To keep up with shoppers today, merchants need a modern cloud POS software that will allow them to quickly adapt to market changes and easily sell both in-store and online. Cloud technology offers that flexibility.
The Coronavirus pandemic changed the way that consumers shop, work, and live. Retail is no exception. In 2020, over 80% of consumers shopped at least once online. Since the pandemic, there have been new sales strategies that retailers are adopting such as contactless payment, curbside pickup, virtual consultations, and even social commerce (purchasing products through social media). According to retail experts and shopper surveys, this new behavior is here to stay.
What Is Cloud POS Software?
A cloud POS system is a retail management software that doesn’t need to be installed anywhere. Instead of maintaining a server computer in your physical store, cloud POS companies host your information on secure third-party services such as Google Cloud or Microsoft Azure. This is different to traditional POS systems which can only be installed and/or used on specific devices.
Cloud-based systems has advantages in the current shopper environment when compared to installed software. Some obvious advantages are its flexibility and affordability. These characteristics make a huge difference during uncertain times and are key reasons why more merchants are switching to cloud-based systems than ever before.
Until the pandemic started, multi-location retailers were the businesses most likely to look at cloud-based POS. This makes a lot of sense since the sharing of information between different stores is much harder with traditional POS systems. Since the COVID-19 pandemic, there has been an increased the demand for online sales options. For retailers with only a single physical store, this means that they need to manage customers and inventory between in-store and online sales.
Let’s take a closer look at some of the main benefits of replacing your traditional retail POS with a cloud-based system.
The Benefits Of Cloud POS Software For Retailers Today
As traditional shoppers are increasingly buying online for store pick-up or delivery, retailers need a solid strategy to keep track of inventory, This can be stressful for retailers since online sales are often handled separately from traditional POS systems. Keeping track of inventory history and stock levels everywhere you sell is critical as stock-outs can lead to upset customers and lost sales.
A lot of traditional POS solutions have “cloud” options but many of these are clunky, remote workarounds that don’t sync inventory across locations in real-time, often break down, require expensive third-party tools and technical support to fix.
With uncertain demand throughout the pandemic, managing inventory can be difficult with traditional systems. This is because these systems are sometimes separate or sync only once a day can be a serious drain on resources and finances. The pandemic has also made it even harder for merchants to afford the staff necessary to manually manage inventory or check stock levels because the quantities in the POS system aren’t accurate.
With a modern cloud-based retail POS platform, retailers are able to do all of the following within a single software:
share the same products across all locations and digital channels
split the same product stock quantities by store, website or warehouse
easily create new stores or stock splits to re-allocate inventory at any time
give staff the ability to check all locations for real-time product availability
control exactly how much access staff have to see costs and inventory details
fulfill online sales from stores for pickup or delivery with ease
buy online, pay in-store during pickup
buy online, add more / exchange / return in-store
minimize stock-outs because you can quickly adjust purchasing or move stock quantities around as sales happen, not after the fact
A cloud-based retail POS system provides greater mobility which basically means that retailers can sell from anywhere inside the store, outside the store or online 24/7. The COVID-19 pandemic has proven that retailers need this kind of flexibility in their business. During the recent lockdowns, retailers with access to their POS systems from anywhere were able to immediately work from home or take payments outside of their stores during order pickup.
Modern systems such as TAKU Retail can function on any device which makes it even more cost-effective for retailers to adopt. True cloud systems are not tied to any specific device. Where earlier cloud systems are limited to only a single type of hardware (e.g. iPads), the latest cloud POS systems allow retailers to use any existing web-enabled devices. Similar to how people sharing a Netflix account can watch shows on Windows or Mac computers, Android or Apple smart devices, people selling using a cloud POS can work off of any of these devices together. This type of flexibility helps merchants reduce the overall cost of hardware, even as they grow, since almost any existing device can be turned into a station.
And accessibility doesn’t refer only to selling or accessing reports. While older installed or cloud systems only give retailers access to specific functions, true cloud systems give you full access to all of the features in the software so you can run your business from anywhere. This also includes managing access rights all from one dashboard. If you’re a larger retailer, you should be able to quickly manage (or revise) the access rights for each staff member across all devices wherever you happen to be working.
3. Manage Shoppers From Every Channel In One Dashboard
While the Coronavirus pandemic will pass, changes in consumer shopping habits are here to stay. Retail consumers are now shopping locally, cost-consciously, and digitally. Being there for your customers wherever they are is often called “omnichannel retail” or “unified commerce”.
What’s important to remember is that being omnichannel is about more than simply making sales in all channels. It’s about providing a seamless experience for shoppers. It means making it easier for shoppers to find you, buy from you or even bring something back to you. There’s no doubt that taking orders online is important to the survival of a lot of retailers during the pandemic. But in the long-term, omnichannel retailers are more profitable because they have more opportunities to engage with their shoppers across different channels. And omnichannel drives higher-margins in-store sales together with the convenience of online 24/7 shopping.
Another thing to keep in mind is that online sales naturally come with higher return rates as shoppers make mistakes or shipments are damaged. Being able to manage all of your sales and returns across all channels from stores is important to minimize returns and to minimize the costs of these returns – e.g. by offering in-store returns or exchanges to avoid losing sales or paying double the processing fees.
Many retailers experienced significant growth in online sales and store pickup during the pandemic. In fact, in some essential sectors, traditional stores were unable to keep up with the demand as they struggled to handle the sudden boost in traffic.
As your business grows and becomes more complex, your retail management system must be able to accommodate new stores, new sales channels, new employees, and new product lines without any limitations. A flexible unified commerce system will have the built-in options required for you to adapt as your business grows. This includes functions such as unlimited physical stores, unlimited back office users, unlimited stock quantity splits and customizable tax rules. With customizable settings, fast onboarding support and transparent pricing, modern cloud systems offer retail owners a flexible tailored solution that can easily scale without hidden costs.
With shopping behavior shifting constantly throughout the pandemic, being able to track, manage, and engage with customers across all channels is key for long-term success. An all-in-one cloud POS software allows you to handle all of your touchpoints from in-store shopping and curbside pickup to local delivery, all under a single login. It allows retailers to be flexible with their business processes and adapt quickly when the environment changes.
With traditional systems, data needs to be manually managed between different sales channels. In comparison, cloud-based systems give merchants access to shared retail data which makes it significantly easier for them to see trends as they happen in real-time.
Built with next-generation technology, modern cloud platforms are even able to help retailers leverage their own retail data to attract more shoppers. As the first POS company to be a Trusted Google Partner, TAKU is the first platform in the industry to automatically help retailers be found online by people searching nearby for what they sell. Not only can newer cloud POS systems increase sales when shoppers are engaged, they can now help retailers get in front of shoppers before they even leave their homes.
Make sure you’re using retail technology that can keep up with the rapidly changing world post-pandemic. Make the switch to cloud today – it’s easier than you think.
Want to know how TAKU can help you sell anywhere and at anytime?
Get shoppers through your door by displaying your seasonal merchandise (whether you plan on using an entire aisle or a single point-of-purchase display) at a prominent location. Use proper signage to lead shoppers to your Halloween-themed merchandise and displays, will also make them more likely to purchase.
Not selling Halloween-themed products? You can still decorate your store with some festive decorations and visual merchandising. Think about creating a window or point-of-purchase display that showcases products that you already sell – but with a twist. You can use spider webs, jack-o-lanterns, leaves, and fall colours (black, orange, red etc.) to spook things up.
Completely revamping your store’s website is time-consuming and in some cases, it can be expensive. But adding a Halloween touch to your website can go a long way in getting shoppers in a festive spirit. Including Halloween images on your homepage, fixing themed add-ons, and adding pop-up designs are all cost-effective and easy ways to add a spooky feel.
You can also drive more shoppers to your website by creating a separate page (a landing page) dedicated to Halloween. Here are a few tips:
Create a Halloween gift guide for your shoppers that features all of your Halloween merchandise. If you don’t sell Halloween merchandise, consider posting helpful Halloween content. Some good content or blog post ideas include: “Halloween costume ideas for children”, “Halloween decor ideas”,”DIY costumes for adults”, and “tips for hosting a Halloween party”.
Use Halloween keywords (this will help your store appear higher up in search).
Promote any seasonal discounts or promotions that you are holding.
Don’t forget to decorate your social media and email marketing campaigns for Halloween as well!
Adjust for high traffic hours: while you want to keep ads active 24/7, it is a good idea to boost ad performance during high traffic hours. This includes the hours that your store is open and when your shoppers are most likely to search.
Consider physical location: Users closest to your store (20-35 km radius) are much more likely to visit than others who are. Target local shoppers by increasing bids for users that are closest to your store.
For more information on how your retail store can easily implement Google LIAs to increase foot traffic and sales, click here.
4) Add Halloween Products
If your store doesn’t sell any Halloween merchandise, you can consider selling seasonal items to boost your store sales.
The following are some good examples of how retailers can add in popular seasonal offerings:
Long gone is the age of clunky cash registers and old legacy systems. Their replacement? a system that allows retailers to sell anywhere, whenever.
In fact, with the technology available to retailers today, store owners can run their entire business with just a tablet or smartphone. Using a mobile device and a cloud-based retail system like TAKU Retail, retailers now have the ability to sell anywhere inside their store, outside their store (e.g. pop-up shops, trade shows or events), and take orders online 24/7.
This means that the first step to selling everywhere is finding the right retail POS software for your store.
Let us to walk you through some key features to look out for so you can easily start selling on every channel without any extra work.
1. Real-time Inventory Management
Selling in multiple sales channels (e.g. in-store, online, and social media) requires retailers to keep an accurate count of inventory across the board. So whether you have inventory at your storefront, a warehouse, or at a pop-up event, you need a way to easily track your on-hand quantity. However, many POS systems are designed to handle sales and inventory in only one channel and managing things separately can get increasingly complex, especially as you add online sales channels or multiple physical locations.
A multi-channel POS software can help you manage inventory anywhere you sell or stock your products. Not only does this make inventory tracking easier, but it also makes fulfilling orders across all channels quicker and more efficient.
With modern cloud technology, retailers can easily manage stock across all locations and channels while keeping shoppers happy by minimizing stock-outs. Complete stock visibility means that you can adjust purchasing needs as sales happen (not just after the fact) so that you always have the most suitable inventory in stock.
When assessing POS vendors, look out for the following:
Being able to manage all customer sales and returns in one place: As omnichannel shopping has increased due to the pandemic, so has the rate of returns. This is particularly true with online sales which can have return rates of up to 40% compared to traditional in-store return rates. In order to minimize your overall return costs, your POS system should be able to easily manage transactions across multiple channels – e.g. by offering in-store returns or exchanges on online orders to avoid losing sales or paying double the processing fees.
Customer profiles: Most POS software helps you collect in-depth contact information both for marketing purposes and to help you learn more about your customers.
Customer transaction history: Being able to quickly access a customer’s transaction history gives retail associates the ability to offer on the spot recommendations, increasing up-selling and cross-selling opportunities.
3. Consolidated Sales Metrics and Reporting
On top of managing inventory and customers, POS software provides valuable information that store owners can use to make data-driven decisions about their retail business.
Modern POS systems make it simple to see analytics across all channels of your business, both individually and across your entire business as a whole. This can help you see what’s working and what isn’t, helping you be more flexible and adapt quickly to changes in the retail environment. At the same time, your POS solution should make it easy for you to manage sales taxes across on sales channels.
Here’s what to look for when assessing POS options:
Sales data by each location and across all stores
Sales reports for both online and in-store sales
Sales broken down by day, weeks, and months
Sales per employee
Product reports – to see what is selling and what isn’t
Sales taxes across all sales channels
4. Marketing Integrations and Fulfillment Options
The right POS features can also help you make more sales. Today’s innovative solutions offer digital marketing integrations designed to meet the evolving needs of today’s shoppers, which can lead to increased sales for your business. For example, you can use your POS to showcase your products on Google and get right in front of nearby shoppers who are looking for the products you sell.
Providing different fulfillment options is another way to serve the needs of your customers. It’s important to look for a POS solution that offers flexible delivery and pickup options, such as:
Local delivery: This option allows retailers to fulfil orders in the same area where their business is located. It is particularly useful for retailers selling bulky or large products. Make sure you look for solutions that can handle proper zoning with scheduled deliveries if you’re using your own in-house delivery staff.
Shipping: As an added convenience, it’s a good idea to offer home delivery. This way, if an item is unavailable at a certain location, customers can have the product shipped directly to their home.
Buy online, pick-up in-store (BOPIS): A popular fulfillment option amongst customers during the pandemic, BOPIS allows customers to purchase items online and pick them up at a physical store or a third party location. Stores offering this fulfillment option have been able to minimize their packing costs while decreasing their rate of returns as customers can physically check the products they have purchased before leaving with their order
Want to take action and make more sales by moving your physical store online?
Thanksgiving weekend (from Thanksgiving to Cyber Monday) is one of the biggest shopping events of the year. Black Friday will look different this year as more COVID-19 restrictions are being lifted. It will be a chance for shoppers to re-emerge in store to do their shopping.
This is the perfect opportunity for retailers to attract more shoppers with Black Friday marketing to increase store visits and sales. To take full advantage of the holiday weekend, retailers need to be prepared to meet shopper demand and expectations.
Black Friday Shopper Insights And Trends
Despite the impact of the pandemic, Black Friday sales in 2020 were surprisingly strong. Although brick-and-mortar stores saw a decline in foot traffic and sales, 2020 was a year for e-commerce. According to Adobe Analytics, online sales in the US went up by a whopping 21.6% from the previous year.
From the same survey, it was reported that 44% of consumers planned to shop small and support local retailers. Compared to previous months, local retailers did see a 545% increase in sales around Black Friday. This is good news for local retailers who want to take advantage of the spending season.
Keep reading to find out how you can take advantage of these trends and increase your retail sales!
6 Retail Store Marketing Tips
1) Improve Your Local Online Presence
Research shows that shoppers are looking to Google and conducting searches even more now prior to visiting physical stores. This shows that valid and accurate online information make it easier for shoppers to purchase in-store. This means that, even without an online store, it’s important to improve your online presence.
If your business cannot easily be found online, there’s a large chance that you are losing out on potential shoppers to your competitors. Here is a quick checklist that will help you review how your retail store appears online:
Check to see if you business information and holiday hours are updated on Google My Business.
You can use tools like Yext to run a scan of how your business appears on listings / online directories across the web (Google, Yahoo, Bing etc).
If you’ve moved or want to be found on more local directories, sign up for a one-time local listing service through services such as The Hoth or Fat Joe.
Encourage or even offer a small incentive to get your happy customers to leave a positive review on your Google My Business store profile. Make sure that you reply to customer reviews whether they are good or bad. You’ll want to ensure that your customers are regularly leaving reviews as 90% of customers read online reviews before visiting a business. Click here to find out how you can gather more positive reviews for your retail business.
Retailers with websites need to make sure that their websites are mobile-friendly. You can use Google’s Mobile-Friendly test to check how easy it is for shoppers to view your website on their mobile phones.
2) Engage With Shoppers After The Holiday Weekend Is Over
This means that in order to capture this chunk of customers, retailers should build on the existing interest and run promotions or events even after the Black Friday weekend. To reach as many shoppers as possible, run email marketing campaigns possibly together with digital marketing ads to promote your unique products and deals!
By partnering with local businesses, you can provide unique deals that shoppers will have a hard time passing up. And this way, you don’t have to risk low profit margins. In fact, you can still sell products at regular price or even at a premium.
The best collaboration strategies include:
Selling products in bundles: Packaging products that complement each other in one product bundle is a great way to increase your store’s average order value. For example, pairing three lipstick shades with a skincare product or, bundling sweaters with a free bag. In order for this strategy to work, it’s obviously a good idea to partner with another retailer that sells complementary products.
Offer partner promotions / discounts: Another effective strategy includes cross-promoting. For example, shoppers will receive 10% off of total sale or free shipping at your partner’s business when they purchase $50 or more at your store. You can print promotional material on your receipts and customers can use this as a voucher.
Black Friday is a great opportunity to strengthen your relationship with your most loyal shoppers. After all, they are best customers and the ones most interested in your products.
By adding exclusivity to your email marketing campaigns, you increase psychological rewards like a sense of belonging and importance. This is why exclusivity makes your promotional offers appear more attractive to shoppers vs. simply pricing and encourages them to visit your store.
Remember – shoppers receive too many emails during this time of year. So make your emails stand out with:
Clear offers in the subject line (for example: Exclusive VIP Sale)
Personalized subject lines (personalized subject lines are 26% more likely to be opened). Or, you could include the shopper’s first name in the email opening line.
A short, simple, and to the point message.
5) Promote Urgency
The majority of shoppers (92%) believe that strong deals will be offered all throughout the holiday season. And with so many competitors offering deals during the weekend, shoppers are left with a lot of decisions to make. That’s why it’s necessary to create a sense a urgency with your Black Friday marketing campaigns.
Urgency is a widely used marketing tool in retail. And for good reason – creating a sense of urgency in shoppers increases demand and ultimately leads to more purchases. Create an incentive for shoppers to take action by running your promotions for a limited time. One effective way to create time pressure is to include a countdown timer on your website or in your email campaign. Show your shoppers how many days, hours, and minutes are remaining for them to get a deal on their favorite items.
6) Highlight Stock Availability
Stock availability is a type of FOMO or “Fear Of Missing Out” that encourages shoppers to take action. It’s a good idea to emphasize that certain items are limited or low in stock in your marketing campaigns or on your e-commerce site. If you do not have an online store, it’s a good idea to run Google Local Inventory Ads and take advantage of digital marketing that helps you promote automatically based on product availability. If your POS is linked directly to these type of Google Ads, stock availability will adjust based on real-time shelf quantities and save you the hassle of manual updates.
These ads work by targeting nearby shoppers who are searching online for products that your store sells. Google LIAs are effective because they capture shopper intent at the moment that they are looking to purchase. Click here to learn how your store can easily implement Google LIAs together with your POS system to increase store sales and foot traffic.
Omnichannel Shopping Are The New Reality Of Retail
Regardless of what stage you are at, moving your retail business online, consider the strategies above to improve how well you serve your customers online this year during the all-important holiday shopping season.
Rather than interruption, digital marketing focuses on delivering useful information at the exact moment that target shoppers are looking for it.
What are the Benefits of Digital Marketing Over Traditional Marketing Methods?
Easily Measure Marketing Campaigns
Traditional marketing methods are difficult to track. For example, how do you know how many people saw your newspaper or magazine advertisement in a day? Or how many shoppers you attracted because of it?
Since traditional marketing is so difficult to measure, you won’t know if your marketing budget is being spent effectively.
On the other hand, digital marketing gives you the ability to measure results with advanced analytics. This includes:
The number of people reached (people who saw your content)
The demographics and geographical location of the people reached
Conversion rates (an actual sale, a completed download, a subscriber, etc.) Average session duration (the time spent looking at your content)Exit rate (where people left after viewing your content)
Bounce rate (the percentage of people who left after viewing only one page of your website)
E-mail open rate (percentage of shoppers who opened your e-mail)
Click-Through-Rate (CTR) (percentage of shoppers who clicked on the link in your advertisement)
As you can see, digital marketing provides very useful, real-time data.
At the touch of a button, you know which methods are working and which are not, giving you the ability to adjust your campaigns to achieve better results.
Traditional marketing methods reach a broad audience. Which means that there is no guarantee your advertisement will be seen by your target shoppers.
There is a chance an ad may reach your target shoppers eventually – but it’s like taking a shot in the dark.
Let’s say you are advertising your furniture store on a billboard. What are the chances that every person passing by it is actually interested in purchasing furniture?
Targeting capabilities are much more effective with digital marketing.
This is because you are able to select who sees your marketing campaign. Digital platforms (Facebook, Google, Instagram etc.) allow you to target shoppers based on their gender, age, geographical location, personal interests, their search results, etc.
This means your advertisements will only be shown to those who are most likely to be interested in your products! This way, you can be certain that your marketing budget is being spent more effectively.
Larger retailers have no problem spending millions of dollars on traditional marketing and advertising. This makes it extremely difficult for small retailers with limited budgets to compete.
That’s why digital marketing is the perfect alternative; you can create a similar impact at a much lower cost.
The graph above shows the cost per thousand impressions (often referred to as CPM in marketing) for 7 different marketing tactics. 6 of the tactics are traditional marketing methods while 1 is a digital marketing tool.
While the final cost will vary by industry, social media marketing still allows you to reach 1,000 potential customers at a much lower cost than traditional marketing methods.
This means you can spend less money and still reach more shoppers. Or, you can choose to spend the same amount of money and reach even more shoppers!
Compared to traditional marketing, digital marketing methods are generally more cost effective and can offer a higher return on investment.
Target Shoppers at the Right Place and at the Right Time
Think about the last time you needed information – where did you turn?
This is why digital marketing has a huge advantage over traditional marketing. It allows retailers to reach buyers directly – at the right place and at the right time. In other words, you can meet shoppers with relevant and useful information at the exact moment that they are looking for it!
With traditional marketing, you are reaching buyers indirectly through interruption. You can only hope that magazine readers stop to read your advertisement or that drivers notice your billboard on the highway.
But because advertisements are everywhere, most people find them annoying and as a result, they are often ignored. This is why traditional marketing is becoming less effective.
Value vs. Interruption
Traditional marketing methods use interruption to gain the attention of an audience. This is why most people hate receiving sales flyers or inconvenient phone calls. It doesn’t feel authentic.
People just don’t trust sales-focused advertisements. They see hundreds of them a day and have gotten used to ignoring them.
Nowadays, shoppers are looking for valuable and useful information that will help them make purchasing decisions. This includes product reviews, blogs, and informative videos.
With digital marketing you don’t have to grab the attention of shoppers – because you already have it!
Want to know more about off-season marketing strategies for retail stores?
For retailers, inventory planning matters. Inventory is your largest asset and has the greatest impact on your business cash flow. If you plan your inventory well, you can reduce your overhead costs and increase cashflow. This article will help you understand the essentials to inventory management for retailers.
Cashflow sitting in old or out-of-season inventory is money that could be better used elsewhere. Many successful retailers don’t carry a lot of excess stock to have the flexibility to introduce new products more quickly. This is particularly true in industries such as grocery where products can easily expire or fashion where products can be trendy. All products are worth less over time as they get “stale.” But in fast-moving sectors, products have shorter life cycles, meaning they lose their value faster. As such, carrying too much stock means an increased chance of getting stuck with products that require deep discounting to free up your cashflow. Consider this the next time your suppliers offer you better prices to buy a larger volume of product.
Remember though, keeping your inventory “lean” doesn’t only mean keeping stock levels low. If stock levels don’t match your sales demand and are kept too low, you will constantly have out-of-stock products. You want to avoid stock-outs as they are costly to retailers. They lead to lost sales, wasted marketing efforts, and unhappier customers.
There are many different inventory management methods but ultimately, it comes down to one thing, “do you have stock when you need to sell it“.
In the end, selling at any price is not the objective. To be profitable, retailers need loyal, repeat customers that don’t require expensive marketing campaigns to get them to buy. When you think of it this way, inventory is an important part of your overall customer service. Customer service is the new marketing as every touch point impacts how your customers view your business. Less stock-outs means higher sales in-store and faster fulfillment for online orders, all of which means better customer satisfaction.
What Can I Do As A Retailer To Better Manage My Inventory?
If you’re a small-to-midsize retailer and all of this sounds scary, don’t worry. Not all retailers have the resources of the big brands, and regardless of your size, there are things you can do to better plan your inventory.
1) Make Sure You Always Have Access To Real-Time Stock Levels
You can’t manage what you don’t know. With an increasing number of sales channels (e.g. e-commerce, pop-ups, etc.), a retail POS that can handle “unified commerce” with real-time stock levels is essential to inventory management in today’s market. Unified commerce is just another way of saying a total retail management platform that you can log into from anywhere that offers a single view of inventory, sales, and customer data across an entire business in real time. As expected, the need for real-time inventory data grows as the business and transaction complexity increases.
2) Use Minimum Stock Levels
Use minimum stock levels, also known as safety stock levels. In many retail point-of-sale systems, you can assign a minimum stock level to every product in your store which you can easily track in comparison to your actual stock level. You should also be able to easily make mass updates in your POS when you review your minimum stock levels every 3-6 months.
3) Track Inventory Stock Levels By Supplier
Track inventory stock levels by supplier so that you can consolidate purchases to minimize stock-outs, lead time, and shipping costs. This will also allow you to more easily meet supplier minimum order amounts.
4) Track Inventory Turnover
This is essential to inventory management in retail. Basically this refers to how many times a product is sold and replaced over a certain period of time. This can be tracked at a very high level (e.g. including the entire store inventory) or at the product / category level. There are different ways to calculate turnover but whatever approach you use, consider using Cost of Goods Sold instead of Sales as you will get a more accurate measure as your result will not include markup. For example:
From Jan-Mar, this company had inventory turnover of 13.33. This is calculated by taking the Sales$ for this period and dividing it by Average Stock Value$. Now you can convert this to “inventory days” by taking 365 / 13.33. So from Jan-Mar, inventory turns 13.33 times a year and is on hand for approximately 27.38 days. If you run the same calculations for Apr-Jun, inventory turns 18.33 times a year and is on hand for approximately 19.91 days.
From these two examples, the higher your turnover rate, the more efficient you are, since it means that your inventory is being sold faster and you have more cash flow in your business. A lot of people forget that the cost of inventory is not just the original purchase cost of an item. It includes the ongoing cost TO SELL that inventory. The longer it takes to sell something, the greater your real inventory cost as your money is sitting in that dead stock instead of products that are in high demand.
5) Determine Your Ideal Reorder Days
It is always a good idea to estimate the lead time required to reorder products in time for suppliers to produce OR deliver them before you are out-of-stock. For example, if you know it takes two weeks to receive orders from a particular vendor, make sure to factor that lead time into your reorder timing. In the beginning, you don’t want to cut it too close as unexpected delays can happen (e.g. snowstorms in the winter). This is especially true if you are ordering for a busy time of year such as Christmas. For some retailers, losing a week during the holidays might mean the difference between Christmas and Boxing Day pricing.
Inventory Management – Essential For All
A lot of independent retailers or businesses often think that they are not large enough to use inventory management tools and try to use spreadsheets to keep track of their goods. While this can work in the beginning, as your inventory items grow in both size and attributes, you will either overstock (to prevent stock-outs) or have constant back orders. You will also lose out on freight savings and volume discounts you might have received if you had consolidated your vendor orders more efficiently.
Start improving your operations by following the key essentials to inventory management we’ve listed above. Then when you’re ready, start to slowly automate these functions one-by-one. With the proper point-of-sale system, you will be able to spend less time managing your inventory and more time selling it.
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