4 Quick Tips for Creating and Managing a Successful Inventory Shop (Inventory Series, Part 2)

In our previous post, we explored why inventory has made a comeback. Today, we’re considering three tips you can use to optimize the inventory option for your shop. 

Here are four ways you can both maximize your opportunity for and mitigate your risk when it comes to building a successful inventory shop experience for your customers. 

(I) Use Speed to Your Advantage 

E-commerce skyrocketed to new heights in 2020 due to the pandemic, accelerating 10 years of growth in online shopping in just three months, a staggering leap in progress.

Beneath the surface, our behaviors as buyers shifted too, perhaps permanently, one is in relation to speed. As everyone in this industry knows, the consumer today expects fast-as-humanly-possible turn-times. Faster, even. Out of necessity, the consumer moved much of their purchasing online, and in doing so, their expectations for faster delivery increased. 

Consistently, more and more retail brands are shipping immediately, creating an opportunity for you. Instead of fighting your clients to allow for a budget for inventory, you can simply cite their own experience when it comes to buying by asking: When do they expect their orders to arrive when they buy something personally? 

Moreover, every brand has certain items that are mission-critical products. Perhaps it’s a uniform program or a shop that contains kits for a new sales initiative. Inventory is a perfect solution for those must-have priority products. Dropship orders still have their place, but for higher priority merch, use speed to your advantage by suggesting inventory as an option, your clients and their clients will thank you for it. 

(II) Adopt the drop 

Inventory issues got you going crazy? 

Stockouts are the bane of the industry right now. Everyone is struggling with inventory levels. Don’t make your shop a victim of stockout problems. Here’s one way to work around it, while at the same time, sell more merchandise (in a cool way): 

Put your marketer’s hat on and adopt the drop. Streetwear brands like Supreme have mastered the art of creating highly-coveted goods by employing a scarcity model through “The Drop,” a limited supplies tactic, “get them while you can.” 

What’s ironic is that Supreme started this massive trend called The Drop out of necessity, due to inventory problems. James Jebbia, the founder of Supreme, in a GQ interview, stated, “It wasn’t any kind of strategic planning. It was more out of necessity, when we made things, not having the certainty and means to be able to order an item for the whole season. We’d make some tees, some sweats; if they don’t sell, we’re going to be stuck with them. So we made less quantity because, again, we didn’t know. And if it was really good, it would sell. Then we had nothing left to sell. We couldn’t call up the people and ask them to remake it, nor did we really want to. So it was: ‘Okay if that does well, we have to replace it with something.’  … We always wanted to do things that we feel people would really get a kick out of, really love.”

Adopting the drop is also adopting the language and rhythm that your client and their client (the end-rejoicer), is familiar with, adopting the way they think -as consumers- is a beautiful way to bridge B2B selling with trendsetting, plus, avoid the land mines around inventory suddenly being unavailable. By advertising that your inventory is “while supplies last” mitigates the buyer’s frustration. 

Moreover, adopting the rhythm of a drop gives you rails to run on when it comes to when you present new ideas to clients. When you are creating drops for merch, that means you and your team and your buyer, get into the rhythm of product selection every Spring/Summer and Fall/Winter. 

Scarcity, smart marketing, and creative merchandising create a high-demand merch experience modeled on covetability (a word coined by our friends at Coolperx). 

(III) Build a Shop with Harmony 

The pros know that when you build a shop solution with the entire brand strategy in mind, you need to accommodate both inventory and non-inventory options, mainly, to allow more product options without taxing your client’s budget. 

But for inventory, estimating usage so that you’ll know what to buy is tricky (ask any supplier). And with a brand’s shop, it’s even trickier. Often, you or your client won’t have historical purchasing data to guide your inventory decisions. You (and the client) also get pretty damn excited about the merch you’re designing together (as well you should), but sometimes, your enthusiasm overrides your reason.  

I know it’s tempting to take that 5,000 piece hat order from the client for inventory but, unless you can demonstrate reasonably that you’ll move that supply of merchandise in 3-6 months (based on actual purchasing data, not on gut) don’t do it. Settle for less QTY and shift that budget to either other items or, offer a few more drop-ship options. 

In the skucon breakout (Secrets to Successful E-Commerce and Shops with Tracey Clingen), Tracey advised that no matter what quantity your customer requests, be sure it’s moving inventory. Regardless of the client, “four turns a year” is how Tracey and her team at Genumark advise their clients, this keeps your store fluid and your selection fresh. Test product through drop-ship items, she advised, and don’t gamble on unknowns with inventory, your store will be more profitable and more active if you’re aware of that basic rule of thumb.  

(IV) Create an Apparel Matrix 

Though you might not have historical purchasing data, something you do have (now) is a decent estimator for what you should inventory for your shop. 

In our industry, most shops are at least 30% apparel, which is also where the largest investment for inventory comes from, as apparel items are a higher unit price (typically) than hard goods. It’s one thing to inventory 1000 pencils, it’s another matter entirely to inventory 1,000 polos, and not just because of the unit price but also: sizes. 

Following is an apparel matrix I picked up years ago from Ira Neaman at Vantage Apparel. It’s an estimator you can use to make an educated guess (based on universal buying trends) what percentage of sizes you should inventory. As a modest figure, and just as an example, if you were going to inventory 12 shirts, you would inventory the following in sizes: 

SM: 1

M: 2

L: 4

XL: 4 

2XL: 1

You, of course, would inventory more than twelve but that gives you an idea of percentages. A rookie mistake is to order the same quantity in all sizes but the pro takes it even further: Once you have a successful store for a customer, go back and look at which sizes moved the most for that particular brand and create your client’s unique apparel matrix. An energy client with folks working in the field might skew to larger sizes, shirts for a tech company might skew smaller, every brand has its own matrix. Knowing this, will help you and your client make an educated guess as to where to invest your inventory dollars. 

The bottom line? 

When it comes to inventory shops, remember: You are your customers’ advocate, not their siphon. A promotional product client sticks around for two years (on average) but a successful shop relationship can quadruple that number because you both become deeply vested in the outcome and, you become their reliable partner who thinks beyond just landing the next order, you think further: fulfilling your client’s mission.