The holidays are over. Let’s all take a deep breath.
It was the best holiday season on record for online retailers, as online sales jumped a whopping 20% over 2014; but don’t pop your leftover champagne just yet. There are a few areas of improvement that became clear during the holidays, and inventory is one of them.
Out of stock situations are embarrassing: you work hard to get shoppers to your store with clever advertising, entice them with your great prices and helpful product descriptions--but then they can’t add an item to their cart because you’re all out of it. Let’s make sure that never happens again.
Inventory is an inherently messy part of retail. Even the most successful retailers have ended up with too much or too little stock at some point, but that doesn’t have to be the case anymore, thanks to data. A quick look into historical sales data and best selling products for your specific vertical can determine which products improve profit margins and sell well consistently. Let’s dig deeper into these two ideas.
How Historical Sales Data Can Help
When you change anything about your business, it’s important to have the data to figure out where you’ve come from and what impact your tweaks are making. If a product isn’t selling well, maybe it’s because the pricing was uncompetitive or maybe it’s just because unseasonably warm weather kept shoppers from buying it (this is a common issue for clothing retailers). Either way, knowing how many sold and under what conditions historically will tell you what strategy is most effective.
Like most parts of online retail, inventory is an ongoing process. You can’t just order once and sit back and relax. Instead, an optimized inventory must be constantly reevaluated to figure out which products and in what quantities worked, and what you should avoid in the future. In the case of inventory, it’s definitely true that you have to look back in order to move forward on the best foot.
Why You Should Track Best Sellers
You already know that your product assortment has a huge impact on your success as a seller and some products are more important than others. The Pareto Principle suggests that 80% of your sales will come from 20% of your stock, and that’s where best sellers come in. Having the top items in your vertical will draw shoppers to your site and your pricing will help them complete the purchase. So how do you make sure that you’re always stocked up on the hottest items that will take your online shop to the next level?
That’s where data comes back in. In order to find the best new products to add to your assortment, you need to keep track of how they’re selling and how they’re ranked on top marketplaces, especially Amazon. First, retailers need to choose the category or categories that will expand their selling capacity. This makes it possible to pinpoint the products that will increase sales. Next, a combination of popularity trends (such as rating and rank on Amazon over time), cost, and pricing information will give you an idea of how volatile the item is and how much you’d be able to make from each sale. After all, you’ll only want to add the products that are consistently highly rated and the most profitable to make the most of your selling experience.
An advanced last step would be to perform a gap analysis based on the top products you find. Sure, some best selling products might have slim margins, but maybe all of your competitors carry them. In that case, it might be a good idea to put your typical margins to the side and carry it anyway to avoid losing customers. You can always make up those margin dollars on unique products that you don’t have to price quite as competitively.
How to Speed up Inventory Improvement
The easiest way to keep up with best sellers is by automating the process. That way you’ll never sleep on the top selling products again. Now that the holidays are over, all retailers are looking for the next top products that will speed up sales closer to where they were in mid December. The post holiday sales slump doesn’t have to be a reality with data-driven assortment planning. The combination of internal historical sales data and data from monitoring best sellers can help any retailer keep with trends and even lead the pack in their vertical.
About the Author
Angelica Valentine is the Content Marketing Manager at Wiser, the leading provider of data-driven pricing and merchandising solutions for retailers, brands, and manufacturers. Angelica is an Oakland native who loves writing, exploring, and participating in music, food, and cultural events around the Bay Area.