Stock What You Sell

Selling your products online may sound easy, but if you are going to make it a full time job, then be prepared to go through the same survival-of-the-fittest challenges that will be thrown upon you.

The reality is much tougher than it looks. You may have heard of the term ‘drop-ship’, where you actually sell something that is not in your own inventory. Instead, you actually ask your supplier or manufacturer to drop-ship your orders for you. This may sound like a very good arrangement, but very often, your customer service’s quality will be compromised. Speed of delivery is out of your control. The way the items are packaged is out of your control. The stock level is out of your control. With so many things out of your control, you are risking your reputation.

Yes, drop-shipping may help to alleviate your cash flow issue, but it also introduces many problems into your operation. When you drop ship, you don’t receive the goods in your warehouse hence causing your stock level to be negative. You then setup a virtual warehouse for each of your suppliers to solve the goods receiving problem. And virtual warehouses can become an administrative nightmare when it comes to tallying your stocks.

So, I can only tell you this- if you are indeed serious about selling your products, stock them. Stock just enough to last for a 2 weeks if cash is tight. If possible, stock up to 30 days.

Why are you not stocking them now? Probably you are not confident about selling them. If so, talk to your suppliers and ask them for consignment. If you can’t get consignment, ask them if you can exchange the goods with similar value products. If you want to return the stocks for good, is there a restocking fee (usually 10-15%)? Some suppliers demand cash on delivery, but if you can find suppliers who can provide you with 30 days credit, then you get yourself some breathing space. When we started 12v.com.my, one of our suppliers was kind enough to give us 120 days credit. That was one of the critical factors that allowed the company to last till today.

Back to the stock issue. Since you don’t have all the money in the world (at least not yet), you cannot stock everything you are selling on your website. So, the key in stocking up is priority. Naturally, you want to stock the items that you sell the most, but starting out, you probably don’t have the data to back you up on which item would be in demand, and most importantly, if certain demand trend is picking up, or dying off.

This is where your intuition plays a big role. Yup, logic can only help with facts and figures, but if you are trying to look into the future, you have to start using your sixth sense. By that, I don’t mean you are gambling. Real entrepreneurs don’t gamble, because in a game of chance, they know the odds are always against them.

There are a number of factors that will cause your product to sell like hot cakes or turn your hot cakes into cold turkeys. Here are a few reasons I can think of:
1) competition; some is good, too much or too little is no good
2) stock availability; if it’s easy to get anywhere, it’s probably more challenging to sell
3) profit margin; the higher the profit, the better you can wage a price war, but don’t get addicted as the winner of a price war means you just created a low profit business for yourself
4) mass appeal; if given a choice between selling chicken eggs or a Bugatti Veyron gearbox, always choose the eggs.

But the most important factor, more than any of the ones listed above, is your opinion towards the product itself. Simply because your opinion on the object you are selling matters. Are you already sold on the product yourself? Would you disown your own family members if they don’t buy from you? Would your friend associate you as the ambassador of the product you are selling? If you don’t have a favorable opinion on the product you are selling, you won’t go the extra mile in pushing them to the market. No, you cannot be neutral about it either. In fact, you have to be extremely biased.

So, you now know how to get the right product to stock. Now, go sell it.

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