DTS1.4 – Inventory Management

Description

Inventory is more than just stuff you have in a room on a shelf, or on hangers in your boutique, or in IKEA bags, its a tool that you can use to build your business to new heights and propel your sales in a way you haven’t seen before. All it takes is a little change in perspective and a lot of swaps. In this episode of Direct to Success we will go over the benefits of strategic swapping, why swapping hasn’t worked for you so far, and how you can make it work for you now!

Transcript

Hey Hey everyone, welcome welcome to today’s Podcast with me, your host, Minessa Konecky! As always, we will be talking about topics that will impact YOUR business in a short and sweet presentation that you can listen to while running errands, taking photos, folding laundry – whatever – it’s good for the background! And as a queen of efficiency – I am a big believer in wanting to do at least 2 things at once, one thing with my mind and one with my hands – this sings to my little green heart!

So, without further ado, let’s get started on our topic for today – Inventory management. I know, it’s a sexy topic and you have been waiting on the edge of your seats for it to come out! I’ll try not to make it too dry!

I want to start by talking about the prevailing belief that inventory is stuff. I mean sure, it is stuff, but it’s so much more than that. In most current ways of thinking, inventory is just items you have in stock, regardless of what it is otherwise, at its most base level, that’s the definition. But if you think about inventory in that light, then really you have only 2 things you can do with it. If something is just a “Stock item” then you can either procure it, or dispatch it. Buy it, or sell it. Which is great, and it’s true, but what if we looked at inventory a little differently and instead of thinking of it as just something we buy or sell, what if we thought of it as a tool to bring people joy, a way to get them excited, a way to create community, provide entertainment, a way to build confidence – if we start to think about it like that it gets a little less dry, and a little more exciting. Now for those of you who are numbers oriented and looking for facts and data, I may be losing you here, but stay with me. Because when you start to think of inventory as a tool to accomplish these ends, suddenly the mechanisms by which you get it start to expand, and the way in which you can show it expand as well.

What I mean by that is this. Right now, if I told you to go out there and get more inventory you would either sell what you have until you could place an order, OR you would go and place an order now. Done, inventory purchased. Which means that in order for you to get new stuff into your boutique, you need to SPEND money to get it. So, in order for you to SPEND that money, you have to HAVE that money, which is where a lot of people run into roadblocks, because sales are slow (for a variety of reasons) and you don’t’ have the money to spend right now on inventory, so you are kinda stuck in a holding pattern. Compounding the issue is that you need the money you make from your sales to pay for bills, so all in all you are really in a conundrum, and truthfully, it’s enough to make someone throw in the towel on the whole business and take up underwater basket weaving.

Strategic Swapping

The good news is that with a shift in perspective it doesn’t have to be this way. Think about this, there are about 80K retailers in the business right now, of which not all of them are active. I would guesstimate about 50K active retailers, and then say another 10-20K who have inventory, have decided they don’t want to stay in the business so stopped selling, and haven’t submitted their intent to resign to LuLaRoe so they are just sitting on a bunch of inventory. So, we know they have stuff. Then for the other 50K, aside from the top sellers who rotate through their inventory at light speed rates, a large part of them are probably dealing with the same problem you are. They all have inventory, they move through it at a pace certainly, but not enough to completely rotate through their inventory every week, so they have a percentage of their inventory that remains stagnant most of the time, and then another (smaller) percentage that is constantly rotating, so they still have that chunk that’s hanging out.

Now here’s the thing. With 5000 of any print being printed, and there being between 50-60K retailers with inventory that means that chances are, they won’t have the same prints as you, though some might, it’s highly unlikely. So, it seems like we have a perfect situation here. Retailer A has 1,500 pieces of which she needs to replace say 1,000 of them with different prints to keep it fresh, and Retailer B has 1,000 pieces of which say she wants to move 600. Why not swap out entire styles, get a whole fresh new look for the cost of shipping (or no shipping if they are local).

Before we go any further I want to be clear about what I mean when I say swapping. I do not mean that you go through their inventory piece by piece and pick out 2 large Randys for your 2 Large Randys, and 2 Small Nicoles for your 2 small nicoles. And I don’t mean that you cherry pick the pieces you want based on prints you like. I mean you say, I need Randys, I have 60 of them, I will trade all 60 sight unseen to anyone who wants to swap out 60 Randys. Sizing isn’t relevant. As long as the cost is net 0, it’s fine.

There are multiple reasons for this:

  • What you like isn’t what your customers will like. There are as many different tastes as there are people out there, and if you only pick what you like then you are only selling to yourself, so unless YOU are buying the inventory, it makes no sense to pick out things that only you like.
  • Swapping can become habit-forming because it gives you a hit of dopamine that excites you, you got a new piece, which then fills you with hope of selling that piece, and you become addicted to the feeling of hope of selling, rather than the actual feeling of selling. AND since you are in this scenario cherry picking your items, you will not sell as much, so you won’t get any satisfaction from that, but you WILL get satisfaction from the hope that swapping gives you, so you will do it more and more until you are spending all your time swapping, and no time selling.
  • Swapping creates the illusion that you are “working your business.” You aren’t. the 4 hours you spent cherry picking out 10 Nicoles is not working your business, its one business activity that does not produce income.
  • It’s not a good use of time. Period.

BUT if you think of swapping as merely an activity you engage in as part of your business, and do not get married to your inventory, it becomes a fast and efficient process. It’s not about hope, it’s about rotating inventory as often as possible.

So How Does It Work

So, if you wanted to swap, but not do it the way that wastes money or time, what do you do? Well there are a few things you can do. First, you can join all the local retailer groups in your area. Most regions will have a group for local retailers to support each other, join and propose a swap like this. Every 2 weeks a group of you get together at someone’s house, you bring entire styles, and you swap them out. Randys for Randy. Nicole for Nicole, Amelia for Amelia. 10 for 10 (size and print irrelevant). Then you take what you swapped home, and that becomes your inventory that you are going to use extremely strategically (more on that in a second). Make sure you have these swaps scheduled every 2 weeks, maybe you don’t go to all of them if you don’t need to, but that way it’s a standing date so if anyone needs to swap out entire styles, or specific sections of styles, they can.

The second way is to do it on your team page or create a subpage within your team group (if your team page is for some reason not ok with this – which is entirely possible) where you start a blind swap thread. Everyone who has something to swap posts the number and the style, and then people just claim. So for example I have 20 Nicoles I want to swap out for 20 Nicoles. I will post that on the thread and someone who has say 40 Nicoles but is willing to swap out 20 will comment yes, and then they do the swap. Alternatively I could be discontinuing Classics, and I want Irma. So, I say I am swapping out 20 Classics for 20 Irmas. Now someone else may have 300 Irmas and they are ok with just swapping for classics, they let me know and we make the trade. BLIND. We buy, and we ship. Quick and easy. No pictures, no muss no fuss.

Caveat for outfits

Now there IS a situation in which you WILL want to cherry pick items, and that would be for if you have specific outfits set up in your home, but are missing a piece. You have an amazing top and Lola, need a Shirley or a Sarah. Maybe you have the perfect Sarah and Carly but you are looking for leggings – whatever it may be, you need that ONE piece. In those cases, you may want to pick specific pieces FOR THAT OUTFIT. Because at that point it’s not about getting something “you like” better than the other stuff, but rather it’s about completing an outfit you are trying to make. There is a strategy behind it, it’s not about how you are feeling about a particular print. For the exchange of one piece or buying one piece at wholesale from your fellow retailers, you can complete an outfit and have one additional thing to show your customers.

Showing Your Inventory

Now that you’ve swapped out all of this inventory, what now? Well we need to make sure we show it. There are a few things we need to remember about the people that we sell to in order to figure out how to show our inventory and those are

  • Not everyone is online all the time breathlessly waiting for you to post. Which means that you can wall drop a sweet Julia right now as a featured item but only a select few will actually see the notification.
    How knowing this helps: What that tells us is that if we want to make sure that the highest number of members of our group or followers of our page see our posts, then we need to drip our featured items and outfits on to the wall over the course of the day, OR we need to make sure we post everything when we know most of our VIPs and followers will be online.
  • People like to shop in a variety of ways. I personally do not like to shop lives, and I won’t watch them, even if you have a Carly I have been looking for for months. That’s not how I shop. I also won’t shop your wall, but I will always shop your albums. My aunt prefers to shop the wall. We have customers who wont shop our albums or our wall, but will always watch our lives, and some that will only do speed videos.
    How knowing this helps: In order to make sure the most number of people see our inventory, we need to make sure we show it as many different ways as possible.

The rule of thumb will be that you must show every style all of the ways for at least 2 rotations – so live sale, speed video, album sale, featured wall drop, and outfit (if appropriate, some items just don’t lend themselves to outfits, so don’t force the issue). AND if at all possible, throw in an open house in there.

First thing I would do is pick out the pieces that you know you can put into outfits. Don’t put those on the wall or show live until after you have already made outfits with them and shown those outfits. If it doesn’t sell in the first outfit, and you have alternatives, swap it out to the next about 3-4 days later. Once your outfit pieces have been through the outfit rotation then you can put them into the rotation for the individual showings.

With the rest of the new items, I would start with the least time-consuming and administratively heavy activity first – which would be a live sale. Step 1, go live either at your regular scheduled time (assuming you have a regular scheduled time), or if you don’t then schedule a live sale where you will show all these new prints that you must share! Remember that “new” doesn’t have to mean BRAND new, it just means its new to your customers, which it is because they’ve never seen these prints before in your store! Next step, Speed Video – these are great to post on your business page as well as your VIP group (I would post it to business and then share it to your VIP group to make sure it’s the same post and you see the comments in both places!)

Next step is to wait a few days, go live again with the same style at a completely different time of day to try to get different eyes on the style. In the meantime, if you swapped more than one style then rinse and repeat with that, if you got just the one style then go ahead and pepper in some of the styles you did not swap out in lives in the meantime to keep the variety up.

After you’ve done the videos and gone live twice, which at this point is about a week later, now you take pictures of what’s left and post them in your albums twice. Once you’ve gone through the rotation it should be time either for your next swap or you are getting close to the one after that, take your Julias and swap them out again and begin the cycle anew.

Why This Works

The truth is, this sounds like its contrary to everything that we’ve been told in the past about buying, selling, and moving inventory, and a lot of that is because the activities themselves weren’t the issue, it’s the mindset behind the activity. What I found in talking to retailers who were engaging in swaps was that they were spending HOURS trying to cherry pick a handful of pieces not because they were focused on selling, but because they were focused on selling a particular print or finding a print that they believed they could sell, as a consequence of the mindset being that whatever you swapped for you would have in your inventory forever – so you’d better like it. But what ended up happening was that some retailers were spending SO much time swapping, there wasn’t a whole lot of selling going  on. And often they would show pieces they got, and when they didn’t sell right away would allow their egos to be deflated, as if the fact that that piece didn’t sell was a personal affront.

And truthfully, why wouldn’t it feel that way? You spent HOURS finding that perfect Julia, and you selected it because you thought it was beautiful, and now no one is buying it? Its almost like they are saying your taste is questionable. Moreover, you feel connected to that print, why doesn’t anyone else? And it would become a crusade to sell specific prints. But if you take the emotion out of it, and just consider your inventory as a constantly rotating collection of clothes, it becomes less about how you feel and more about just showing what you have so you can rotate it out.

The reason this works is because once you get this cycle started, you remove stagnancy factor. If you are swapping out entire styles or huge chunks of styles once every two weeks (remember no more than 1 every 2 weeks and only for a couple of hours tops – make sure you are making an effective use of your time!) then truthfully it doesn’t matter if you get some dupes, or some items that you just know your VIP will hate, because you won’t have it long enough for it to matter. You’ll have new stuff coming in in a month or so. Combine that with the fact that you will be placing regular warehouse orders andyway, and you can develop a reputation for having constantly rotating inventory. Which, if you recall is one of the reasons that your VIP members will continue to visit your page regularly – due to your variety and constant changes. They never know what they’re going to find next.

When I was in my 20s I worked with my dad at a technology startup – ours actually, right at the beginning of the internet. 1995. We were one of the first companies to be making websites back when you had to code them by hand – and I was a graphic designer and a coder at the time. My dad always said not to get attached to hardware – that it was just hardware, there was no relationship that was forming between me and the computer. It’s a tool, an asset by which I can accomplish many things, but the actual device itself in terms of whether it was this laptop or that, wasn’t relevant. It took me years to understand what he was saying. That it didn’t matter what computer I had (and this becomes more relevant when you consider that we basically has 20 employees and we had to swap out laptops often depending on what we were working on), all the computers worked great, it was what I did with it. The tool is the tool, you get to decide how you use it. When I joined LuLaRoe, that lesson didn’t actually translate for a while. It wasn’t until I realized that retailers (myself included) had a tendency to imbue our inventory with so much emotion, it had so much meaning attached to it that when we couldn’t sell it, it felt like some sort of personal failure on our part. If everything sells, and I’m not selling everything, especially pieces I love, then clearly the lack of selling is an indication of my personal value as a business owner.

BUT if you change your perspective just slightly, and consider that the clothes are the clothes and that yes, everything sells eventually, but maybe not from you to one of your customers. Maybe you swap out with your neighbor who swaps out with a team mate in North Carolina, and that Randy that neither you nor your neighbor were able to move gets sold 30 seconds after it gets posted in North Carolina. Because the customer who had been hunting for that piece wasn’t on your page, and she wasn’t on your neighbors page – she was on her teammate in North Carolinas page. Everything sells eventually to someone, but it doesn’t have to be your sale. Moreover, inventory is not something you need to have a deep relationship with full of feelings, it’s a Randy, it’s a Carly, it’s a pair of leggings, its clothing. It comes in, you show it, you sell it, what doesn’t sell you swap out. Once you are able to disconnect those feelings from inventory, you will find swapping gets faster and easier, and your sales will slowly inch up and inch up until 6 months from now you not only have a whole new sales system based on rapidly rotating inventory, but you also have sales as a result.

Thank you for joining us this week as we talked all about inventory and how important it is to view it as a malleable and transferrable asset, and some strategies for rotating inventory fast and often if you can’t use sales to do it. Our goal here at Direct to Success is to constantly provide you with business strategies to help you maintain a solopreneur mindset and work with a strategy so you can have more time to do the fun things in life like play board games and hang out with your family! If you have any questions about this podcast, or would like to suggest future topics, to help with that please email me at podcast@directtosuccess.net. If you missed any part of this podcast, don’t worry, we took the notes for you, and you can find them at https://www.directtosuccess.net/podcast/104. We’ll be back next week to talk about giveaways and the lottery and determining YOUR personal threshold for risk!

 

Comments

  1. What a great podcast! I appreciate your ability to organize the elements of a topic and present it in such a way that I am able to not only understand, but digest. I look forward to more topics.

    1. admin

      Thank you so much Lucia! Feel free to message me if you have any ideas for topics for the cast! 🙂 New one just went up today!

  2. Kim E Miller

    OMG this was so amazing. Going to listen again and take notes then apply to my business. Then will listen to you other podcasts. Thank you for your time and for sharing what you have learned for others to become successful. Much appreciated!!!!

    1. admin

      You are so welcome! I am so glad you find the podcast helpful! 🙂 Sorry for the delay in responding. I actually am just figuring out how to use the comments feature on this thing! 🙂 (Always learning something new!)

  3. Gerri Harkins

    First I’ve listened to and LOVED the first 3 episodes! Thanks so much for doing this! Question When you swap i understand swapping blind however Idon’t understand why size is not important? Please help?

    1. admin

      I love this question. The reason that I say size is not important is mostly for time purposes. If you are going to spend time counting out sizes it just adds an extra layer of complexity to the entire process. Moreover, since using this method you are going to be swapping pretty frequently, the inventory won’t be in your hands long enough for the sizing to have a substantive impact on your overall inventory, since you will swap out for different sizes/styles later depending on what you choose to swap out. However, if you happen to cater to a specific size range, like XXS-XS or 2X, then at that point sizing may be more relevant because your clientele really don’t care about the other sizes. So you will want to modify the plan as necessary to accommodate your customer base!

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