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Inventory Management

Planning a new business is very exciting. If you take some time to do some extensive planning, it can be rewarding instead of a source of frustration. If you plan on starting an ecommerce business or a retail store front, the eternal questions usually boils down to inventory.

Customers today want a variety and want to have choices even if you cater to a niche market. You might blame this mentality on bigger stores like Wal-Mart. They have large purchasing power and carry tons and tons of inventories. But planning inventory for your endeavor has to be planned a little more carefully. You will want to start out building your brand or authority by having enough inventory to draw people to your store or website. Once you build up a reputation, people will come back to you again and again. The challenge is how much inventory can you afford to buy and how much can you afford to keep on hand. Clearly there is a ying and yang relationship at work here.

Our first online website started with 10 pallets of inventory purchased from a reputable company in China. We only had knowledge of the demographic market we were targeting but little authority. It took some time to tell the world “we are the experts here, so come buy from us.” You do this by being established, word of mouth, and in the case of e commerce, links to your site. So at some point things went well, but then we ran out of inventory. Things stopped in the sales department obviously. So then you have to order again, but there is a time function involved when importing that you have to plan for. It takes about 30 days of sea travel for goods to show up plus there is lead time for the factories to make and prepare your items.

The next order was a full twenty foot container (about 15 pallets). Now we were back in business but you always need to be thinking the next container ahead. On one hand you do not want to hold your inventory since the goal is to turn it as fast as possible. On the other hand you do not want to run out either. Hence the new problem is one of balance.

So what’s the magical answer? There isn’t one. Why? Because all business models are not the same. So what you have to do is trial and error your way to what works for your business. Looking at trends will definitely help you with the importing timeline. If you are a storefront you will notice that your location has a lot to do with how fast your inventory is turned over. If you are a website then you know the age of the site, the number of links and your marketing plan have a big factor on your search engine positions. Improving those positions always allows for your inventory to turn faster which gives you better tools to figure out your importing decision.

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