051 - Navigating Inventory Challenges with Expert Strategies

051 - Navigating Inventory Challenges with Expert Strategies

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Welcome to this episode of Women Powering Ecommerce. Join me every Tuesday as I take you behind the scenes of my journey as a female e-commerce entrepreneur. Together, we'll explore the highs, the lows, inspiring you to take action and achieve your own business goals. So let's get started.

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Okay, so for today's topic, I chose inventory forecasting. I just thought I'd do a behind the scenes episode because I just do them as we go. Whatever the things I come across in a week, I just say, okay, let's do an episode on that because it's fresh, it's real, it's down to earth. That's the real deal, what we're dealing with in e-commerce on a daily basis. So I wanted to do today's episode on that.

So I did an episode on inventory not too long ago, and I still again, I'm doing one today because I just, like I said, I create my episode according to what I'm going through in real time. And I just want to share this as quickly as possible with you, I wanna document my journey, that's the purpose of this podcast. And I wanna make sure I add as much detail and hope you can learn off of me. In the end, that's the whole pure risk. So let's start by,

Inventory management quickly. So looking back on my 2023 year for my e-commerce, I've been trying to gauge what we did best and what was the biggest challenge. So drum roll, what we did best is email marketing. The results were insane. We started off the year at around 18% of revenue from email and we had weeks that we did like 60%. I think that was for Black Friday.

Most of our sales came from email and that was amazing. Over 60%, I honestly did not hear that very often. So super, super happy with that. Now, what was our biggest challenge? I would say inventory management. And the reason for that is because I've had past experiences of yes, being out of stock for some products, which is normal, I can say. It happens to everyone, right? You get a spike in sales, for example, did not expect it.

then you run out of stock. Okay, so we can manage that. But then things changed and we had to adapt two years ago. And we're still kind of adapting, which is crazy, right? Because some things you'll make a change and you'll only see the consequences like so far down the road, especially with inventory. If I ordered for so long and there's maybe I won't have enough, I'll have too much or something, then maybe I'll know just much later. So that's what happened.

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just to back it up, our lead times changed from two weeks to two months in 2022. So maybe a year ago. But we've only been seeing the impact of that change this year because we had enough inventory for a full year when we actually switched our inventory lead times. And we did that because we wanted to make sure we weren't backorder from like inventory management styles. So, yeah, so now we're just kind of going through the changes we have to make.

And like I said, we used to and experienced some back orders, some BOs, but we've never experienced overstocking. That was the first for us. We had like this really opposite problem from what we were used to manage, which is not like I think in some way, I prefer to be overstocked than understocked, but still, it comes with its load of things to figure out.

So when we changed our lead time from two weeks to two months due to our labs, a lot of things change and a lot of reasons are behind that, but that's not the purpose of this today. We overstocked some products without knowing and not selling all the stock before, there you go, the expiration date. Oops. Yeah, so we never really...

took it seriously to check the expiration dates on a regular basis. I used to do that maybe once a year near December. Okay, we're going to just take all of our inventory while we calculate everything, check the expiration dates and great. But what happens is that, I mean, yeah, we did that last year, but then like mid year, or near like Q3 of this year, we realized, okay, we have a lot of stock left for this Q.

and but the expiration date is like coming up in January. So, and that's why we didn't know because usually in December, we do our like inventory and expiration date checkups, but then we were like in September, October, and we were realizing, okay, this is a problem. Things are gonna expire in January and we have a like a lot in stock. The necessity of a flash sale really became a reality. So we did that. And then we still didn't sell everything we wanted to,

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because there were actually one or two SKUs, incredible, one in particular, because we had such a high MOQ when we ordered that one specific SKU. I mean, yeah, so our goal is not to sell products that are about to expire, right? So we had to make it quick. So reflection on the loss is a lot of dollars, inventory dollars wasted. And just because we,

did not plan out things correctly. I think we omitted of seeing some details and we did not think that this would happen because it never happened before. Why would that change? But no, things change and we just didn't plan out properly. So yes, this is unfortunate. It was unfortunate, but when things like this show up, I just...

in the end saw it as a new opportunity for better systems to put in place. So this brought the need to find a better solution, a system to prevent this from recurring. So this brought me to analyze the cause, so high minimum order quantities. That was one of the issues that we under, we didn't take as seriously or we didn't think it through all the way.

in just varying product shelf lives. It's not something we're used to because usually we sell out before the shelf life, like much in advance. But yeah, so for example, like our natural products, because we sell natural products for animals, colloidal silver, medicinal mushrooms, those things expire much faster than longer shelf life products like homeopathy, which is a big part of our product line. A few key takeaways.

what I need to learn and do better. That's, I'm gonna share that with you. This is really what I came up with. And now, and I'm so happy about this happening in, like this year, every time I have something happening that's maybe from the start or like when something unfortunate happens, yeah, it doesn't feel great. But I really try to quickly learn the lessons.

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I did not do that before. I did that maybe later when the situation came back up, but now right away, something happened. What's the lesson that can be learned? That's really important. And I feel like I grow much faster. So that's what I wanna do with you. This happened, what did I learn? How did I grow with it? So one of the things is just understanding market demand. I feel like I need to learn to predict customer needs more accurately. That's what came out of it.

Another thing is balancing order quantities through negotiation. And I've been working hard on that for my next order recently. I need to learn to find the sweet spot between the minimum order quantities that are required from the manufacturer and the realistic sales expectations. So for example, and that's just a very recent case that happened this week, I had my...

manufacturer, my supplier, Ashley, who asked me this, who said that I needed this MOQ, this minimum order quantity for this skew. And I like I knew it's impossible. I'm not going to sell all this before the expiration date. So I really worked hard on negotiating and I'm working hard on making sure it goes through. So yeah, so that's one of the things. Another thing is the product shelf life considerations.

I need to pay closer attention to expiration dates and product turnovers. So we definitely need to learn this, that counting only on our software will not be enough. And that's one thing we relied on a lot. We were super happy to have this new software this year to really manage and automate our inventory. But then I realized it does not replace the human. Sometimes you still need to add a layer of human to check those expiration dates, those bottles once every X time.

And that's what we're going to do from now on. We've done that already started. This is done. The other thing is risk management. So develop a plan for excess stock. That's also one of the lessons I learned. So we put a plan, once we learn this, this happened after what we did is we put a plan in place to know what to do when we realize ahead of time.

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that we will not sell out six months before the expiration date. So now we can be proactive and make sure that we do something about it instead of being like two months before everything expires and having to do a flash sell. And the last thing, which is my biggest key takeaway is again, supplier negotiation. I kind of said that before, but I'm saying it again, working with suppliers to negotiate better MOQs and terms.

If your minimum order quantities are too high for the product you'll sell, I need to learn to negotiate. And I was not good at that. And I'm still working hard on that, but I need to be okay not fear to ask or not fear to say no when they tell me something. So that's what I did and I'm currently doing. And we'll see how it turns out. I'm pretty much done one of my negotiations.

It took literally two months, so we'll see. It may be a long process of back and forth, but I'm sure and convinced that it's definitely worth it. So this is nothing like what I said today at this episode. Literally, it's nothing big. It's really just a behind the scenes look into the day of an e-commerce owner. And I guess this is part of continuous learning, learning to embrace each challenge as a learning opportunity. That's really what I got out of it. So that's it. This ends the episode. I hope you enjoyed it. Please subscribe to my channel and share if you like this episode. It's a great way to help more women in e-commerce that need that additional support. Thank you for being part of this journey with me.

I hope you gained valuable insights and inspiration today to keep growing and taking action towards your goals. Please follow me on social media and remember to like, share, and comment this video. Subscribe to get notifications every time a new video is uploaded. See you next time.