Getting the Right Assortment
VALUABLE TIPS FOR WINDSURFING RETAILERS - CHAPTER #4
You've identified suppliers that offer reasonable margins that fit your operating budget's targets based on your realistic sales turnover goals.
They're either offering one brand as a comprehensive solution, or a portfolio of category brands with similar commercial terms that allow you to have minimal points of contact for an easy life.
You're also savvy about 'effective margin' being higher with producers that hold stock and allow you to be more agile and smart with your cashflow than those luring you with deceptive bulk deals or high-on-paper markups without genuined added value.
The brand/s they sell have the best balance of short shelf-life and extended lifecycle and you're confident their logistics are up-to-speed for you trust them to deliver in time to optimise your short selling season.
Perhaps these items are not the high-end brand you originally had in mind, but at least now you have confidence in servicing customers' actual needs and that you are working within a profitable structure.
You feel you know how to be streamlined and efficient by being conservative and minimising stock investment risk - but are your walls now bare and shelves empty?
As a physical store you will need stock to display and merchandise to attract more walk-ins. And as a webshop you will need the smaller, cheaper items that eat into effective margin to hand rather than make a loss with ineffective drop-ships. (More on this later in the series.)
So What do You Order?
In this case, having chosen a comprehensive, reliable supplier, your absolute best option is to order 'wide' instead of 'deep'. It's definitely better to order 'one of everything' (especially lower value parts that walk-ins might expect for service, before then being talked into a new mast!) or right on the minumum order quantities of as many items as you can, than struggling to pick the right sizes and amounts of so-called core products.
With uncertain meteorological and financial climates it's impossible to predict what will move fastest, so roll with it once you're underway and keep cash free to finance meeting demand for faster-moving goods.
This first consigment is of course where you leverage your best margin and pre-order terms before focusing on managing your effective margin, relative to actual demand and available mid-season supply as we examined earlier.
If you had picked multiple suppliers to sprinkle small amounts of units across multiple categories you would create a headache of extra and time-consuming administration such as order tracking, stock-taking, payments - and of course not gained the benefit of higher order-value discounts because you did not order 'deep' with any of them. (So, by using less suppliers you're effectively buying 'deep' in value terms, which is much smarter.)
- Buy Wide not Deep to Fill Shelves
- Purchase from as Few Trusted, Comprehensive Suppliers as Possible
- Maximise Pre-Order/Bulk Discounts
- Minimise Administration
- Optimise Ongoing Profit with Fast Turnaround Items