Being able to increase your inventory breadth successfully means being able to command a breadth of different skills, both quality- and quantity-related.
Firstly you need to be good at sourcing and procurement. This involves constantly researching, finding and working with new suppliers. Some of your suppliers may supply you with physical stock for your warehouse. Others may be virtual suppliers, holding the stock for you and, when you make sales, fulfilling and the dispatching the orders on your behalf.
Secondly, carrying a large breadth of inventory increases the burden on ordering items to replenish stock, as well as back ordering for items that are in demand. The more breadth of inventory you stock, the chances are the more supplier relationships you have to manage, and the more ordering and re-ordering you need to do to stay on top of your stock levels.
Thirdly, with a range of suppliers to work with, you also have a range of different supplier information coming into your business, and probably also a range of quality of information in those supplier feeds. Some suppliers may be paper-based, others may send you spreadsheets with stock and barcode information, and others may use automated feeds. Whatever the means they use to send the information, suppliers will structure the information on their products in different ways, with varying levels of completeness. Your mission, is to make sense of and manage all this data.
Making sense of SKUs
Although we’ve established that when it comes to inventory breadth it’s case of ‘the more the merrier’, there are clearly some challenges that need to be overcome by merchants looking to increase the range of products they offer. An important consideration is SKU coverage. In many retail sectors it’s not simply a case of one version of each product. In addition to the Master SKU for the base product, there is a sub-SKU for each variation. Sometimes there’s even a listing SKU for each variation according to the marketplace or channel in which it’s listed. This both increases and complicates the range of inventory that your ecommerce software needs to manage.
Sourcing strategy becomes important when you’re dealing with a large range of products. The internet has widened your pool of potential suppliers to span the world, which is great for choice but also brings with it the legal, regulatory and tax requirements behind importing goods from overseas. China may be the cheapest source for the products you sell, but it’s more complicated and takes longer than getting them from Chinatown.
Re-ordering your inventory
Re-ordering is also a challenge when you have a breadth of inventory and suppliers. If you’re doing your re-ordering manually, then you need to know how fast each item of inventory is selling, how much stock you have left and how many days’ worth of stock this represents before you run out. You also need to factor in the lead-time for getting the stock in from the supplier, as well as keep all the paperwork under control. When you’re out of stock, especially for popular items, you’re losing sales and not growing your business.
Using virtual suppliers and drop-shipping your orders means that you don’t have to hold the stock in your warehouse; someone is doing that for you. It also allows you to broaden the range of items you sell. You still need to get accurate and up-to-date levels of stock your suppliers are carrying, so that you don’t oversell. In addition, when you do sell an item which is held virtually, you need to get the purchase order and the buyer’s delivery details to your supplier. You then need to make sure you show the adjusted stock levels for the item across all your multi channel marketplaces. Clearly, this gets more complicated the more virtual suppliers you use, the more virtual products you offer for sale, and the more places you offer them.
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