Please advice on amount of inventory

for a starting e-commerce

[krolik]

Hello Everybody,

we are planning to start our e-store in a few months and are trying to figure out how much inventory to buy for start.
How many items of one product? It is going to be jewelery, averge price of one product ~ 40$.
Can anyone suggest anything please.

Thank you.

[ytswy]

Ideally none at all IMO - take no risks and tie up no cash until you have a good idea of what sells.

Obviously dependent on what your suppliers can do for you - drop shipping, or getting product to you quickly and cheaply enough so that you can buy once you have an order.

Once you have an idea of run rates then you can start to take stock in order to maximise your profit.

The mechanics of your business may make this impossible, but I wouldn't spend more than you absolutely have to - not just to minimise risk, but also because any money tied up in stock is money you can't use on the great idea you have next week.

A lot depends on how many product lines you carry - if it's five or ten then keeping them all in stock is realistic, if it's five thousand you need to think of another solution.

[krolik]

Thank you for your reply and comments.

Unfortunately, I have to have some inventory. Products will be purchased from abroad and it usually takes 2-3 weeks for supplier to deliver the order to me. So I have to have products in stock to sell them here in US.

For starter I will have 5 major catagories of products and then 6 to 10 different lines of product in each category.

I was thinking to buy 3 pieces of each product for start.
Is it reasonable or completely dumb idea?

Thanks again for any suggestions and comments.

[Essex_boy]

No I think if they take that loing to reach you then you have to order and hold some stock however ID hold the bear minimum possible until you know which are selling

[appi2]

So 5(categories) x 10(product) x 3(pieces) -> 1500 x $40 = $6000
If $6000 is small change then ok.
But what happens if you sell 4 of one of the pieces? What would you do then?

Could offer pre-order with discount, delivery to customer in 4 weeks of ordering.

Or be slightly evil, take the money, contact customer sorry out of stock, new stock in 4 weeks, give nice discount or refund.

[ytswy]

At the end of the day, being unable to fulfill an order is not the end of the world. You may lose that order, and you may annoy that customer enough to lose any repeat business, but if you got one customer then you'll get more.

Other factors that may be worth considering:

How aggressively you are marketing the site.

How easy it is to switch someone to another product - ie if you offer a slightly more expensive product at the same price as an unavailable one, is the customer likely to switch.

Or be slightly evil, take the money, contact customer sorry out of stock, new stock in 4 weeks, give nice discount or refund.

That would be illegal in the UK (Consumer Credit Act I believe). Even if you can do that in the US, I'd strongly advise only charging people when you know you can fulfill - keeps everything a lot more friendly. We have taken to giving coupons for use against a future purchase to people we mess around, which seems to work well although we haven't been doing it long enough to draw firm conclusions.

[ssgumby]

We put up about 15k in initial inventory. Our inventory is perishable within a year typically. We did up front research on the market and what we anticipated as good sellers. We got roughly 3 of each product. Within the first 6 months, we knew what was selling and what wasnt and adjusted accordingly. The items that didnt sell well, we discounted in our clearance dept. I'd say out of the 15k we had maybe $400 in inventory that didnt sell well and we had to discount/discard. We have learned a lot and now carry between 3 and 10 of each item and have flat out discontinued some items that didnt do well. We have suppliers that get us our product weekly. There are occasions when we run out of something, but it is rare.

We mainly went with a large initial inventory due to the price reduction when buying larger quantities. We were able to maximize profits this way and learn something along the way.

Mike

[krolik]

Thank you All for all comments, and Mike for some numbers ;-)

I think I will stick with 3 of each product for initial inventory.