The 2017 holiday season quickly approaches! You know what that means: customers have already started their gift shopping. In order to maximize your profits this winter, you'll need to effectively plan your inventory for the holiday rush.
Start thinking ahead today. Here are five tips to prepare your inventory for the busiest shopping season of the entire year.
1. Understand Your Current Stock
It's difficult to plan how much inventory you should soon have in stock when you don't already know. Make sure you have an accurate measure of your current stock. It's important data to have, so you can estimate your demand. Additionally, knowing your current stock helps prevent you from running out of stock later.
Likewise, you should audit your inventory regularly, all throughout the year, not just during profitable seasons. You can use Square to sync your offline and online inventory for easier inventory management.
2. Communicate with Your Manufacturer Right Away
If you haven't already thought about the holiday season, you're most likely in need of more inventory. That's why you should communicate with your manufacturer's warehouse, letting them know you'll need to order very soon. Don't wait, even if you're unsure of how much inventory to order just yet.
If you run low on stock sooner than planned, know when the last possible date is to order merchandise. If your supplier is overseas, for instance, it could take months to stock back up, which of course makes it nearly impossible during the holiday season.
3. Estimate Your Demand
Take a look at last year's data. The numbers will not only tell you how many items sold, but will also show how much inventory you began and ended with. But don't be afraid to dream big with your demand forecasting, either. Consider the maximum number of customers who would be interested in what your shop sells.
Additionally, make an alternative plan if your products don't sell as planned. For instance, plan potential percent discounts to offer if your inventory turns into an overstock.
Unfortunately, if this is your first holiday season with a new business, you won't have this information readily available to you. However, you should focus on collecting accurate, detailed information about this year's sales to help you next year.
4. Remember the Value of Gift Cards
Keep in mind customers will likely want to purchase gift cards from your shop. Gift cards will affect your physical inventory, if your shop offers to sell them, which can be useful if you ever do run out of inventory.
The holiday season is a popular time of year for such purchases. According to market research by the Blackhawk Network, 67 percent of consumers purchased gift cards during the 2016 winter holidays. Additionally, customers typically spend the same amount on gift giving as the previous year.
5. Budget for Inventory Emergencies
No matter how prepared you are with inventory, your shop can still run out of stock. This is why you should set aside emergency business funds in case this happens, so you can order merchandise in a timely fashion. Be mindful that warehouses may charge extra during the holiday season for merchandise, so plan on budgeting more than you normally would.
Don't miss out on the opportunity to maximize profits this holiday season. Think ahead and make a plan. Remember, your customers are already thinking about and acting on their holiday purchases. Not only will these strategies help you achieve higher holiday profits, but they are great business habits to practice throughout the entire year.