How can better Inventory Management impact your Shopify store?
Within this blog post we are going to discuss why as a Retailer it’s important to have two things running succinctly for a successful eCommerce business, alongside the obvious – Marketing:
- The correct website applications
- Retail planning – inventory management
These points complement each other nicely, and are essential to optimizing and maximizing your sales pipeline. Read on to understand how you can unlock more revenue through effective planning based off technology and Shopify Apps.
Having the correct applications provides your store with data, insights, content collection from the customers, and ways to re-market and re-target customers. This allows you to make more money and profit. Purchase Order, Shipping Note and Invoice Parsing to get real a real time view into cash flow is also a huge workflow optimisation many overlook. There are a lot of Apps that can enable you to be on top of your inventory and cash flow. They are the most invaluable sources you can have in terms of understanding your customer and the demand. Inventory management and optimisation takes work, but it doesn’t have to be difficult.
Using customer data to increase conversions
What I have realised as a Retail Planner from talking with the team at BackInStock is that, this data and insight is often underutilized. Sometimes the business decision maker doesn’t even read reporting emails that are sent. These emails contain statistics and conversion metrics from the previous week, and therefore a lot of this data isn’t optimized. At times, there are store owners with thousands of emails notifications queued, but not delivered, when they actually have product in stock and customers waiting for the products. This is simply because the store owner is not reading emails and engaging with the platform to optimise store sales.
Pricing packages for a Back In Stock App, including these insights range from 100 email notifications a month to 50,000 stock notifications monthly. Larger plans are also available upon request. Either way, there is a plan to fit your store’s needs as you can get 50,000+ email notifications per month from customers that are looking to purchase.
This gives you the chance to really assess the demand of a product. For example, you might have assumed a particular dress at $100 retail, (bought for $50 wholesale), could only sell 100 units max. However demand suggests that 1,000 customers want an email notifying them when it is back in stock. Being cautious you only ordered 100, so you can only sell 100, (100 units X $50 = $5,000). More importantly you know you’re satisfying 10% of people interested. Lets monetize that; your potential demand for this item is 1,000 units (1000 units X $50 = $50,000) lost gross profit of $45,000.
This links back to the reporting emails that are sent with statistics, and conversion metrics from the previous week. You can also get this information when logged into your Back in Stock admin panel. If you’re not using the reports to increase your ordering accuracy, or to understand demand you won’t appreciate the true volume desired to satisfy your customers. Meaning… potentially thousands of dollars in conversions you are missing. Inventory management is a big deal.
Conversion rates from the in stock notifications vary of course. You might learn from conversion data that from 1,000 email notifications, only 700 want to purchase (700 units X $50 = $35,000) but this is an additional $30K on anticipated. By using the dashboard data to assess demand you will get closer to the ideal order quantity, and this will also empower better planning for future purchases. There is a massive opportunity to convert more Shopify store traffic into sales. Store owners can use this to help understand if you are backing the right type of product and who your customer is. You are helping your customers, and helping yourself purchase better as you understand the consumer. You are also helping the marketing team figure out who your muse is and the customer journey via the conversion tracking.
Better Retail Planning as part of your core strategy
Retail planning can provide a deeper understanding of the data, and give you clarity on the insights via analysis, it helps you analyse the content to understand and create your muse. This gives your business direction to re-market and re-target to make more money from those customers that fit a specific demographic or type, and ultimately build a stronger team and strategy as you gain focus for buying. This helps you ask an important question WHY? Having the WHY creates reason, and provides focus for analysis. This is also where you can start to evolve your marketing strategy in order to really maximise what the data is telling you via Planning. Once you have a Retail Plan, you can track actual sales vs. plan, you can see how accurate you are with planning, and use the applications in order to understand who your customer is – then repeat.
By using applications and retail planning in parallel, you can better understand the story and their value to your business. This is where planning helps buying, via deep analysis of the numbers and the demand. Demand planning is a multi-step operational supply chain management (SCM) process used to create reliable forecasts. Effective demand planning can guide users to improve the accuracy of revenue forecasts, align inventory levels with peaks and troughs in demand, and enhance profitability for a given channel or product.
This post is contributed by Zoey Hopkins, Independent Retail Consultant at Zoey Help!