Replacement or Expansion: The Art of Culling Your Inventory
When you decide to drop products from the inventory for your online business, you can take two approaches to adjust or refresh your inventory, as described:
Replacing one product with another
One strategy for refreshing your inventory is to replace nonperforming products: Get rid of one product and immediately substitute it with a new one. Your replacement products should meet these criteria:
They’re complementary. Look for items that are a good fit with the theme or focus of your site. You want products that continue to be relevant to your target customer.
Resist the temptation to add products that require marketing to an entirely different customer base. That’s almost the same as starting a brand-new business, and it can permanently derail you.
They’re price competitive. The price points of replacement products should be within the range of your current pricing structure. You don’t want to introduce a high-end luxury item if your site is more of a midrange store. Similarly, you want to search for products that can be competitively priced on the general market. If you can find the product from other online sources for significantly less cost, you will have difficulty competing.
Always compare prices before adding products. PriceGrabber lets you view current rates online for a particular item. Or download a price-comparison toolbar, such as PriceBlink, which you add to your browser. PriceBlink automatically displays comparison pricing and relevant coupons when you search for products online.
They’re appropriate for markup. Choose products that are priced right for you, too. An item can be costly to you if the wholesale price is too high, or if you have to buy a super large quantity to make the price feasible. These items throw off your normal markup strategy and leave you paying for it — literally!
They’re deliverable. When you search for products now, the world is truly at your feet. You can send anything from almost anywhere and then resell it. If delivering a product to your customer becomes difficult or takes too long, however, it costs you business. Your site should feature products that can be quickly shipped to customers without hassles or delays.
Expanding your product line
You can refresh your inventory by simply expanding it. Here are a few expansion tactics:
Concentrate on expanding a particular product line. Perhaps your inventory analysis reinforces what you already suspected: One particular brand of products sells particularly well. Suppose that you’re a reseller of spa products (hair and skin care) and you realize that the three Bumble and Bumble brand products on your site consistently sell well.
After dropping your five worst-selling products, you decide to expand the Bumble and Bumble line. You have no reason to search for other brand-name products; just build on the one you already have.
Expanding on a popular line of products is also a useful marketing opportunity. Make the most of it. Promote not only the new products but also the fact that you’re expanding the entire brand.
Accessorize your bestselling products by adding items that complement one of your top products. Perhaps you sell electronics and games and find out that the Wii U game system by Nintendo is one of your three best-selling products. When you beef up your inventory, concentrate on Wii U companion products. You can expand your line of Wii U video games, memory cards, controllers, and any other items that work with it.
Accessorizing is similar to the promotional strategy of upselling. When you see a product that your customers want, add supplemental products that might also interest them.
Scale back the number of your products. This strategy narrows your focus so that you can concentrate on a select group of your top sellers, no matter which brand or category they’re in. In other words, eliminate the dead weight. Then start promoting the heck out of your best-performing products to increase sales.
For example, you might have 75 items for sale, and your inventory analysis shows that only a dozen of those products make up a clear majority of your sales. Combined, the other 63 items account for fewer than 15 percent of your total annual sales.
If you get rid of the majority of your products and stick to the 12 bestsellers — along with marketing — you should see sales increase without the hassle of working with a large number of products.