Help with inventory levels needed

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Hi guys,

Can you provide your advice about inventory levels if we are not able to use a drop shipping method.

Our suppliers are overseas and it will take them 7-10 days to deliver the items via express and it will also cost quite a lot for single orders as we will be paying international shipping for each order. We have opted to purchase the products in bulk and use a local fulfillment house to do this.

As a result we have run into our first major dilemma - We are selling small accessory items and are wondering how much we should be stocking up on? Should we be focusing on 3 of each, 10 of each etc? Ultimately we do not know how much we can sell, but we also do not want to lose momentum if the sales start coming through for popular products and have to make our customers wait approximately 14 days in total to receive their product.

Our market will be mainly within the same country so by normal or express post will usually reach the customers within 1 - 5 days. I don't know how happy people will be waiting 14 days for an item to be restocked and delivered but at the same time we do not want to pay additional hundreds of dollars on inventory if we cannot sell.

Your feedback would be much appreciated.

Thanks,
#inventory #levels #needed
  • Profile picture of the author Jesse L
    Not knowing your products or the pricing, it really is hard to say.
    You may just have to stock several of each, then if sales are greater than expected, order accordingly. Of course this may mean you are out of stock and should say so. BUT you can put a notice of such and do as Amazon.com and Not charge their card until the item has come in. Or give a slight discount coupon for not having the item in. Then capture their information and notify them when the item is in stock.
    But you are not going to know how much you should stock until you have done some testing and gained experience in the matter.

    Good Luck!

    JL
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    The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather a lack of will. – Vince Lambardi

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    • Profile picture of the author alksense
      You won't know until you test...

      I recommend starting with NO INVENTORY. Make your website's "Add to Cart" buttons open a pop up that says "Due to high demand this item is on backorder for the next two weeks. Please enter your email address if you would like to be notified once this item is back in stock."... and have an email submit form under that.

      You will build your list of future customers, know how to much to order from your supplier and you will not waste capital purchasing inventory that may never sell.

      Good luck!
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      • Profile picture of the author boatree
        Originally Posted by alksense View Post

        You won't know until you test...

        I recommend starting with NO INVENTORY. Make your website's "Add to Cart" buttons open a pop up that says "Due to high demand this item is on backorder for the next two weeks. Please enter your email address if you would like to be notified once this item is back in stock."... and have an email submit form under that.

        You will build your list of future customers, know how to much to order from your supplier and you will not waste capital purchasing inventory that may never sell.

        Good luck!
        Thanks for the advice, because our wholesalers provide quite average images of the items they sell, we will need to order in small amounts, take new photos + photoshop and upload!
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      • Profile picture of the author Ryce
        Originally Posted by alksense View Post

        You won't know until you test...

        I recommend starting with NO INVENTORY. Make your website's "Add to Cart" buttons open a pop up that says "Due to high demand this item is on backorder for the next two weeks. Please enter your email address if you would like to be notified once this item is back in stock."... and have an email submit form under that.

        You will build your list of future customers, know how to much to order from your supplier and you will not waste capital purchasing inventory that may never sell.

        Good luck!
        Hi Anton!!

        Any experience with a software or API that can manage inventory and orders between website owner and supplier / dropshipper ?
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    • Profile picture of the author boatree
      Thanks very much Jesse, we will have to do this.
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  • Profile picture of the author shifat
    I think its better you stock every product you sell a bit so you don't ran out of products when some customers looking for a particular product.
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  • Profile picture of the author Ryce
    Found 3 plataforms that seems more solid.

    Anyone tried one of those below?

    Linnworks

    or

    Enterprise Software for Drop Shipping | DropShip Commerce

    or
    Ordoro
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  • Profile picture of the author Silas Hart
    Concentrate on offering a volume (large selection) of inventory at first with plans on narrowing down.

    I'm going to relate my experiences in selling things such as clothing accessories and cell phone accessories.

    To financial be able to offer a large selection of inventory you will most likely be investing in inventory of anywhere between 1 and 5 pcs per item, of as many different items as possible. You are spreading yourself thin, but if your profit margin is good then you can still survive while narrowing down the most commonly viewed items and most commonly purchased items which gives you more knowledge of the items your target audience is interested in.

    Never show "This is out of stock" - because this is something that turns away customers. Not only from the item, but from your entire website and your potential customer is unlikely to return. You can instead allow them to Checkout as regular, input their purchase information such as their credit card details

    When I started a side businesses selling phone accessories, I had to purchase a large variety of products so that I can have each one photographed and detailed. Out of all of my inventory, only about 20% of it was getting attention from buyers. I might have seen a purchase for one of my lesser known products, but it wasn't worth investing $2.00 for a case, the cost of overhead in photographing it and databasing it, and letting it sit in my warehouse for 5 months before it was sold. I classified my inventory as "Hot" "Medium" and "Cold" and made it so my total purchase amounts typically consisted of 80% going towards Hot items, 15% towards Medium, and 5% towards Cold - which were usually items that I THOUGHT might be hot but had no prior evidence as being so from other sellers or my own data. Im usually right, such as buying a Ninja Turtles iPhone 4s Case that was just made by manufacturers (or something like that), and I can move that to another category.

    When you are able to narrow down your purchases to what customers are most likely to purchase then that is when your profit margin increases. You can go from the standard wholesale rate when you buy 1 or 5 of a specific item, to reduced wholesale rates when you buy 100 of the same item. This could be a reduction in an individual price such as paying $2.00 per item when buy 5 to paying $0.80 per item when you buy 100.

    Many people who utilize dropshipping go from dropshipping 1000 different items to then investing in inventory of 100 different items. If they stayed with dropshipping after narrowing down, they wouldn't be able to "reap the rewards" of a high profit margin per item when the negotiate for bulk purchases.

    What to do with inventory that doesn't sell is you can offer it as freebies to past customers who made a large purchase, people who fully register but don't buy anything, or offer them at a low price (a sale).
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