(This is a wierd kind of post, I just want to stimulate some discussion surrounding inventory turnover ratio and what things one should look for to maximize their investment in capital. I was reading that in Dell used to stock 10 weeks worth of inventory, and now they only stock 1 days worth since their stock devalues by the week by 1%).
When looking for ideas on what to sell online, inventory turnover and startup capital come into play.
For example, I've researched the clothing industry. And they way it works is that you have to buy the clothing a good 6 months prior to the season (as mfg make they stock based upon pre-purchases and demand levels). This means that if a certain product is a hot seller, you can't maximize on this since you can't buy any more stock! So this effects your sales and hinders your potential turnover.
So say you have 20K to invest in inventory, you can't just re-order based on what you have sold since the mfg won't have any stock to sell you! So does this mean in the clothing industry you can only really turnover your inventory ONCE?
In comparison to say someone selling something they can easily reorder from their supplier, they can invest 20K, and reorder on demand and thus increase their annual turnover.
I would think an online operation can turnover their inventory many more times that an offline business because of the market reach. I've heard online the avg person might do 4-5 times per year, while offline it is more like 2-3 times (obviously it varies by industry etc).
Ideas? thoughts? Comments on the topic in general? :)