In 2011 Best Buy told customers in late November that their inventory pipeline had broken down and there would be a shortage of many of their most popular items for the Holiday season. Best Buy expected that this announcement would prompt consumers to rush to their cars or their computers and buy like crazy. But just the opposite happened; their customers set up such a hullaballoo of complaints that the company has never completely recovered from that gaffe.
It’s the same for every business, big or small; that delicate balance between overstocking and understocking for the Holidays that spells the difference between a fat and rosy bottom line and a thin and starving one. Most merchants expect to do about twenty percent of their business between now and December 31st.
Keep the following inventory tips in mind to make this season’s sales the merriest:
How early do your potential customer start their research for big ticket items they are thinking of purchasing for the Holidays? Most studies say they begin this process in October. So doesn’t it make sense for you to have your Holiday marketing strategy well in place by October as well? And to have a solid estimate of how much inventory you expect to move this Holiday season. If you want to wow consumers with bargains and special offerings you should have all details worked out before Halloween — not after Thanksgiving! So if you haven’t gotten your marketing/inventory details set yet — make it happen right now or start kissing those Holiday profits goodbye!
Whether it’s a brick and mortar store or an online store, or combination of both, inventory control can either be your best friend or your worst nightmare. It all depends on how organized and transparent the warehouse network is. An organized warehouse will have software in place that tells managers immediately if there is a shortage of any product or an overabundance of any item. If you don’t have the software or the staff in place, taking an online programming and development course could be your next best option. Accurate and organized inventory not only boosts sales but also gives the customer an exceptional service experience. This is very important to the bottom line when you consider 90% of customers who are dissatisfied, will not buy again or come back unless handled correctly.
Big ticket items are often sold for just a nano-cent over cost, in order to keep such heavy inventory moving. There’s not much profit margin there. So don’t forget small ticket items. They are often in great demand around the Holidays and can be priced so that both the consumer and the merchant feel comfortable with the exchange rate.
And after . . . ?
Merchants tend to think that all their inventory problems are over once the Holidays have come and gone. Then it’s time to sit back and relax, counting your profits, right? WRONG. One of the biggest inventory challenges is still ahead — returns and refunds. Depending on your product, you should factor in the cost of refunds, especially on big ticket items. Don’t get caught short-handed after the Holiday rush and be unable to process refunds in a timely and friendly manner. Nothing loses customers faster than a balky and rude return process that leaves customers feeling frustrated and mistrusted. Besides, studies show that a friendly and proactive returns policy can persuade up to 33 percent of customers to either accept the item over a cash refund or purchase something similar.
And all the returns must be recycled back into your inventory at the warehouse, or sent back to the originator. And if you don’t think that doesn’t take any planning, you’re in for a big surprise!