Smart wholesale buying could increase profit margins and result in e-commerce business success. However, like every piece of advice that’s ever been offered, it is easier said than done. E-commerce business success exceeds the face value of the wholesale purchase of items and selling them on an e-commerce site. That said, what does it involve and how can one run a successful e-commerce business?
First things first, every e-commerce retailer buys then sells some kind of product be it apparel, cosmetics, books, furniture, and many others, apart from a few exceptions who sell digital products or downloadable products. Before deciding which commodity to deal in, and at what price they should sell them for, retailers must understand a few factors coherently:
• Understand their target market and the needs of their customers.
• Know their inventory position, especially how it impacts cash flow.
• Build a strong relationship with the suppliers’ representatives.
• Measure analyze and fully grasp their role in the line of business.
As a retailer analyses the above, they should take cognizance of their competition to understand where they lie in this context according to silver wholesaler Elf925Wholesale. As such, these wholesale buyers have to do their thorough research in the first quarter of the year. This is because most suppliers hold shows and buyers’ forums in an attempt to engage their potential customers.
Some of these include small membership shows like the Western & English Sales Association’s Denver Market; the Outdoor Retailer Winter Market in Salt Lake City; Retail’s Big Show in New York and so on. Some other small e-commerce businesses may find online emails and telephone calls with vendor representatives sufficient, after which they can choose products from the pages of a catalog or website. Whatever method you choose to interact with vendors, here are 5 tips for buying a profitable inventory for your e-commerce business:
1. Know Your Customers; Be The Customer
Perhaps saying that you should know your customer sounds like a business cliche, but understanding this point and actualizing it will bring unprecedented success. Marketers, salespeople, and business consultants do not alliterate this same phrase, without knowing how much it means to businesses. That said, when you understand what your customers need, you will invest in commodities that they will buy. The best way to know what a person needs or wants is to put yourself in their shoes.
E-commerce entrepreneurs, therefore, have to take the perspective of their target customers and the easiest way to do this is by being a potential customer in the industry. If for example, you would like to deal in an online shoe shop, you need to love shoes. It’s the only way you would know what kind of shoes are trending, how to choose, style, and pick those with high demand. In fact, passion in a certain segment will take you further than any marketing skills will. If you’d like to buy woodworking tools, you ought to have experience as a woodworker!
2. Understand Your Inventory
This is a very important part of healthy bookkeeping and recordkeeping and has the potential to make or break a business. Every time you are making a new purchase, you should know the following in detail:
• What are the current inventory levels: How much stock is left?
• Sell-through rates: What is the sale velocity of a certain product per day, week, month, or quarter and based on that how many more should be purchased?
• Seasonal peaks: Are there products that sell better at a certain time of the year or month and how do you plan for these inventory requirements?
• Gross margin: What are the net sales minus the cost of products or certain categories of products?
• Product affinity: Are there products that are related to others and help sell them so need to be purchased together?
• Product gaps: Are there items that need to be in the inventory but are not. Say you sell thread, but have no needles so customers keep asking for them.
• Cash flow. How do all products in your inventory impact your business as an entity?
3. Build Relationships with Your Representatives
The manufacturers’ representatives can impact an e-commerce business positively or negatively. They help solve any disputes, adjust locations when need be, impact delivery times, and generally help in negotiating the terms. When you build a healthy relationship with these folks, they are bound to give you a competitive edge over other dealers in the same line as you.
Imagine a scenario were a hot product sells quite fast but takes time to manufacture hereby limiting the number of purchases, and probably allowing purchase by large retailers only. A healthy relationship with representatives could ensure that you get the product regardless.
4. Measure, Analyze, and Understand
Though it takes time to get the hang of product flow and realize which products are hot and trending before the entire market does, regular monitoring makes this possible. A smart e-commerce retail buyer monitors how products flow through the business and look for opportunities
• Increase profit dollars
• Earn higher margins
• Increase sales velocity
• Reduce product outages
• Closing out Slacking products say the last 5 or 10 products.
5. Watch Your Competition
Last but not least, keep an eye on your competition as you buy.
With these 5 tips, you’re assured of the best inventory for your e-commerce business.