If you’ve just stepped into the world of selling retail or wholesale products, you’ll need to find out when you have enough goods and when it’s time to order more. This can be quite a balancing and juggling act, and when you’re first starting out you can expect to make a few mistakes along the way. Fortunately, there are some ways to tell when it’s time to place another order to make sure that you have enough stock available.
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Understanding the Reorder Point
You have a product that you’ve been selling and it seems to be a hit in the market place (like these classroom headphones). It’s selling faster than you ever thought possible and with every sale you’re naturally making more money. At the same time, however, your inventory levels are dwindling. We have a case study here about BarksTech going through this themselves. If you put off ordering more supplies for too long, your customers will be disappointed and will go to your competition to find the product. On the other hand, if you place an order too quickly, you’ll have a lot of product on hand and will need to figure out how to store it.
How Long Will It Take for the Stock to Arrive?
You’ll need to figure out how long it will take before the new product arrives. If you order it today, will it arrive the next day? Next week? In a month? Every supplier will have its own transit time so this is the first thing that you’ll need to explore. If it will take a few weeks to see a new order appear at your doorstep and you only have a few products left in stock, it’s time to place an order now!
Keep in mind that some products can be ordered from different suppliers. If, for example, you’re selling generic products, you can find suppliers that can send the goods faster if need be. If, on the other hand, you’re selling something more specific such as brand name lingerie, you may be only working with one or two suppliers. In this case, the transit time will be fixed and you’ll have to work within that specific timeframe.
How Many Sales Take Place Each Day
If you haven’t already, figure out how many sales you are making of the product every day and then use this amount to estimate how much product you’ll need until the new stock arrives. This will give you an idea of when to place your order but you’ll also have to keep an eye on current and future sales. Things can change from day to day and from week to week. What’s hot today may be as cold as ice tomorrow.
How Much Supply Do You Have on Hand?
Take a look at the supply of the product you have on hand right now. This will give you a good idea of the time factor involved and when another order should be placed. Have one of your workers do an up-to-date inventory of the supply and then crunch the numbers from there.
Once you have been in business for a while you’ll get a better feel of the reorder point and will learn to trust your instincts. While there are specific calculations available to help you figure out when you should order more supplies, they are not by any means a guarantee. In the retail and wholesale world, you need to expect the unexpected at all times and use your experience to make the best decisions.