The Importance of a Healthy Inventory During the Holiday Season
The holiday season is the busiest time of year for ecommerce businesses and retailers alike, all looking to maximize their sales during this special time of year. The most effective way to maximize your holiday season is through a robust inventory that is functional year round, but particularly during the holidays. It’s easy to get wrapped up in the excitement of sales, but it is critical to remember that inventory management is a core responsibility that cannot be neglected.
What is a healthy inventory?
A healthy inventory can be deemed fit if it possesses optimal stock levels, has the right percentage of each product given present and future demand, and has no unsellable goods in stock. In regards to the holidays, “Brands need to ensure that they have enough product to get them through the busy season and a bit more for the new year,” says Jessie Kunkel, Amify’s Inventory Manager, as she stresses the significance of having a safety stock during the merry months. A safety stock (inventory that serves as a buffer in the event of a sales increase) is indicative of a healthy inventory because it demonstrates that an organization has done its research and is anticipating the future.
Why is it important to have a healthy inventory?
It is essential for retailers to hold inventory at the top of their priority list. Not having inventory means that a company is not generating sales, which ultimately jeopardizes the longevity of the organization. It is much better for an inventory team to be proactive rather than reactive to avoid costly sales losses that have the potential to ignite a chaotic, internal fire.
In addition to the preceding premise, a healthy inventory is important because it makes cash available for other company expenses and operations. When an inventory is unhealthy, capital is tied up in stock that is expensive to acquire and hold. Inventory is expected to be sold, but when it doesn’t, its value and projected profit is inaccessible.
Having a healthy inventory is important because it allows an organization to compile accurate financial reports. Companies that have an inventory to manage must reference their inventory against accounting data to prevent major discrepancies, which is critical information for investors and shareholders. An unhealthy inventory and inaccurate financial reports may cause stakeholders to withdraw their assets, resulting in another house fire.
How to achieve a healthy inventory?
A brand can have a healthy inventory by avoiding stockout, also known as running out of stock. Not only does running out of stock cause companies to miss out on the money generated from individual sales, but it also causes companies to lose customers permanently, which is an even greater loss. The key to prevent going out of stock is to forecast the right stock and the best sellers. Predicting which inventory elements need to be purchased ahead of time means that high-demand products will be readily accessible when the crazed customers are geared up to make their holiday purchases.
Additionally, a company can have sound inventory by avoiding overstock. When there is an overload of certain items it can be extremely difficult to get rid of the overstock due to a couple of factors. For starters, unsold inventory tends to go out of style the longer it sits on the shelves. Furthermore, products that linger around storage units have a higher chance of getting damaged or stolen. As a direct result of overstock, brands will have to write off or discount costly inventory, dramatically affecting their bottom line and revenue streams. Nonetheless, meticulous forecasting can save the day before the flame even recognizes its potential. Referencing historical sales reports from years prior can give brands the insight they need to purchase the right assortment of product based on the seasonality of their items.
The online retail industry is already well into the holiday spirit and it is particularly imperative for brands to have a healthy inventory, otherwise they will miss their window to send in product and capitalize on the societal notion of holiday consumerism. To learn how Amify can whip your inventory into shape this holiday season or the next, get in contact with one of our experts today!