How to manage your consignment inventory
March 31, 2016
Solid consignment inventory management is crucial
“I’m running a business, not a museum”
I laughed when I first read that quote in an article written over 5 years ago by Brad Martyn of Focus CFO. It tells the whole story. We’ve all seen shops like that. Merchandise sits for months in the same location, gathering dust, fading from the light of a nearby window. For years, I monitored a framed antique print in an antique mall that sat in the same spot. I tried to negotiate a better price with the dealer, but he would have none of it. Last year, my husband purchased it when everything in the booth went to 50% off. I wound up paying less than I was originally willing to offer the dealer!
Of all the issues facing resale shops, creative consignment inventory management has to be one of the largest. How do you know if you have enough inventory? When do you have too much? How can you make the same inventory look different? When is it time to move it out with a sale? Here are a few ideas to help you avoid the trap of running a museum instead of a resale business. Or worse, you may enter The Twilight Zone of Inventory Management!
Find your niche
It is impossible to be all things to all people. Therefore, look for that one area that gives you a certain measure of exclusivity. Become the “only one in our area” or the “first to offer.” Add inventory with a focus on your niche and resist the urge to take on every consigned item just because they’re in good condition. The more exclusive your merchandise, the less risk you will have in being shopped on an apples to apples comparison basis. Having a specific inventory niche builds urgency too. Shoppers realize you only have one of the item they want and they are quicker to shop on a regular basis. Also, if you’ve established your niche it’s easier to partner with other resale shops in your area.
Follow the 80 /20 Rule
The universal 80/20 rule applies to so many areas. In sales, it’s generally known that 20% of your customers purchase 80% of your merchandise. Now’s the time to focus on those key customers. They are the ones who do not shop you on price alone. Use your software program to determine who is in that top 20%. Find out their wish lists; remember important dates for them; send thank you cards; offer them a special members-only shopping incentive program and by all means, build a close personal relationship. Become more than a merchandise provider by adding value and appreciation to their lives.
Move to the back
If you’ve decided it’s time to move merchandise with a sale, I’m sure you are aware that the best place to display your marked down items is at the back of the store. Not only are American shoppers trained to look in the back for the sale shelf or rack, you’re now moving your customers through your entire store. The chances of them finding a regularly priced gem is far greater.
Have a solid tracking system
Every article I read, stresses the need to have a system in place to track your sales over time. By tracking, you’ll have the data you need to make inventory decisions in the future. It’s not enough to experience the ebb and flow of your shoppers, you need raw numbers. Then, you need to analyze those numbers on an annual, quarterly, monthly, weekly, maybe even daily basis. Need a suggestion for a solid consignment inventory tracking system? Consider SimpleConsign. We offer a Quick search feature making adding and tracking inventory a breeze.
