Successful stock management is key to enabling brands to thrive commercially in highly competitive and fast-paced consumer retail markets, particularly for ecommerce brands and online retailers for whom positive brand perceptions is very much down to having what customers need, when they need it, where they need it.
However, effectively balancing inventory can be extremely tricky – especially when stocking a wide range of products. Trying to anticipate what line will be popular, where can appear to be a dark art. But real-time data can be invaluable in helping to unpick trends and support planning. Alongside this skilled stock management and agile logistics can help to meet demand and mitigate against waste and lost sales.
Poor stock control can result in two main problems[i]:
Most consumable packaged goods, from batteries and bath soak to tea and tequila, will have a sell by date on them and after this date, the product can no longer be sold due to reduced quality or legal reasons. This means that out of date products will have to be thrown away, resulting in unnecessary disposal costs and profit loss.
Avoiding wastage is especially crucial in the rapidly expanding cosmetics industry. The fast-paced industry must adapt to the changing demands of customers while keeping up with social trends, so adhering to a product sell by date is imperative and requires efficient stock rotation, sometimes aligned to marketing promotion, to optimise through put.
Lose out to competitors
Placing an order online to later find that the item is out of stock can disappoint customers and drive them to a seek out a competitor alternative, negatively affecting customer relationships and damaging brand loyalty.
Statistics show that almost 70% of online shoppers became ‘lost sales’ when faced with a stock-out product. Additionally, 65% of shoppers who became ‘lost sales’ found a similar product to the one they were searching for through a competitor site[ii].
Here are three key tips to help you make the most of your stock and avoid losing sales:
- Be organised
It’s important to keep track of all products by keeping detailed and accurate records of stock. Reports show that over 43% of small companies don’t track inventory or use manual processes to do so[iii].
An effective method to organise stock is the First-In, First-Out (FIFO). This method assumes that inventory purchased or manufactured first is sold first and newer inventory remains unsold. This technique ensures that the stock is systematically rotated to avoid products going out of date before they are sold and will help to monitor how much stock is left.
- Be prepared
The key is to be aware of inventory stock which is nearing its sell by date. Flash sales, which involve reducing the price of stock that is nearing its sell by date, will help to sell products before they become obsolete. Low prices are appealing to customers and will boost sales in a competitive market.
It’s also important to be able to forecast sales. Be organised and prepare your stock for busy periods, such as Christmas, where sales will likely increase. Don’t let your stock completely run out as this could damage customer relationships leading them to look elsewhere. Also, accurate data will be able to tell you regional variations to support B2B sales, so for example you may find some lines are more popular in the South East than in Scotland and distribute stock accordingly.
- Know your business
Overstocking is one of the most common issues in warehouses made by supply chain organisations. It’s imperative to reduce inventory levels to suit the requirements of your business to ensure that you’re not paying to store stock for too long.
This is particularly important when storing beauty cosmetics, such as foundation. Beauty products are always evolving, changing their ingredients and updating their products. Inevitably, new make-up launches will decrease the value of old products; so your logistics partner must be responsive to changes in the industry and able to adapt their stock appropriately.
At Cygnia, we pride ourselves on being responsive to consumer demands by acclimatising to shifting market demands and consumer tastes. By creating fresh and innovative solutions, we are able to help brands effectively manage stock and deliver value for our partners, building brand reputation and reducing waste in an increasingly competitive market.
Want to know more about how outsourcing to a logistics partner could help improve stock management? Get in touch.