Regardless of the size of your ecommerce business, it hurts the bottom line when you lose a sale, especially when it’s due to preventable reasons. And one of the most obvious reasons for a loss of sale is an essential part of the supply chain management pipeline – inventory planning.
Here are some common mistakes that ecommerce businesses make that can make them vulnerable to Loss of Sale.
- Having too much inventory: Overstocking can cost your business, especially when you have too many units of the wrong product, leaving very little space for other products that would sell immediately. You may also end up spending more on storage, become vulnerable to your cash being tied up, and even risk expiration of your products.
- Not restocking on time: Running out of stock can happen for many reasons – lack of space, limited units, or fast moving items. The problem arises when you neglect restocking quickly. If your customer visits your business page only to see the ‘out of stock’ tag too often, you could lose a sale and a customer.
- Not investing in warehouse organization: It doesn’t take a math genius to know that any inefficiencies in your processes translate to financial loss. With inefficient warehouse organization, you may end up with inaccurate or delayed orders that often lead to refunds and lost customers.
Good inventory management directly impacts your profits and cash flows. With the right measures in place, you can ensure that you only buy the amount of stock you need, minimizing stockouts and other inventory inefficiencies. It also allows you to carefully strategize every aspect of the supply chain – right from early production and stocking to the final sale.
So, what’s the answer? Inventory planning!
At Tenovia, we work with businesses of all scales to solve inefficiencies and issues faced by supply chain teams, inventory management teams, as well as category managers to facilitate strategic transformations in the planning and replenishment processes. Perhaps the most useful tool in this endeavor is effective ROS – an in-house metric available on our analytics tool Tensight. Simply put, effective ROS is defined as the rate of sale of an article factoring the actual number of days it was available in the inventory.
This simple metric allows us to create highly customized plans that can be tailored to different organizations and marketplaces on a style-level based on each channel’s performance. Once we receive the data from the metric, we break down the allocated inventory and create categorizations on the basis of warehouses, regions, etc. It was this metric that allowed us to transform inventory processes for leading footwear brand Paragon.
How we helped footwear giant Paragon prevent loss of sale
Manufacturing over 14 Cr pairs of footwear each year, Paragon owns more than 12 fulfillment centers and a veritably large catalog of products. Given this vast inventory, planning then became a unique challenge. In addition to the diverse product range, Paragon had to keep in consideration the large number of SKUs as well as product seasonality. This often led to high out of stock percentages and consequently, losses in sales.
However with our strategy, Paragon’s supply chain team was able to achieve seamless replenishment and minimize out of stock percentages. Their sales targets increased 15% month on month. The brand’s aged inventory also reduced by a whopping 37% in six months. During the same period, their out of stock percentage decreased from 20% to 7%. Today, owing to its streamlined process, Paragon is now an accredited Platinum Seller on Flipkart. All this just by tweaking the inventory planning process and no additional marketing.
Revamp your inventory planning with Tenovia
If you too have been experiencing a gap in inventory management, you’ve come to the right place. Just like Paragon and a host of top brands across the country, we can help your business ace the inventory game with cutting-edge customized solutions. Not only will we help you figure out the gaps, we will also put in place processes that will address your unique challenges in the long term.
Determined to never lose a sale to inefficient planning and management? The experts at Tenovia have got your back!