Inventory. Having enough is everything. Along with demand for your product, customer delight, and strong financial fundamentals, it’s the lifeblood of your company.
The holiday season is the most challenging and trickiest time of year to hit the mark with balancing inventory. It seems simple: purchase the right items, at the right time, in the right quantities. Of course, it’s not that simple.
Too much inventory – and you face an overstock situation. Too little – and you are understocked and scrambling to increase product inventory. In either situation, you are eating into your profits.
You’ve worked hard all year building a great company. As the holiday season approaches you need to position your business to take advantage of the uptick in consumer spending and maximize your share of sales.
After all, this is your best chance of the year to amplify your brand, bring in record sales, and create a buzz for your product and services.
So how, can you stay on track?
Did you know that in 2022, global online sales for the holiday season topped $1.14 trillion? Taking prudent steps now will ensure your business wins its fair share of the 2023 pie.
Further, a key trend being predicted for 2023 is that due to inflationary pressures shoppers will delay buying decisions until much later in the cycle – as they wait for discounts. This means you will likely need to keep more inventory in “safety stock” as demand for your product and service will spike later this holiday season.
Planning now to have more safety stock to meet any inventory shortfalls will help you be prepared for the expected delay in the buying season. At all costs, you want to avoid a stockout situation, which usually occurs for 3 reasons:
So, what are the keys to hitting the perfect inventory balance?
Don’t think it’s real?
Take this nightmare scenario for example. Let’s say you sell through Amazon. Your inventory is low as you head into the holiday season. You may not have enough cash on hand to create a bank of safety stock. As the holiday season kicks off, there is sudden and unexpected demand for your product.
Orders come in, but you find yourself short on inventory. What happens? Amazon removes your listing, and your company is marked “inactive.” And that means you can’t sell! Nobody is happy in this scenario – not your customers, not Amazon, and certainly not you.
In this situation, here’s what happens next:
So, you can see there are dire consequences to not thinking through your inventory plan – among them -- loss of revenue, and customer and business partner dissatisfaction – and these can have long-term ramifications on your business.
There are three key elements to your winning inventory plan as we approach the holiday season:
Great Sales Forecasting – Use predictive sales data you’ve collected over the past several years and double down on sales forecasting accuracy. Due to inflationary pressures, you now know shoppers will be looking for late deals, meaning you will need to be prepared with on-demand inventory. Also, check with your partners. Amazon, for example, has tools that can help.
Flexibility – You need to enter the holiday season by making every aspect of your business as flexible as possible. Do you working capital on hand to weather the unexpected? How much safety stock do you have in inventory? Are you meeting regularly with your supply chain vendors to understand their challenges? Asking these questions now will help increase your business agility and prepare for the unexpected.
Working Capital – Most important of all, you need working capital to ensure you have immediate access to cash to prepare now, and respond later, to changing customer buying pattern. You may be unsure of the best way to obtain working capital. Thankfully, there are innovative companies that can offer revenue-based financing (funding to cover a pre-agreed-to percentage of revenue). One such company is Stenn. In as little as 48 hours, you can obtain up to $10 million in working capital.
Make the most of your plan. Be ready. And have the cash you need to grow your business!
© Stenn International Ltd. All rights reserved. Any redistribution or reproduction of part or all of the contents in any form is prohibited other than the following:
Disclaimer: The above article has been prepared on the basis of Stenn’s understanding of the subject. It is for information only and doesn’t constitute advice or recommendation. Whilst every care has been taken in preparing this article, we cannot guarantee that inaccuracies will not occur. Stenn International Ltd. will not be held responsible for any loss, damage or inconvenience caused as a result of anything published above. All those applying for credit should seek professional advice when doing so.