What inventory do you order for your online store?
The simple answer to the question posed above, is “Inventory that sells.” I am still learning what sells and what doesn’t sell so I don’t have a good answer. I think that each store owner has to find their own way. Don’t just buy what you like but attempt to buy things that the majority of people like. There are many articles written on this subject across the web. What I wanted to discuss was what how inventory for an online store may differ from inventory in a brick and mortar store.
My store, Osmun Gifts, is an online store only. I am going through a learning curve here and I am hoping that it isn’t too expensive. My first experience with ordering the wrong product was that I ordered a rustic votive holder. It is small, compact, inexpensive and has a nice western flavor. What is wrong with it? Well, if my store was a brick and mortar store, it would be perfect. However, everyone must buy online to get it from me. I cannot fit this item due to the glass votive holder into a small flat rate priority mail box. It almost fits but not quite. If I offer, Flat Rate Priority Mail for it, then the cost of mailing is more than the retail cost of the item. Some people might buy it but I can’t think of when I would ever pay more for shipping than I would for the item from a store. First class mail and regular priority mail have the same cost problems. The darn package is heavy because the item is made of cast iron. The other standard shippers are even more expensive than USPS for such a small item. To reiterate, the product is a good product but getting it to the customer in my case is the issue. My hope is that I can break even on the sales. Lesson learned here is that the shipping of a product is almost as important as the product itself when doing online sales. Going forward, I will pay much more attention to how I can ship products to the customer. In addition to the aesthetic appeal, I will note the weight and size of the product before I buy it.
On this same subject of learning by doing, very tiny products don’t work well either. I have what I believe are some really good products that are both very small and inexpensive. These would sell well if they were sitting on a counter where customers could see them in the checkout line. They would be able to pick them up and for a small price buy them. A customer will often pay cash for an item if it is $5 or less. Again, an online store doesn’t have that option. Impulse buying is not the same. In addition, I have found that to show these small products, you need close-ups when showing pictures on the website. This however, can lead to a misconception about the actual size even when the measurements are given in the listing. Customers think that the object is larger than it actually is and complain when the item arrives in their mailbox. Finally, when the gifts are really inexpensive, it is difficult to make a profit. As an example, suppose that the profit on items after all expenses are paid is 10%. Sounds great doesn’t it. However, if you sell 100 items at $3 apiece, your profit is $30 but if you sell 10 items at $30 apiece, the profit is still $30. In fact, the profit on the more expensive item will be greater because online store sales use credit cards and pay a flat fee on each transaction. Plus the costs of packing materials need to be included. It takes about the same amount of time to get an inexpensive item sold as it does to get a more expensive one. One must research the product, order the product, list the product on the website, process the order, and ship the order. This can be taken too far though. If your product offerings are too expensive, you may never sell enough to generate a profit. Outside of the popular well known electronics such as computers and TVs, how many people would buy something from the internet for $3000 without first seeing it in person? My lesson learned here is don’t carry too much stock at a very low price for an online store. It is too much work and a large amount must be sold for it to be worth the price. Balance is important here. The right balance depends upon the type of product being carried by the store. And no, I haven’t found the right balance yet.
Each day, I learn a little more about the ins and outs of running an online store. I have never done this before. Even with the best advice that is followed, there are bound to be mistakes made. Frederick P. Brooks sums it up well:
Good judgement is the result of experience … Experience is the result of bad judgement.
May my mistakes be small and my learning large.