Inventory planning is in need of a Goldilocks moment right now.
Not long ago, home furnishings brands went through the stress of too little inventory. Then the pendulum swung and brands had entirely too much stock and have been challenged to move it.
At this point, you may have wound some of the excess inventory down, but figuring out where to go from here seems to require a plan that is juuust right.
Many brands are hesitant to ramp back up after being over-inventoried. But on the flip side, keeping in stock is critical to supporting your ecommerce business. A healthy in-stock rate keeps listings live and placements steady. It reflects positively to your retail partners. And, obviously, it allows items to sell.
If you run out of stock, a product can still live on a showroom floor for customers to see it and purchase it for a later delivery date. But online, the customer never sees it. Staying in stock is very much a (necessary) ecommerce play.
To effectively manage your ecommerce business, brands must find a balance to ensure that pendulum doesn’t swing back the other way. Let’s talk through a few ways to navigate inventory in this environment:
1. Focus on a never-out list.
A never-out list is a list of your best-selling products or those that makeup 80 percent of online sales. This list should be used literally—make sure the items on it never fall out of stock.
We understand that brands need to be cautious about ordering stock—but letting that caution bleed into your best-sellers puts you at risk of losing share instead of gaining during a softer period. A never-out list can be used to allocate budget, weighing it heavier on best-sellers to help ensure your brand comes out ahead. It’s your safest use of capital in an uncertain time.
Even if it takes longer to move through, you know that these are items that will sell because, unlike new products, they’ve already been proven.
If you have been ordering less inventory or plan to, keep your best-sellers top of mind.
2. Use retailer tools that can help with forecasting.
Even in an unpredictable environment, retailers have more data at their disposal around account sales, seasonality and promotions. Using those insights can help your brand see trends and better ensure your inventory aligns with customer demand.
Wayfair, Overstock (Bed Bath & Beyond) and Amazon all offer forecasting tools that are updated monthly and can help project inventory needs 9 to 12 months out. If these are key retailers for your business, it’s a great tool to take advantage of and consider alongside your inventory planning.
Promotions are the name of the game right now, and being competitive here will help keep inventory moving if you are (or worried about being) overstocked.
3. Ensure you have a strong promotional strategy.
Promotions are the name of the game right now, and being competitive here will help keep inventory moving if you are (or worried about being) overstocked.
There’s the obvious reason, of course—promotions help you remain competitive on price and attract the many customers who are shopping for a deal.
But promotions are also a critical strategy for keeping your brand visible to the end customer. By participating, you can benefit from the retailer’s marketing push, allowing your products to be seen by more prospective customers and creating a better opportunity for sales.
In the competitive world of ecommerce, promotions aren’t just about the price. They are a critical strategy for keeping your brand visible to the end customer. Piggybacking on that marketing firepower goes further than just a price drop.
When you need to drive sales to keep inventory moving, it’s that much more important that product content is dialed in.
4. …and strong fundamentals for selling online.
Promotions are just one of several key elements to a healthy ecommerce business. There’s also:
- A+ product content (both data, assets and enhanced content)
- Operations and logistics
- Engaged and collaborative partners
You can hedge against market slowness by making sure you’re firing on all cylinders in the fundamentals of ecommerce. Those seemingly small pieces add up in a trying environment to drive sales and keep inventory moving. So continue to push toward progress in those areas.
When you need to drive sales to keep inventory moving, it’s that much more important that product content is dialed in.
5. Work with nimble retailers.
Having a diverse retail partner portfolio is important for a lot of reasons, but one is so, if you do run out of stock, make sure you’re working with those who can support backorders.
Of course, that’s not going to happen now that you’re using that never-out list, right? But in the event of a stock outage, having partners who don’t take your product completely offline can help bridge the gap and let you bounce back more quickly when stock is replenished.
Remember, inventory is a pivotal aspect of your ecommerce play. Ensuring that you never run out of stock for your best-selling items while managing the overall inventory wisely will help your products stand out in the competitive online market.
Manufacturers who stay proactive, focus on maintaining fundamentals and use the resources they have will help navigate the uncertainties of inventory planning and effectively support your ecommerce business.
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