
- There is the concept that the finance people call the time value of money. Time is money, your money. The more time it’s taking you and your staff to stay on top of your inventory and stock movements, the more it’s costing you. If your business is subject to seasonality variations, then these costs will peak and trough over the course of the year and you will need to plan for them. More seriously, ecommerce moves at the speed of real time. If your people can’t update stock levels fast enough across all your marketplaces, you risk overselling your fast-moving items. You'll also disappoint your customers and see your seller ratings go down. Finally, you could potentially be removed from a channel.
- Lastly, it can sometimes be very difficult to get a true picture of what’s happening in your business. If you’ve ever tried to walk or drive briefly with your eyes closed, you’ll remember that feeling of disorientation and high anxiety. It’s the same with your business. It could mean disaster if you don’t have accurate and up-to-date information on your inventory and stock levels. Sales performance across your products, marketplaces and regions also need to be taken into account. Lack of visibility into your multi channel ecommerce business, in the form of detailed data, can make it almost impossible to make good decisions.
To see the second part of our blog, click here. Contact Volo for more information on Inventory and stock control.