Future of Commerce Blog

Answers to your Biggest Inventory Purchasing Questions


Purchasing can be tricky when you’re growing a business. With multiple suppliers, anticipating needs and deciding what inventory best supports your sales goals, the questions can be endless and leave you feeling defeated. First of all, it’s important to find a solution that helps you centralize all of this information so that you can spend more time creating a purchasing timeline and strategy. Secondly, here are some of the top questions we hear from retailers and some tips on how you can make better purchasing decisions.

What do I buy?

Think about your key targets. Are you focused on sales or profitability? Whatever it is, make sure to pick one goal and focus on that. If you decide profitability is what’s most important, focus on products that provide the biggest margin and be sure to track your costs. If you’re trying to capture the market, then general sales may be more important. Be sure to replenish the stock that is flying off the shelves and into the hands of customers.

Typically, businesses choose to focus on profit unless you’re trying to capture the market. Focus on profitability, but pay attention to products that have low margins but are sold along with high margin products or pull people into your site or store.

Anticipate changes in trends or seasonality. Be sure you’re aware of customer needs and see what items are being sold together, so you can maybe bundle together.

If you have historical data, look to that.

How much should I buy?

You have two options here, and what will be tough is deciding which one you prefer. (Hooray! More decisions!) Would you prefer to have aging inventory on your shelves with the intention of discounting at a later date? Or would you rather lose sales because you didn’t have enough to support the demand? Obviously, the target is to have neither of those situations happen, but these are things you should be thinking about as a retailer.

The simplest way to know how much you should buy is to take the average of last month’s/quarter’s sales and buy the same amount, assuming your sales will be the same moving forward.

When do I buy and from whom?

These two often go hand-in-hand. The type of supplier you have may heavily influence when you decide to order new inventory from them. Obviously, your goal is to never run out of stock and that your replenished stock arrives on time, but this isn’t always the case. In order to master this, it takes coordination between your suppliers and understanding your demand.

We recently launched a supplier scorecard that helps you get a better picture of how your supplier stacks up against industry benchmarks. You can view average lead times, percent of inventory received and more. This scorecard also gives you an idea of how your suppliers stack up against other retail suppliers. Check out more details in this post.

All in all, there can be a lot of questions swimming around in your head when it comes to purchasing and inventory management in general. Our goal at Stitch is to make those questions a little easier to understand and answer.

Bridge Mellichamp

Bridge Mellichamp is the Director of Data Science and Special Projects. Numbers excite her more than you can imagine; at the core, she’s driven by helping Stitch and its customers make sense of their data so they can make incredibly smart business decisions.In her free time, she enjoys winning at booking flights, sand in her toes at Ocean Beach, and escapes to Tahoe.

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