Preventing Slow Moving Inventory for Ecommerce Sellers

March 24, 2014

How can I move my slow moving inventory part 4:

In our last few posts, we’ve looked at how to identify slow moving inventory with the help of your ecommerce fulfilment partner, how to market it better on your own website, and how to get the most ROI on it when it is time to cut prices. Better still if you didn’t get into that kind of trouble in the first place, right?

Planning to prevent SMI can be difficult. When you first start carrying an item, it can be easy to misjudge demand, and you almost never know what the most efficient order size would be. EOQ, or Economic Order Quantity, is the order size that maximises your profit in a given time, considering unit price, mark-up, turnover, delivery and fulfillment costs.

The first time you order stock, that is mostly guesswork

So, step one is to determine EOQ as accurately as possible before making the first order. Look at similar items you already carry, especially items from the same manufacturer or distributor, if possible.

Look at how much marketing effort you put into the existing item, and don’t expect the new one to sell as well if you do not spend that kind of effort on it. Consider the carrying cost per unit as well. If the carrying cost increase for stocking twice as many units destroys the volume buying price reduction, you would be creating slow moving inventory. Especially if it is your first time carrying this item, be cautious, and buy small. These are no the economic times to be taking risks, especially for ecommerce retailers. Amazon can afford to lose money every quarter, but you cannot.

Step two is to keep your marketing campaigns aggressive, active and interesting. Change your product categories once in a while. Make sure your customer database is accurate, up to date, and tracks important data. Ecommerce is about small companies, for the most part. While being small has several disadvantages, it allows for a great deal of agility. Try to walk the line between your site and marketing efforts being too boring to attract new customers, and being too chaotic to give return customers the comfort of familiarity.

Above all, don’t be afraid to discontinue offering products that just don’t sell.

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